Thinking Managers

Within a company the CEO is generally regarded as being all powerful, yet the fact remains that the average tenure of a CEO is less than 2 years.  Against this background, Robert Heller of considers the nature of the power a CEO.

Power and the Manager

Once in a while journalists and writers get hung up on identifying the most powerful woman or women managers.  But what is meant by ‘power’?  It might refer to force of personality, which is expected of chief executives of both sexes.  But forceful personalities might not necessarily have significant power in the usual sense.
The real meaning of corporate power is in the importance of the company, not the individual managers.

Fortune magazine called Carly Fiorina as “the most powerful woman in business” as she was the first female to be appointed CEO of one of the 20 largest companies in the US.  But when you examine Fiorina’s actual performance at Hewlett-Packard, the most significant aspect of her power is its limitations.  Her major initiative was to secure the acquisition of a rival PC maker Compaq (which had just been taken over Digital Equipment).

The founding families were vehemently opposed to the takeover, and a ferocious battle ensued in and out of the boardroom.  Fiorina secured the support of a narrow majority of the shareholders, but it turned out to be a victory gained at too great a cost.  Walter Hewlett, who led the family opposition, might well be proved absolutely right – Compaq was a dubious purchase, and perhaps should not have been contemplated.  But the epic struggle shows that ultimate power is that of ownership – employees, even those with the title of chief executive, do not possess it.

Actually, the power of the CEO has always been conditional, the largest element by far in the complex network of influence and authority in which all managers participate and which instils each of them a measure of individual power.  One of these conditions is that all holders of power must justify their position by their performance, both in results and relationships in the eyes of their superiors and subordinates.  The CEO is not an exception to this rule, and quite right too.
One of the dissenters among the HP directors, Tom Perkins, said: “I probably am too easily bored with board process, and too preoccupied with customers, growth, market share and the bottom line.”  This came as part of a response to a fierce attack on him by Fiorina.  But Perkins, a veteran and very successful Silicon Valley venture capitalist, is spot on.
Power rises towards the top, and becomes greater as it does.  So the way power is exercised must be changed to match.  The ultimate power of the CEO is making others take responsibility for all aspects of the organisation, while establishing a modus operandi that instils the boss with complete confidence that those responsibilities are being handled in the best way possible.

About the author
Robert Heller is one of the world’s best selling authors on business management.