Business and finance journalist, Matt Packer discusses key news stories with the Institute of Leadership & Management (ILM) head of research, policy & standards, Kate Cooper.
Building and maintaining good working relationships between co-workers, managers and employees is vital to any business, no matter the size.
But finding the right balance between realistic expectations and relying too heavily on these relationships can be difficult to navigate.
As a manager, having the right team around you can hugely affect your productivity, both as a team and an individual, as demonstrated by recent research conducted at Harvard Business School into how CEOs use their time.
Over 12 years, the research team tracked some 60,000 working hours performed by 25 CEOs of publicly listed companies to see how they allocated their personal presence across their organisations’ various constituencies.
One of the most significant findings was that CEOs place significant weight in the assistance of their direct reports: often highly talented leadership figures themselves, who help CEOs to decant their messages throughout organisational levels and departments. But the relationships can falter if the bond of trust breaks down, according to the researchers.
“We found that it’s critical for each member of the leadership team to have the capabilities to excel and earn the CEO’s full trust and support,” they wrote in Harvard Business Review. “Any weaknesses in this group significantly reduce the CEO’s effectiveness, because dealing with work that reports should have handled, and cleaning up after them, eats up valuable time.”
In fact, they explained that the number one regret among newly appointed CEOs was not setting high-enough standards in selecting direct reports.
“Many CEOs told us this was because they focused too much on the present and not enough on the future when they first stepped into the role. Direct reports who could manage the status quo were often not the ones who could help the CEO take the company to a new level.”
Finding the balance
Given the intrinsic value of close working between CEOs and direct reports, how can each side of the bargain ensure the relationship is working?
Kate Cooper says: “The most important thing to remember with regards to this research is that you can only be good as a leader if you surround yourself with good people, but finding the right people is a challenge for any leader – particularly CEOs. The findings also reinforce or restate a recurring theme that crops up in our own research, which is the importance of trust. At that level, you are appointing people who could potentially be your successors.
“However, if you’re new to an organisation, it’s very difficult to look ahead and say, ‘This is what I need now, but actually I’m not going to go for that – I’m going to go for what I think I’ll need in the future.’ For the majority of CEOs, that’s really a leap too far.”
Cooper notes: “in the end, it’s about developing people. Get the person who’s right for the organisation’s present pressures – then help them grow and develop into the person who could respond to, and play a key role in surmounting, future challenges. That will enable you to build and nurture that all-important trusting relationship with your direct reports. And along the way, be mindful of the need for effective succession planning.”
CEOs are often in put in difficult positions as they navigate how to best manage their direct reports while steering the company in the best direction for future growth. Knowing you can trust your staff is key but developing personal relationships can be dangerous.
One CEO who was recently nudged out of his position for becoming too closely involved with a colleague is CEO Brian Krzanich, formerly of Intel.
Under his watch, Intel captured some 40% of the $260 billion date-centre chips market – and that is just one part of the firm’s business.
Despite the romantic relationship ending some time ago, the firm has a strict non-fraternisation policy that applies to all managers.
In an official statement, the chipmaker said: “Intel was recently informed that Mr Krzanich had a past consensual relationship with an Intel employee. An ongoing investigation by internal and external counsel has confirmed a violation of Intel’s non-fraternisation policy, which applies to all managers. Given the expectation that all employees will respect Intel’s values and adhere to the company’s code of conduct, the board has accepted Mr Krzanich’s resignation.”
Intel’s policy of banning leadership figures from becoming romantically linked with staff has in this case triggered the hasty assembly of an entirely new leadership team, with CFO Bob Swan – who held the same role at eBay for nine years up to 2016 – appointed as interim CEO.
The company’s statement added, “The board believes strongly in Intel’s strategy and we are confident in Bob Swan’s ability to lead the company as we conduct a robust search for our next CEO. Bob has been instrumental to the development and execution of Intel’s strategy, and we know the company will continue to smoothly execute. We appreciate Brian’s many contributions to Intel.”
Regardless of the “robust succession-planning process” that has been put in place, all of this organisational turbulence has flowed from a policy designed to safeguard against one of the world’s most common occurrences: relationships between co-workers. Does this demonstrate that non-fraternisation policies are inherently unreasonable?
“We actually did some research on this subject three years ago called Love in the Office,” says Cooper. “The majority of people we surveyed didn’t have a problem with relationships at work. Are you more loyal to someone with whom you’re romantically involved than you are to someone with whom you have a long and close friendship? The kind of concerns that some firms have over how romantic loyalties could skew perspectives are unrealistic.”
Cooper points out: “A 2016 survey of 1,600 adults by the TUC found that one in five people who are married or in a civil partnership met their partners at work. It also found that a third of people have, at some point, had relationships with colleagues. TUC general secretary Frances O’Grady said: ‘It’s hardly surprising that relationships start around the water cooler – after all, we work longer hours than anyone else in Europe.’ Clearly, you’re never going to prevent this with non-fraternisation policies. All you’re going to do is make people more secretive about their relationships – and that could be even more damaging than the relationships themselves.”
“If you are open and transparent,” Cooper advises, “then arrangements and contingencies can be put in place to safeguard against conflicts of interest. Really, it’s all about the professionalism of those involved. I know people who have been in romantic relationships while they have worked together, and their relationships haven’t undermined their professionalism in any way. That said, if there was a policy line in place that Krzanich overstepped, then he did the right thing by resigning. After all, it was part of the company’s internal rules and, as CEO – particularly one with a strong track record – it was up to him to show an example.”
Cooper adds: “In terms of the potential struggle that Intel faces with replacing him, a well-managed succession policy should ensure that no one is irreplaceable, and that options are always on the table for emergencies like this. The alternative is simply too risky.”
For more on these topics, listen to Episode 4 of the ILM podcast in partnership with LID Radio:
About the authors
Matt Packer is a business and finance journalist who provides expert comment for organisations such as CPA Global, Inemmo Leadership Development Consultancy, The Institute of Leadership & Management and the Chartered Management Institute.
Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management (ILM). She has appeared on BBC Television, BBC Radio 4, has a regular column in Dialogue magazine, is a key note speaker at conferences and provides expert commentary on a range of topics arising from the Institute’s research agenda.