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Managing Execs Who Didn't Get the Promotion

 
3/22/2004
Three VPs are up for the CEO's job. One gets it. The other two aren't happy. How can your organization work this out?

QuestionThe managing director heads an organization with three vice presidents under him. For the last two years the company has been run this way and has been successful in turning around.

With reorganization on the agenda, it is proposed that one of the vice presidents be appointed as the CEO. This has led to resentment among the other team members. The fallout has been demotivation horizontally and vertically. What could be a "win-win" solution for this issue?

AnswerEgo, ego—who's got the ego? Power, control, ego, and pride seem to account for the lion's share of business behavior. Emotions at the top are propagated throughout the ranks; problems below may simply reflect problems at the top. So let's start at the top in fixing the situation.

It sounds like what you really want is a healthy company. A healthy company needs a healthy executive team, and we all know what that looks like: The CEO has the respect and cooperation of the team. The team works well together, with each member bringing their top strengths and competencies to their jobs.

You need to align your executives behind a common vision of what a healthy executive team is. Gather your quarrelsome veeps for a heart-to-heart behind closed doors. They need to clear the air and then align behind a team they can all fully support.

Make sure everyone understands the common goal
Your executives must agree on the goal that's really before them: creating a leadership structure that lets the turnaround continue and flourish. They'll be tempted to include a goal like, "reach an accommodation where we three get what we want." While that's win-win for the individuals involved, it neglects the fourth player: the greater life form known as The Company. The company's health affects everyone else working there. Keeping the company well fed and happy is more important than the personal whims of the vice presidents.

You need to align your executives behind a common vision of what a healthy executive team is.

In the book Good to Great (HarperCollins, 2001), Jim Collins's research shows that business leaders build the greatest companies when they put company interests ahead of personal interests. If each VP defines winning as "I get to be CEO," then win-win is impossible. But since your VPs are surely great CEO material, they all know that a healthy company is the goal, not personal status and power. So make sure they abandon the goal of win-win and instead shoot for healthy leadership structure.

Your executives should keep one thing in mind: If the CEO slot hasn't actually been awarded yet, their behavior now is part of their audition. If they're tanking company morale because it looks like they won't get the job, they're demonstrating their unfitness for the position.

Introduce the brutal truth
The brutal truth, part one: When three people vie for the top spot, two won't get it. Period.

The brutal truth, part two: The execs must work as a team and support each other. If they won't, some of them will have to go—and it won't be the CEO. All three were happy being VPs when they joined; it's their elevation of one to CEO that's causing the problem. The passed-over execs need to find a way to support the new corporate structure or leave. There's no place in an executive suite for members who won't do their job. (Oh, yes… If they leave, don't give them severance! By punting on the hard work of forging a strong team, they're not earning their salary, much less anything more. You don't want to send the message that divisiveness is a great way to collect a golden parachute.)

If they decide they want to stay and forge a strong team, it's time to help them redesign their attitude.

Clear the air of emotional crud
Your executives may spend their time posturing rather than facing the tough emotions that underlie the situation. They need to confront and resolve the real emotional issues in order for the team to function.

Sometimes, just the chance to voice disappointment is enough. Emotions are often most troublesome when they don't get to run their course. We may consider some emotions (discouragement, worthlessness) so mortifying that we never learn to acknowledge and move past them. But blocking an emotion before listening to it rarely lets us move on gracefully.

Does being passed over for CEO mean you've hit your competence limit?

Ask your execs to use their feelings to get to their underlying motivations. This can get into sensitive stuff, so they can do this privately and just bring the result to the meeting. Have them recognize and acknowledge their feelings about the situation. Then have them ask, "What is this emotion trying to tell me?" They can follow this thread to find the real issue underlying the bad morale. That issue can then be brought to the group for discussion.

Emotional rescue
This section is based on my experience with emotions, not on any therapeutic or counseling models. I'm assuming your morale problems come from "everyday" emotional reactions. Severe emotional issues may require therapy. Here are some examples on how I might respond to these emotions.

