2023 has not been a quiet year for senior executives in the corporate world.
In the unfamiliar workplace of the post-pandemic, economic uncertainty and the environment of sudden changes in shareholders and work priorities, business leaders made unprecedented risky decisions.
“We’ve seen some leaders struggling to move forward with their business models in a new era of higher interest rates and greater demands on employees,” says Christopher Kayes, professor of management at George University’s School of Business Administration. Washington, in the capital of the United States.
“Many are operating according to the same playbook from the pre-pandemic erawhen workers were more conformist and had less influence,” he points out.
Although there have been many successes, many CEOs faltered and as a result, in several cases, have had to leave their positions in record numbers on their own initiative or at the request of the boards of directors.
Among these, here are five missteps that stood out as cautionary lessons of modern management.
Grindr’s inflexible policies
Bosses and employees have been having issues over return-to-workplace policies for years; In 2023, many bosses decided to assert their power.
While many employers and employees found a middle path around hybrid arrangements, in August, the CEO of the app Grindr dating site George Arison issued a sudden, uncompromising return-to-the-office ultimatum to his workers: come to the office twice a week or receive your severance pay in October.
While that policy worked for some who already lived near Grindr hubs in cities like New York, Chicago, Los Angeles, San Francisco and Washington DC, it also meant that dozens of remotely hired employees would have to quickly arrange to move or lose their works.
Kayes says Grindr management failed to recognize the profound change his order would have on its own workforce:
“There has long been a mistaken belief that being a boss simply means issuing edicts or demands and that other people will follow them. That’s certainly no longer the case: when you have to make big policy changes that affect the lives of employees, you need to consult them first. Grindr didn’t do that.”
Larry Robertson, a Sydney-based author and leadership coach, agrees that Grindr’s directors failed in their duty to communicate their reasoning to employees. The lack of notice, combined with an inflexible deadline, also led employees to make important decisions suddenly and defensively.
The result was that nearly half of Grindr employees rejected the order and the app suffered a backlash in the media. “The reality is that if you don’t have your employees on your side, then you don’t have a thriving business.”says Robertson and adds:
“With such a huge loss of talent and a tarnished public image, it is difficult to see how it can continue to be the same organization going forward.”
Alienating clients on Reddit
As the unstable economy led companies to worry about their profits, many companies looked for alternative sources of income to consolidate their balance sheets.
In April, when the site Web Reddit was preparing to launch a public offering of its shares, announcing that it would begin charging for access to its API (application programming interface), the infrastructure that allows the creation of apps from third parties regarding the data of the app major.
The API is critical for users to participate and moderate content in the subreddit community.
In a June post on Reddit, CEO Steve Huffman also announced that the social media platform would impose limits on data access in July, leaving the developers of the apps of third parties desperately searching how to implement changes to maintain their software working within the Reddit infrastructure.
“Reddit needs to be a self-sustaining business, and to do that, it can no longer subsidize commercial entities that require large-scale data usage,” Huffman wrote.
While that would have been a good idea for long-term revenue, it cost it in terms of its relationship with its consumers. The apps popular sites closed as a result, the Reddit community protested, and subreddit moderators imposed bans.
Kayes believes that while Huffman’s decision made financial sense, it alienated some in its most loyal user base, perhaps permanently.
“Free platforms like Reddit have to take bold entrepreneurial actions if they want to generate funds and attract investors. However, they should include their customers’ voice in how to progress. The problem here was due to the implementation and how it was communicated”.
Robertson believes Huffman’s explanation should have gone further. “If you are going to make a major change to a service for consumers, especially one that is very popular, you need to communicate how it will benefit them in the long term. So it’s not only about defending yourself with a decision about your net balance, but also about explaining to the customer how they will receive even better service in the future.”
Underestimating employee power at GM
In 2023, collective organizing reached its highest point since 2019, which resulted in a wave of high-profile strikes.
In October, General Motors (GM) – led by its CEO, Mary Barra – became the first of the “Big Three” US auto companies to negotiate an agreement with the United Auto Workers (UAW). , for its acronym in English), after six weeks of an extensive strike.
Then, The company had already suffered losses of more than US$1 billion. The agreement, interpreted as a major victory for workers, helped stop the bleeding at GM as employees returned to work.
