Human Capital Briefs

How to Break into Your CEO’s Inner Circle

March 12, 2015

There is a widely held belief that strategic decisions are made collectively by an organization’s executive team, the senior executives who report directly to the CEO. In many organizations, though, nothing could be further from the truth. Decision-making power resides with a much smaller group, who form what you might call the CEO’s inner cabinet. Members of this elite club wield a disproportionate amount of influence, which is why most executives want to join.

But how does one become a member of the CEO’s inner cabinet? What traits must one possess? Ask CEOs and many hesitate to even admit they have an inner cabinet lest it demotivate those who aren’t members or, worse, have them clamoring to be admitted. Other CEOs simply respond that their closest confidants need to be “team players,” which is vague and even misleading.

To help executives get a better understanding of what they need to do in order to become a member of the CEO’s top team, I asked the CEOs I have worked with to name the “best” executives they’ve led — by definition, therefore, members of their inner cabinet — and to describe what set them apart. Five traits came up time and again.

Insiders make their numbers

This is often the first thing CEOs mentioned. It is shorthand for “they achieve the objectives I set for them” and the dogged determination they demonstrate in doing so.

But do the very best always make their numbers? No, the CEOs admitted, but they don’t waste time making excuses when they don’t. In a word, they feel accountable. This trait was wonderfully illustrated by a senior vice president in a telecoms company who recounted how a regulatory ruling had just wiped several millions dollars from his bottom line. From the conversation that ensued it was clear that pleading with his CEO to readjust his year-end earnings target wasn’t an option. His only thought was how to make up the shortfall.

The dogged determination that the best executives exhibit when trying to make their numbers sometimes leads them to jostle with peers, something the CEOs I spoke to found quite acceptable, despite their often professed preference for “team players”.  In fact, the last thing a CEO wants is for an executive to surrender resources and capital to a colleague in the interest of the team. That decision is not for executives to take — it is the CEO’s. In such circumstances, the CEO feels best served by executives who fight hard to make the case that their units deserve the available capital and resources.

Insiders don’t spring surprises

If bad news is about to hit, CEOs want to hear it directly from the executive responsible, and certainly not from a board member or the media. This places executives between a rock and a hard place. Tell the CEO about the bad news before it materializes and you run the risk of appearing incompetent or unsure of yourself — not traits CEO admire. Just as bad, you invite the CEO to poke his or her nose in your business.

Seasoned executives learn when to reach out to their CEOs and when to hold back, which inevitably means they aren’t always totally transparent. CEOs tolerate this because they were once in the same shoes and in any event they know that they have little choice, given that they can’t know everything that’s going on in the company.

That said, not being totally transparent is one thing, but being evasive is quite another. Though CEOs may tolerate that executives keep information from them at times, they expect straightforward answers when they ask straightforward questions. One CEO told me about a direct report who had an impeccable track record but whose monthly reporting was never clear. This led the CEO to ask questions and demand more clarity. The situation never improved and, despite good results, the executive was dismissed for fear that, one day, his lack of clarity might hide a nasty surprise.

Insiders are loyal to the boss

It’s a particularly sensitive point for CEOs in an era in which their effectiveness is being scrutinized more than ever by corporate boards. For this reason, executives who wish to appear loyal should be wary of cozying up to board members. As one CEO put it: “Too much exposure to the board leads to radiation!” CEOs are also wary of executives who form coalitions with peers. One CEO told me she was considering firing her CFO because he consistently ran his monthly financial report by the Operations VP before showing it to her and, as she realized, was letting the Operations VP unduly influence when revenues and expenses were recognized.

Insiders tolerate ambiguity and uncertainty

This matters for two reasons. First, a CEO’s job involves striking a balance between a wide set of seemingly contradictory interests. They must plan for the long-term while minding the short-term, grow the top line yet ensure the bottom line stays healthy, and minimize risks while making risky bets. CEOs want executives who tolerate the ambiguity involved in this juggling act. As one put it: “When I hear an executive complain that I’m sending contradictory messages when I say we need to cut costs and spend to innovate, that tells me something about their capacity to move to the next level.”

Second, CEOs operating in uncertain environments need to have a lot of “what if” discussions with their executives. Those with a low tolerance for ambiguity and uncertainty invariably react by emphasizing the negative consequences of a given scenario, especially on their unit. It is at times like these that executives who want to enter the CEO’s inner cabinet must be able to put their organizational leadership hat on and leave their unit leadership hat at the door. In my experience, a low intolerance for ambiguity and uncertainty derails more executive careers than a lack of technical competence.

Insiders are good-humored

Many CEOs mentioned “a good mood” as a trait they saw in their very best executives.  I sought clarification and discovered that by “a good mood” they did not mean they wanted “Yes” men or women. CEOs want to be challenged but smart executives pick their battles and don’t constantly raise objections. And they are often, although not always, charming enough to present the unpleasant in a pleasant manner.

A good mood also seemed to be code for not bringing disputes with peers to the CEO for resolution. Top executives resolve them on their own. Some are even adept at helping to resolve disputes between their colleagues so they don’t find their way to the CEO’s office. Thus, a good mood appears in some cases to be synonymous with strong mediation skills.

The five traits that emerged from my CEO interviews were found in both men and women, and in executives with P&L responsibilities and those with functional responsibilities. They are not the traits typically found in leadership textbooks, but then again, the majority of leadership textbooks aren’t written by CEOs.  They might not even be the five traits the CEO in your own organization most covets. But unless and until your CEO signals what she actually wants from you, getting better at these behaviors won’t be a bad start to winning a place at the top table.

 

This blog first appeared on Harvard Business Review on 01/12/2015.

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