You hear about CEOs getting fired all the time, but why is it that they get fired? We re going to talk about 8 reasons why CEOs get fired and why it s so common. 1. They mismanage change 2. They don t have a good relationship with their management team 3. They have a poor relationship with the board 4. They lack a key skill set 5. They ve a low opinion of their own employees 6. They re not good with other people 7. They are not good at delegating 8. They make poor decisions
00:00:00.00030 seconds. One time for the underdog. Ignition sequence start. Let me see you put them up. Reach the sky, touch the stars up above. Cause it's one time for the underdog. One time for the underdog.
00:00:17.200I'm Patrick, my debut host of ITIM. And today I want to talk to you about eight reasons why CEOs get fired. You hear a lot of people getting fired. WeWork, Papa John's, many of them. Why is it? We're going to talk about eight reasons why they do.
00:00:28.600So let's get right into it. The first thing I want to look at is the following. There's a study done by LinkedIn. They looked at 12,000 CEOs who have 50 plus employees from 20 different countries to see what they did before they became CEOs. And this is what they gathered. Number one, most common first jobs of these CEOs is they were first consultants. Then the other one is software engineer, then analyst, sales manager, project manager, account manager, manager, founder, associate software developer. These are top 10.
00:00:56.000Then the second one was most common first job functions. What they were doing with that function, their first job before they became CEOs. Number one was biz dev. Going around shaking hands, getting to know people. Very interesting and insightful to know that people who are good with people eventually become CEOs. Number two was sales. Think about it. Number one is biz dev. Number two is sales. Then it's engineering, technical. Then info tech. Then consulting, finance, entrepreneurship, operations, marketing. That's what they had.
00:01:26.000Right before they became CEOs. What did they do before and what percentage of them were directors. Directors of a department. Directors of this before they became CEOs. 72% before becoming a CEO, they were a director. 72% of them went director. Then they became CEOs with the company. And outside of that, this is very interesting, is how many of the CEOs were recruited externally from another company?
00:01:50.000How many of the CEOs were promoted internally? Very, very interesting here. 20% were promoted internally. 80% came from the outside. You know, some people would have thought maybe more came from inside than external, but 80% came from outside. Meaning they hired a headhunter. They hired a corn fairy, a recruiting company.
00:02:08.780We're looking for a company. We're looking for a CEO. Somebody went out there and found them. They spent their $200,000 on the CEO. And then that person came in and only 20% was promoted internally. This is just something to look at on how folks end up becoming CEOs. Having said that, now let's look at why CEOs get fired.
00:02:25.640The first one I want to look at is a study that I saw from CNN where the actual CEOs that were fired. I think it's 73 of them that were fired. What was the leading reason for it? Number one reason was poor business performance. That was 30% of it. Number two was relationship issues with the board. 26%. Number three was a lack of key skill set, which is 22%. And last but not least was alienating the management team, which is 12%. That's tough to do.
00:02:55.640But it's very common because some people don't want to talk to their management team because the management team is typically the one that's most critical of the CEO they're working on. So they'll kind of create a certain distance between them. And then there is no relationship. And then sometimes it's too late and you no longer have influence. We'll get deeper into that. Now here's the next one. This is from Forbes. And this is very insightful because it's the actual board members, 1,087 of them, who decide, I think we've got to fire the CEO.
00:03:22.280How they came to their decision and why they said, I don't think this person's qualified to be a CEO anymore. Very interesting. Look what they said. Five reasons. Number one reason. 31%. Would they mismanage change?
00:03:36.760So we're going through a different season. We're going through change. They mismanage change. They didn't know how to, they either hurt the culture on how it was with the company and then it was a new thing or going into a new thing. They didn't know what new ideas to come up with. But the whole thing is they mismanage change.
00:03:51.820Second one, ignoring customers was 28%. Number three was tolerating low performance. Interesting that 27% just visualize the board. You got seven people sitting there, five people sitting there, nine people sitting there saying, this CEO, I like him. I like her. They seem like a nice guy. They seem like a nice, you know, this is somebody that we feel good about.