Despite the fact that workers and management managed to lift the strike, Robertson says Barra’s initial inability to realize the demands and power of the union caused a huge loss of income as the strike continued. That’s even worse if we consider that Barra had been with the company his entire career.
“Often, CEOs of large corporations are hired hands, paid large salaries to move from one company to another. But Barra really grew up within the companyI would have understood the sense of loyalty, belonging and community within the workers,” he explains.
Instead, Robertson believes Barra did not understand the UAW’s determination.
“They were underestimated: workers actually have more power now than in the past. A CEO of a major corporation that is unionized should position their leadership from the beginning, listen to them, and understand what fundamentally motivates them. It is possible to find common ground, that everyone is working together for the benefit of the organization, helping to create relationships, rather than being antagonistic.
Dramatic cuts to Warner Bros. Discovery
Sometimes companies bring in CEOs to shake up the status quo. When David Zaslav handled the 2022 merger of Warner Bros. with its smaller cable company, Discovery, his tactics worried many industry insiders.
Tasked with making money amid more than $55 billion in debt, Zaslav began ordering cuts across the studio, including the cancellation of films already shot, and massive layoffs that lasted until 2023.
In June, it announced that Warner Bros. Discovery would eliminate the Turner Classic Movies channel, hugely popular with moviegoers. The community was so disturbed that legendary filmmakers such as Steven Spielberg, Martin Scorsese and Paul Thomas Anderson held a summit meeting with Zaslav.
Kayes suggests that Zaslav’s business plan was naive: For it to be successful, it would have had to make cuts in an industry famed for superstar talent, blockbuster productions, and emotionally engaged consumers and employees.
“That tactic might work in the cable industry where there is less star power and influence, but Hollywood is different,” he says. “Here, it seemed like she was taking on everyone.”
Low public estimation of Zaslav’s leadership may also have instigated the Writers Guild of America (WGA) and Screen Actors Guild (SAG) strikes that paralyzed the industry for much of the year, Kayes says.
“In the end, Zaslav was pitted against film directors, some of the most powerful, influential and popular people in the world.. As a result, he became the bad guy in the movie.”
A hostile takeover at X
Since the closing of the Twitter purchase deal in 2022, Elon Musk’s acquisition has been the subject of many dubious business decisions.
During 2023, the billionaire founder of Tesla and SpaceX rebranded the social media platform as “X,” laid off nearly 80% of the staff and lost about $75 million in advertising revenue after he endorsed a conspiracy theory. anti-Semitic at the end of November.
Robertson believes that Musk’s unconventional leadership has failed at a company where he had already established a following and a unique work culture..
“At SpaceX and Tesla, the companies he founded, he was able to create from the ground up and build a community of loyal followers with his space goals and electric vehicles,” he says.
“But Twitter was an organization that had its own values, with employees accustomed to a different style of leadership,” he adds.
Kayes describes Musk’s decisions as “erratic.”
These included attacking brands that had stopped advertising on X, and removing link headlines from articles that were published on the platform.
“People may not mind seeing bosses’ unconventional behavior when it makes them look unique and visionary, but once it enters emotional and unpredictable territory, completely untethered from conventional business norms, it becomes unsettling. ”.
Kayes adds that X still has many problems heading into 2024.
“There is still ambiguity about who the current bosses are. Its new CEO (Linda Yaccarino) was named in June, but it appears that Musk is the one pulling the strings and issuing the public statements. That has caused broader concerns, a monthly reduction in active users and a drop in advertising revenue by more than half.”
The lessons to take with you in 2024
As the business world evolves, so does the role of a leader. Once it might have been expected to do little to keep the balance sheet going, executives now face increased demands from all types of stakeholders, while workplace conditions and culture continue to change.
“It’s harder to be a leader now” says John Clifton, CEO of the global analysis and advisory firm Gallup, based in Washington DC.
“This period coming out of the pandemic has in some ways been more difficult than 2020 itself. From inflation skyrocketing out of control, hybrid work issues and a workforce that feels more isolated than ever. “It is an incredibly challenging time for executives, for sure.”
However, the corporate mistakes of 2023 could provide guidance, if only what not to do.
“Leaders serve an organization, and that includes employees,” Robertson says.
“The world has changed so much, but many of the leadership tactics have not. A lot of it is about communication, listening and having a purposeful conversation so that people feel included, respected and heard. Otherwise, resentment builds up and trust is lost.”
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