How Soft-Touch CEOs Get Hard Results
It's hard to imagine the chief executive of a $32 billion company admitting publicly to any faults. But Pfizer Chairman and CEO Henry A. McKinnell took the confessional approach in January when he posted parts of his performance review, warts and all, on the company intranet. The 25 executive underlings who assessed McKinnell said he needed to give them a lot more coaching, work with them more frequently to solve problems, and choose his words more carefully when critiquing their work.
McKinnell then drew up a personal development plan to help improve his performance. "He's demonstrating the behaviors he wants from his people," says D. Grant Freeland, vice-president of Boston Consulting Group, who has worked with Pfizer as a consultant. "He's living the values of openness and leadership."
McKinnell isn't the only top exec showing a more sensitive side these days. Freshly minted CEOs like Jeffrey R. Immelt at General Electric, IBM's Samuel J. Palmisano, and Joseph Tucci of EMC are also bringing a softer touch to the executive suite. Although it's impossible to generalize, management consultants, customers, analysts, and employees give the new honchos high marks for being more accessible and personable than their harder-edged and sometimes more distant predecessors.
"These leaders come at their roles using influence [more] than authority," says Peter C. Cairo, an executive coach and co-author of Unnatural Leadership, a book published in March that spotlights the kinder, gentler trend developing at many of the top 100 companies.
The modern corporation demands top-notch interpersonal skills for several reasons, management gurus say. Winning today depends on getting the most out of people, not just factories. Gaining competitive advantage is as much about employees sharing knowledge in bringing new products to market faster as it is about making the most gizmos at the least cost.
In addition, more complex global operations and reliance on partners and outsourcing mean CEOs don't have total control. "You need to be nice. Since you don't own them, you can't threaten to fire them," says Rosabeth Moss Kanter, a Harvard Business School professor.
Building trust within and beyond organizations is all the more critical in the wake of the Enron scandal. Management experts say that company's arrogant, bullying culture prevented employees from voicing their views for fear of reprisals, thus contributing to its demise. It's imperative for CEOs to create cultures that value openness and healthy disagreement, both to help companies stay abreast of market conditions and ward against possible fraud.
This is not to say these CEOs are lightweights. Indeed, they don't hesitate to lay off thousands to slash costs. They're relentless about customer focus and product quality. And some, like Immelt, still subscribe to the tough-love culture of forced bell-curve performance reviews that annually rank employees and then yank a given percentage of underachievers.
MINGLING WITH THE MASSES.
Still, their management style sets them apart from their crustier predecessors at once buttoned-down blue chips. They debate strategy, show vulnerability, and communicate more. They don't leave staff training to consultants. And they don't issue fiats from the corner office like many leaders from an earlier generation.
Some have even moved from the corner office to mingle more with the masses. Before, "It was: Do it my way or the highway," says John T. Gardner, a vice-chairman at executive search firm Heidrick & Struggles International. He adds that today, corporate chiefs need to get people to buy into their organization's goals, "and that's hard to do if you're a screamer."
Perhaps the starkest personality change at the top has come at General Electric. While customers and employees revered Jack Welch, they love Immelt. It's no wonder: The new CEO likes to make people feel worthwhile. Welch, by comparison, liked to catch them out and, if they were weak, let them know it. Welch even once joked that Immelt was "too soft." Says Immelt: "I'm very comfortable with how I lead. I focus on results and motivate people to get there."
WORKERS WHO THINK.
Moving thousands of employees and far-flung partners in one direction is more performance art than managerial science. Saying "just do it" no longer works because a new generation of workers has been groomed to think instead of react. The new CEOs, baby boomers themselves, understand that. So they must excel in the art of persuasion -- a skill that comes naturally to former salesmen like Immelt, Palmisano, and Tucci.
Being a good listener and team player is also part of the art. At EMC, Tucci hosts regular lunches with about a dozen randomly selected employees who are invited to tell him the good, bad, and ugly about the company. He's willing to listen to other opinions and debate company strategy. Everyone gets treated the same. "You always treat people with dignity, and you don't have a class system, and it just works better," says Tucci.
He has also spearheaded a reach-out effort beyond EMC's four walls. Tucci was instrumental in forging relationships with Dell and Electronic Data Systems to help sell EMC hardware and provide services. By contrast, former CEO Mike Ruettgers, currently executive chairman, favored the direct-sales approach. Tucci has even been willing at times to travel the 35 miles to Boston, from headquarters in Hopkinton, Mass., to meet with the press after earnings calls, rather than have them come to him.
You would never catch IBM Chairman and former CEO Louis V. Gerstner Jr. doing that. Though credited with bringing Big Blue back from the brink, Gerstner was anything but chummy with analysts, the press, or employees. Palmisano, by contrast, doesn't have an assistant and keeps up with his own e-mail. He has visited the factory floor to hand out coffee and encouragement when a team was scurrying to ship hardware early. "Sam's big advantage over Lou is affability," says George Colony, CEO of Forrester Research in Cambridge, Mass.
Of course, any chief executive's steely eyed focus will always be on the bottom line and shareholder value. What has changed is the route there. "The soft stuff drives the hard results," Richard H. Brown, EDS chairman and CEO, tells fellow execs in his business-circuit speech.
And it will be the hard results that determine how long CEOs stay in the corner office -- if they still have one.
By Faith Keenan in Boston, with Diane Brady in New York
Edited by Michelle Conlin