CEOs and diamonds are a lot alike: Most are flawed in some way, all are hardened and formed under crushing pressures and intense heat, and they are judged by degrees of quality. We’ve perfected the art and science of judging a diamond’s quality via the four C’s: carat, cut, color, clarity. I assert that quality CEOs must have three C’s: credibility, competence, and caring. The difference is that, unlike diamonds, there is no leeway with CEOs: They cannot lose even one of these traits and lead effectively. Here’s why.
CEOs who lose credibility can never regain it. When you communicate, do people believe that you are telling them the objective truth? If they do, then you have credibility. To maintain credibility you have to tell the truth 100 percent of the time. Telling the truth 90 percent of the time is not much better than telling the truth 10 percent of the time. It only takes a few instances of delivering non-credible statements to totally lose your credibility. Once you lose your credibility, you cannot lead successfully.
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Many CEOs start out with the best of intentions, planning to shoot straight with everyone in the organization. When things are going well, it’s easy to give everyone the good news about growing revenue and profits, the success of a new initiative, or a new client that could change the trajectory of the company.
But when things turn south, CEOs often are reticent to share the negatives. They cannot face the responsibility of leading people through tough times, or the realization that they may have no control. As a result, they try to pretend that it isn’t happening, hoping that things will improve. When cutbacks and layoffs come after the CEO has claimed that everything is okay, all credibility with employees is lost. Regaining credibility becomes almost impossible in this situation, and a change of leadership may be the only answer.
You can be seen as credible but not competent. People may believe that you are being truthful but also believe that you are wrong, ill informed, or make poor judgments. If people don’t trust your judgment, you will have little influence over their behavior. “Yeah, yeah,” they’ll think as you talk—and then they’ll go right back to doing what they were doing, the way they were doing it. The CEO may be sitting in the captain’s chair, but every time he shouts an order, people will ignore it.
To be seen as competent, CEOs need to show a deep understanding of the company’s business model—how the product is bought and sold—as well as how the product is made or how the service is constructed and delivered. They need to show a willingness to learn and adapt. In addition, they need to prove that they understand the five responsibilities of the CEO job.
People must believe in both the message and the messenger. Having competence but not caring about your people or the organization’s mission will not get you very far. Caring is about showing that the CEO puts the organization above himself. Like credibility, it can take time to build this trust and a moment to destroy it. CEOs violate the trust of the organization by placing their own interests above all others or by showing a lack of commitment to the organization’s goals and vision. At that point, the chief executive cannot credibly ask anyone on the team to commit to or sacrifice for the greater good.
The most common trust killer for CEOs is the belief that they do not have to follow the same rules or be held to the same standards of performance as the rest of the employees. People understand that the CEO’s time is valuable, but some behaviors erode trust immediately. Examples include having a fancy executive office suite while employees are housed in small cubes, exempting yourself from otherwise all-encompassing policy changes, or spending corporate money on something that did not have a justifiable business purpose. CEOs who engage in these behaviors end up with little real influence or power to direct the organization.
I have a few simple rules that I think go a long way toward convincing people that you care first about the company and then about yourself. The first rule is “the troops eat first,” which is an old military saying. Second, you should own the failures as much as or more than the successes. As Doug Laughlin, former soldier turned advertising agency owner, told The Washington Post: “The worst thing you can do is go to the head of the chow line. Let others go first. Be happy to give others the credit. In the final analysis, your people are what will make you a success.”
Shine Bright Like a Diamond
Diamonds can have flaws and still be cherished by their owners. CEOs cannot lose even one of the three C’s, which are the most powerful assets they have to achieve top performance: credibility, competence, and caring. It’s really about authenticity: No matter how great you are as an orator, or how much you look the part, or how smart you are, you won’t be an effective leader if you cannot demonstrate all three C’s.