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The Khorus Blog

How to Not Get Fired As CEO

Joel Trammell

Posted by Joel Trammell
June 9, 2017

CEOs fail at an alarming rate. Dan Ciampa has found that two out of five new CEOs fail in the first 18 months, for example. And Sequoia Capital has said that 45 percent of founding CEOs in their investments are fired in 18 months.

Why all the turnover? What's going wrong?

Of course there are many factors—market downturns, lack of self-awareness, ethics crises, plain old incompetence. But if we boil it down to essentials, I believe that the #1 reason CEOs get fired is because they have delivered unpredictable performance.

They made projections that were wrong. They didn’t know until the last minute that a key goal wouldn’t be met. They ended up in a board meeting with hat in hand, explaining a big last-minute miss. And that was the end of the board's confidence in them. The writing is now on the wall.

So what's the best way to prevent being fired as CEO? Deliver predictable, reliable performance.

Interestingly, research shows that boards definitely use forecast accuracy as a marker of CEO ability, and that even positive errors decrease confidence. This study in The Accounting Review found that:

The probability of CEO turnover is positively related to the magnitude of absolute forecast errors when firm performance is poor and that this positive relation holds for both positive and negative forecast errors.

Here are my biggest two tips on being more predictable as CEO, even if you haven't been gifted with the ability to see the future:

  1. Set realistic, achievable goals. Certainly don’t sandbag, but don’t get seduced by the idea of “stretch goals” to the point that you end up looking unreliable. Choose quarterly goals that you are about 80% confident you can deliver on.
  2. Rely on the forecasts of your whole team. To be predictable as CEO, you need to stay in touch with your whole organization and actively solicit their insight on whether goals will be met. I don’t just mean your exec team. Ask employees at all levels for their honest prediction of whether key strategic goals will be met. If it’s less than 80%, what’s going on? Is there something that can be done to increase likelihood? If not, at least you can alert the board early—and look much more reliable as CEO.

I urge every CEO to set up a system that helps him/her keep performance predictable so they can retain the confidence of the board. If your system is good, you'll show up to board meeting as the hero—not as the bearer of unexpected bad news.

Khorus was created precisely to help CEOs do that, with very little hassle. Our customer CEOs get weekly predictions from the whole workforce so they know exactly where the company’s strategic goals stand and which ones might be falling off track. That’s the type of insight boards want to see in a CEO, and the kind that prevents them from losing trust.

If you'd like to see how the system works—and how it's helping Khorus customers achieve 80% of their goals on average—get in touch with us to schedule a demo.

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Joel Trammell

Joel Trammell

Joel Trammell is the founder and chairman of Khorus Software. He currently serves as CEO of Black Box Network Services. His book, The CEO Tightrope, is a guide to the chief-executive role.

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