I feel jealous. Jealousy means someone else has something that you want. Wallow in it for a few minutes, and then realize that someone else's good fortune isn't your misfortune. Behind jealousy is "I'm not getting what I deserve." Sadly, that might be true. Welcome to reality—life isn't fair. Maybe you deserved the CEO spot, maybe not. Either way, jealousy isn't healthy for you or the team. You were happy as a VP before. Be happy now. If you can't, consider therapy or coaching. The issue for the group: how to make sure that each person feels he or she is getting the rewards he or she deserves.

I feel betrayed. Betrayal means someone didn't fulfill a promise. Who promised what? Be precise. If the board promised you'd be CEO and they didn't follow through, you may have a legitimate complaint. If a board member mentioned you were in the running, you may have read a promise into that. Talk through the promise and subsequent events with your alleged betrayer and clear the air. Often, however, betrayal is a neat smokescreen for emotions like discouragement or worthlessness, which may be more awkward to confront.

I feel discouraged/small/worthless. Feeling discouraged means you aren't getting results, and you're internalizing the cause. Does being passed over for CEO mean you've hit your competence limit? Not at all! Promotions are only vaguely related to competence, even in the best of times. We're raised to believe that every little thing that does (or doesn't) happen to us directly reflects our ability as human beings. The real world is more complex and usually a lot more arbitrary. If three equal candidates compete for one job, two must be passed over. It's not about competence; it's about only having one job opening. The issue for the group: how to identify the executives' competencies and meld them into their jobs.

I feel contempt. Contempt comes from believing that someone is incompetent in an area you're super-competent. If you think the new CEO is an incompetent boob, you won't buy in to the direction, strategy, or tactics he or she is setting. It's time for persuasion! The issue for the group: Make sure the strategy reflects the entire team's expertise and buy-in. Spend some time airing doubts, questions, and concerns. Create something that you can believe in. If you can't, though, it's time for separation. An executive's job is to help a company succeed. While the current CEO's plans may not guarantee success, executive friction, in-fighting, and sabotage will virtually guarantee failure.

I feel hopeless. Hopelessness just means you've stopped anticipating future success. So start now! Create a rich image for yourself of how you can make your current position a job that really lets you shine. The issue for the group is how to make that happen.

I feel anger. Anger means you feel threatened. It often comes from fear: fear of survival, of being unworthy, of loss, etc. Dig around for the underlying fear. You can handle some fears on your own. If you feel your survival is threatened, a little financial planning may make it obvious that a $200,000 salary is a tad above the poverty line. Some fears can be brought to the group. If you fear you'll lose respect because you weren't promoted, the issue for the group would be: How can you be sure you are still portrayed and treated respectfully?

If anyone answers "no," it's time to start negotiating graceful exits.

I want more money, status, and control. Who doesn't? If you can't marry into it and didn't get this promotion, stop griping and start building. Complete the turnaround and help grow the business. Growth brings more money, status, and control automatically. If that's not enough, reopen compensation negotiations. If you're only in it for the cash, it's worth rethinking the fit between you and the company. The past few years have given us dozens of examples where executives who care only about the dollars can kill the business faster than any competitor.

Create a team they can align behind
Once level heads have prevailed, everyone has to ask the hard questions: Can I support the new CEO's plans and strategies, and can I commit wholeheartedly to my current position as I do so?

If anyone answers "no," it's time to start negotiating graceful exits. At the end of the day, an executive who can't get behind the company must be traded in for a better model. They'll make decisions for their own best interests, and not for the business's long-term benefit. "It's all about me" behavior can be fine at manager or director levels but, especially during troubled times, it can tear your company apart at the leadership level.

Your situation is a tough one. The vertical morale problems will probably be OK once the top levels get sorted out. But this is a case where it's not about what's rational; it's all about emotion. The top team has to settle its issues and back the CEO to heal any rifts in the company. The CEO has been chosen. Strong emotions are natural, but the solution is to use them to identify issues that can be addressed, and then move on. Whining changes nothing, and certainly doesn't build a healthy company. It's time for the team to buy in or say "bye-bye."

© 2004 by Stever Robbins. All rights reserved in all media.

Stever Robbins is founder and president of LeadershipDecisionworks, Inc., a national consulting firm that helps corporate companies develop far-reaching leadership and organizational strategies to sustain growth and productivity over time. You can find more of his articles at http://LeadershipDecisionworks.com.