00:04:13.500But why are they tolerating low performance? Why are they not pushing their team? The investors, the board is saying, you know, we've got to have somebody that's going to come in here and really be able to drive. That was number three reason. Number four, denying reality.
00:04:26.040Yeah, I don't really think that's what we're going through. They're denying. Listen, if we go like this, we could potentially go out of business the next two years. Yeah, I don't really think it's as bad as people think it is.
00:04:34.560Denying reality is 23%. And the last one is too much talk, not enough action. You look at this, this isn't just somebody saying it without experience. It's 73 CEOs that were fired and it's 1,087 board members that gave feedback on why they decided to vote on firing a CEO makes you think.
00:04:55.000So it prompted me to make a list here on why CEOs get fired. Number one is obvious, you lose the board. Once you lose the board and the board doesn't feel good about you, you know what happens here.
00:05:04.100Number two, is in the middle of a scandal. Let's talk about this because this is what many of you send me messages on, both on YouTube and on Instagram, to say, Pat, can you talk about some of this stuff?
00:05:14.680Let me give you some of the scandals that you've been hearing about. Number one is Papa John's. Racial slur. He said that, boom, he had to step down.
00:05:20.580Number two, Travis Kalanick. Sexism and frat culture. That video came out with him talking to one of his drivers and the driver was recording it.
00:05:28.680They got several million views and then in Uber, they were talking about that there was too much partying and the culture wasn't that fair for men and women, all this stuff.
00:05:37.620Boom, he had to step down. Number three is Tony Hayward, which is a very interesting story.
00:05:41.460Because Tony Hayward was the CEO of British Petroleum, I want to say in 2010, and they had this massive spill.
00:05:51.800They had this massive issue that took place, explosion. It was very problematic. Spill, all this stuff that happened, and they lost 11 employees.
00:06:01.520Eleven employees died, okay? So now, he's going through this whole thing. There is this very epic scene, interview that they do, that you've got to watch.
00:06:10.840It's like six seconds, you've got to watch it, where they're asking him questions after he lost 11 employees.
00:06:16.960The families of the 11 employees are contacting this guy, and here's what Tony Hayward says in an interview.
00:06:22.140He says, look, nobody wants this thing to be done than me.
00:06:25.720Nobody wants it to be done more than me. I want my life back. It's the line of what he said.
00:06:32.980You just lost 11 employees who lost their life. They're never going to get a life.
00:06:37.620He says on an interview, I want my life back. Three months later, he resigned. It was done.
00:06:44.100It's not mismanagement of money or things like that. It's more the humane aspect of you dealing with your people.
00:06:49.800What do you mean you want your life back? 11 people. The way you handled crisis wasn't good. Gone.
00:06:54.040And then Carlos Ghosn, who is the chairman of Nissan, Renault, and I believe Mitsubishi,
00:07:00.300he had a scandal that took place with him with Mitsubishi Company Assets and misleading investors.
00:07:04.620November 2018, I think he got arrested in Japan when his issue was taking place.
00:07:09.240And this was a person that was CEO and chairman of three different companies, not small companies.
00:07:14.660Renault, Nissan, Mitsubishi, and all of a sudden all this stuff came about.
00:07:18.460There's a video you can watch about his wife and kind of study what happened here, but he had to step down.
00:07:22.280And last but not least, the recent one with Adam Neumann.
00:07:24.700Hey, really, WeWork is worth $48 billion.
00:07:27.540And then after a little bit of research they're doing, well, you do sign 15-year leases,
00:07:32.440and you do get it at a discount, and you're kind of selling a little bit upsell.
00:07:36.200But what if those 15-year leases, some people cut their contracts with you because the economy's bad.
00:07:40.820I don't really know if you're worth $48 billion.
00:07:42.660I think you're really only worth $15 billion.
00:07:44.800His net worth dropped from $4.2 for $2.1.
00:07:47.920And then he was using companies' resources for his own personal lifestyle.
00:07:53.520And at the same time, you know, doing a little bit of drugs while at work.