Hello folks,

I would love to hear your thoughts regarding the following:

We all know there are times that our loyalty to our staff and those we have worked with for a long time can blind our judgment.  At the extreme, this can have a devastating impact on our leadership capacity and how we run our business.

In the last few months I have encountered a few complicated situations where the CEO’s of companies are making wrong and costly decisions based on the flawed input of certain executives. As an advisor in these situations, my role is to uncover what the consequences of such decisions may be. In three instances, due to the underperformance of certain executives, the CEO has made the wrong decisions, the board has been misinformed and worse, there is a pattern here. The CEO continues to get the wrong input from their staff and potentially headed on a very dangerous path. Total blind trust and loyalty when the information is flawed (I don’t imply it is intentional, but in these cases, it was that the executives simply were not paying attention and making big mistakes!)

In each of these situations, the CEO has a multi-decade and strong relationship with the executives in question. Loyalty trumps all! It is not only a challenge bringing errors to their attention, but hugely difficult to convince the CEO’s that their loyalty to these individuals are blinding their judgment. The CEO then makes the wrong and very costly decisions, which effectively jeopardizes the company’s future.

One of the immediate consequences of blind loyalty is the inability of a CEO to ‘ever’ consider and question the information presented to them. The saying goes like this: “ I trust ‘x’ implicitly. Whatever he/she says, I have no reason to doubt it…”. When a CEO stops thinking and evaluating the information presented to them, that is when the company is in trouble. Also, over time the credibility of the CEO with the Board of Director’s starts eroding as the board begins to question the judgment of the CEO and how he/she makes decisions.

Here is the delicate balance: CEO’s need to have highly trusted and strong bonds with their senior execs. That is a given. But when this loyalty overshadows the better judgment of the CEO and stops the CEO from personally evaluating the information, that is when things get ugly.

Secondly, remember the expression ‘the buck stops here!”. Ultimately, the CEO needs to make the final call so that he/she evaluate the decisions.

And thirdly, it is still possible to be very loyal, yet have a relationships where the CEO can call people to the fire, and that is perfectly acceptable. When a CEO does his/her job and questions information, it is good judgement and should be applauded. If the staff view this as a question of ‘loyalty’ that is where the core of the problem lies. Perhaps these are the staff that one ought not be loyal to?

Loyalty builds strong and lasting relationships and companies. Blind loyalty, as the word implies, causes serious problems, which become systemic and unless corrected, over time are a huge challenge to resolve. Not only does the CEO become ‘blind’ to questioning the information they receive, but the execs become comfortable with their input never being questioned. Double negative when this happens.

When it comes to financials, IF a CEO has blind loyalty to their CFO, and on face value accepts everything the CFO says and never questions the validity or consequences, the organization is put in the way of great harm. Currently, I am in the middle of a few of these situations and we are having to ‘correct’ previous assumptions. Not a pretty sight. Moreover, we could have avoided these situations IF the CEO were not so loyal as to not question the consequences of the projections.

Another situation is where the CEO has placed the entire strategy of the company based on the input of only one senior executive. They are on the wrong path and will be very costly to the company.

So, if we replace ‘blind loyalty’ with ‘wise loyalty’ and not assume that loyalty-based decision making is prudent, we can avoid many of the chronic problems. The CEO, as the name implies, will analyze and think carefully through the financials, and company strategies will not be based on only one person’s input, rather the CEO will take input from all key individuals.

So, what is the merit of blind loyalty? Would love to know what you think about this.