Are CEOs in Touch with Reality? Uh…. Not Really.

A friend of mine works with a CEO who has appeared on the television show, “Undercover Boss,” (and who has been basking in the glow of his appearance ever since.)  Given the positive corporate and personal publicity that resulted, it is certainly understandable why he, or any CEO for that matter, would want to participate.

It’s also understandable why the show has become so popular.  For one thing, though not advertised this way, it does elicit a certain kind of satisfaction for viewers, Schadenfreude if you will, in seeing the “high and mighty” suffering the same humiliations frontline employees too often do.  For another thing, it reinforces the ardent belief among front-line employees, bordering on wish fulfillment, that if bosses only knew what was really going on with them, they would change things dramatically.

While that belief may not actually hold true in reality, one thing is for sure: it’s always true on “Undercover Boss,” and always allows the CEO to turn hero at the end, dispensing justice, rewarding virtue, and righting all wrongs.  Of course this suggests another reason for the popularity of the show: the satisfaction of seeing bad and incompetent supervisors and employees get their comeuppance, of revenge.

The one thing missing, as far as I can see, is that nobody ever seems to ask these bosses the obvious question underlying the show’s premise, “How can you have been so ignorant of what goes on in your own company?”

I’m being a bit disingenuous here. The idea that those on top might be out of touch with their frontlines is a veritable truism. It’s certainly not new news: Almost 40 years ago, George Reedy, former press secretary to U.S. President Lyndon Johnson, published, The Twilight of the Presidency, in which he argued that the isolation of the president behind a wall of protectors was undermining his ability to get the information he needed to understand what was actually happening in the world.  That isolation, he suggested, was becoming a fatal flaw of the office.

While presidents of companies are not presidents of countries, I would suggest that the difference in regard to this issue is simply one of degree. Five years ago, I had the opportunity to ask a relatively new, large corporation CEO what had been his biggest surprise since taking on his role. His answer: how lonely and isolated the role was, and how difficult it was to get straight information.

The problem is enduring. Only a couple of months ago, The Economist reported on a Boston Consulting Group study, “National Governance, Culture and Leadership Assessment,” which showed that bosses continue to be out of touch with the reality of their own employees.  The study found, as reported by The Economist, that:

“Bosses are eight times more likely than the average [employee] to believe that their organization is self-governing.[1] Some 27% of bosses believe their employees are inspired by their firm. Alas, only 4% of employees agree. Likewise, 41% of bosses say their firm rewards performance based on values rather than merely financial results. Only 14% of employees swallow this.”

 The gap between the CEO’s and the employees’ perception of an organization is not necessarily the fault of the CEO. They cannot be everywhere at once. They have to rely on others to filter information for them to ensure they get only what’s most important and most relevant for their business success.

The fault, then, dear friends, lies not in our CEOs, but in those who filter the information to them, who, however honorable their motives, cannot filter out their own biases. The reality is that no one working for a CEO is totally disinterested, or can be totally disinterested.  Whether wittingly or not, they filter information to suit their own views and interests. Even scientists, whose success presumably rests on their being professionally disinterested, are not immune from bias infiltrating their work. As research has shown, scientists have a hard time disentangling the conclusions of their research from the biases of their funding sources, particularly if their research is industry-sponsored (there’s even a term for it: “sponsorship bias”.)[2]

It’s also the case that some CEOs may, for at least semi-rational reasons, put understanding what’s going on at the front lines low on their list of priorities.  After all, as far as I know, there is no direct, easily measurable, causal relationship between a company’s financial performance and discontinuities between leaders’ and employees’ understanding of reality on the front lines.

Finally, as the survey results reported in The Economist suggest, some CEOs may think they already know what’s going on with employees on their front lines, making extra efforts to find out seem superfluous. They are likely to be suffering from “optimism bias,” that is, the tendency to overestimate the outcomes of their actions (as in, something like 90% of drivers describing their driving as “above average.”  Think about it.) It is well known to be particularly acute among those in power.

To put it simply, then, either CEOs don’t know what’s going on at their company’s front lines, don’t want to know, think they already know, or last, want to know, but no one will tell them.

For at least some of you, all of this is probably self-evident already: those at the top are out of touch with the reality of those who do the work on the front lines. The important question is: what is to be done?

The good news is that there are answers, they’re not rocket science, and most of them are already in use. In the next entry of Strategic Leadership Communication, I’ll offer leaders three suggestions for learning what’s actually going on with their front lines.


[1] Vs. either a “command-and-control” top-down culture, or “informed acquiescence,” that is, a “command and control” culture with smarter leadership than and some carrots mixed in with the sticks.

[2] This has been much discussed in the Journal of the American Medical Association (JAMA) over the years.  You can find an example of the research behind this claim, this one focused on nutrition research, at this link.

About barrymike1

Barry Mike is managing partner of Leadership Communication Strategies, LLC, a firm he founded after four years as a managing director for CRA, Inc., a management consultancy specializing in solving business problems whose cause or solution is communications. He has worked extensively as a trusted advisor and leadership communication coach with partners at McKinsey & Co., the world’s leading strategic consulting firm. He has also consulted with senior and emerging leaders in organizations like Kaiser Permanente, Carlson Companies, McDonald’s, Merrill Lynch and Watson Wyatt, crafting a deliberate and outcome-based approach to communicating to key constituents and stakeholders, building leadership communication capability, advancing strategic alignment and communicating corporate change. Barry started consulting after extensive corporate communication experience working with senior executives on strategic leadership communication at T. Rowe Price, Pizza Hut, Verizon, and HP. He has recently published articles on organizational accountability, communicating compliance, and changing corporate culture in the journals Strategy and Leadership, Organizational Dynamics, and Strategic Communication Management.
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2 Responses to Are CEOs in Touch with Reality? Uh…. Not Really.

  1. Kathy says:

    How true! Very well written too. I think oftentimes the problem is the layer below the CEO. In defense of the leadership team, the business strategy is often not well communicated, defined and measured. So they are left to interpret for themselves, achieve “some” notable results and keep their jobs.

    Then, too, there’s the problem of not adequately defining job descriptions and hiring people based on core values aligned with the job. The statistics around hiring the wrong person and how they change the job to fit their core values within a couple of weeks after they are hired is staggering! If there is a low level of accountability for results, what’s happening, or not, on the frontline often goes unnoticed for long periods of time.

    In my experience, employees want and need strategic goals, the right people doing excellent work everyday and a vehicle for communicating and rewarding results throughout the enterprise. Those factors do not exist often enough and we are left with unmotivated employees doing just enough to get paid.

    Thank you for writing about a very important issue! I look forward to your suggestions

  2. Jim says:

    Barry good content the conversations is right on!

    I would ask a different questions, “how many CEO went through the show that we never see becaause thei culture promotes the right values”. I’d love to watch just one!

    Jim

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