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Critical Thinking

Why Terrible Leaders Keep Their Jobs

Critical ThinkingFOXBusiness

Once in a blue moon I get a reader email asking a question that’s so important, so fascinating, so begging to be answered, I literally have to go through my own archives because I can’t believe I’ve never covered it before.

Tell me you’re not dying to know the answer to this:

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“I got an M.S. in organizational development to find the answer to this question, and after two intense years and a big loan debt, I could not glean the answer: ‘Why are so many terrible leaders kept in leadership positions?’”

Turns out I’ve danced all around this question but never really addressed it head on. Here’s why. It may sound simple, and it’s certainly something we all ponder – or curse under our breaths if we happen to work for one – but there’s no “one size fits all” answer.

Let’s be logical. If there was a silver bullet or a quick fix to the problem of bad leaders, every company would have awesome executives, everyone would have a great boss, and we’d all live happily ever after. But that’s not how it is, at least not in this world.

In this world, we have great leaders, terrible leaders, and everything in between. Like it or not, there’s a bell curve or at least some sort of curve for every function or discipline. Why pick on leaders? You might just as well ask why terrible engineers or HR people keep their jobs? Trust me, there are plenty of them.

The truth is, as long as supply and demand aren’t way out of sync, you’re going to have a lot of crappy performers at every function. Not only that, but a bad executive at one company may turn out to be a great one at another. Think about it.

You may hate your husband and divorce the slimy jerk, but get this. That no-good deadbeat you’d just as soon forget existed may end up becoming the love of some other woman’s life. It’s the same with leaders. It’s a function of fit, situation, timing, chemistry, all sorts of things.

Here’s another way to look at it. Define the word “terrible.” Seriously. Ask ten people to define a terrible leader and I guarantee you’ll get ten different answers. It’s subjective. It really depends on the type of company, its goals, its situation, the culture, all sorts of things. There’s nothing more subjective than an adjective like terrible.

For example, from day one I thought Howard Stringer wasn’t the right CEO for Sony. But even after years of massive red ink and decline in share price, the board didn’t see it that way. Sure enough, Sony’s new chief executive Kazuo Hirai already has the company squeaking out a profit. Why couldn’t Stringer have done that?

You could also say it was Stringer’s predecessor, Nobuyuki Idei, whose grandiose vision of turning the consumer electronics company into a global entertainment giant and expanding into the motion picture business created the whole mess to begin with. In which case, giving Stringer seven years to make it work makes sense.

Then there’s the whole “out of the frying pan and into the fire” problem to consider. I’ve seen boards wrestle with that one for years. Let’s say you’ve got a founding CEO who was great for the first few years, is showing signs of struggling, but isn’t ready to step down. What do you do?

If you oust him, it could do more harm than good. It could cause all sorts of issues. And his replacement is a complete unknown. It’s a roll of the dice. Besides, how do you know when it’s time? That’s the thing. You don’t. Again, there’s that nasty time factor. I’ve seen it go right or wrong every which way.

Apple slid into near bankruptcy under several chief executives after getting rid of Steve Jobs. Of course, Jobs needed that wakeup call to grow as a leader, and he did. He went on to found NeXT and Pixar and then returned to Apple and led perhaps the greatest turnaround of all time. If that doesn’t showcase how tough these decisions are, I don’t know what does.

Which brings us to the topic of change. Firing a leader is a big change, and that’s never something to be taken lightly. Dealing with change in the corporate world is a lot like dealing with personal addiction. In that case, people won’t change unless they feel they have no choice or their life is threatened. That’s called bottoming out.

It’s the same with companies. The funny thing is, even something we might all agree on as objective metrics – fundamentals like revenue, profits, debt, and share price – wasn’t enough for Kodak to pull the plug on CEO Antonio Perez before it was too late to avoid bankruptcy.

Now, I happen to think that level of resistance to change, the kind that ends up killing the organization, is pretty self-defeating. Then again, I wasn’t on Kodak’s board so I have no idea what the heck they were thinking. Maybe it was the Peter Principle. Maybe the majority of directors were incompetent. Who knows?

And that brings us to the final reason why terrible leaders don’t always lose their jobs. Sometimes boards are in the CEO’s back pocket. Like it or not, CEOs usually go way back with board directors, often bringing them into the picture as investors or advisors. And that creates a bond that takes a lot of bad stuff over a long period of time to break.

If I had to boil it down to one concept, it’s this: People are unique. Everyone is different. Organizations are made up of people, so they’re just as diverse. And everyone sees things through their own distinctive prism. If you can answer why terrible people have friends and loved ones, you’ll understand why terrible leaders have jobs.

What do you think?

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