The Wall Street Journal headlined a recent article, “A CEO’s Survival Guide: No Anxiety Signals,” cautioning that “it can be costly when CEO’s stumble in the spotlight.” It points out that when a senior executive is interviewed by the press, “investors listen for hard swallows, changes in voice and tone.”
Case in point: About a year after the board of General Electric Co. brought in Larry Culp to replace John Flannery at the helm of the huge company, Mr. Culp fumbled a task straight out of Executive Leadership 101.
In a 20-minute CNBC interview, the seasoned Mr. Culp clearly intended to reassure investors who have endured what the Journal termed “a rocky ride and myriad surprises” as the company reshaped its operations and shed significant divisions. But then he said: “GE’s struggling power business hasn’t hit bottom, and assets will be sold to raise cash.”
That rattled the market, and GE’s share price plunged as much as 10%, dipping below $8 for the first time since the financial crisis.
“GE’s new chief committed a mistake that can wound almost any CEO, even after years of polishing communications skills during conference calls, town halls or board meetings,” Anett Grant, a Minneapolis- based executive coach, told the Journal.
Overestimating ability
“A lot of CEOs simply overestimate their ability to effectively communicate when they aren’t looking at a script,” she added.
Ms. Grant published research in 2014 showing a gap between perceived ability and actual performance. “The feedback from the team is ‘you’re doing a good job, but the public is trying to figure out ‘what is s/he hiding?’”
Jack Brown, a physician and body-language expert in Henderson, Nev., analyzed Mr. Culp’s TV performance and noted mistakes in the use of nonverbal cues that contradicted the words coming out of his mouth. “He needed to avoid anxious signals, such as a dry throat and focus on giving direct responses.”
Dr. Brown said Mr. Culp exhibited a cluster of hard swallows, gravelly voice and voice tics that raise red flags with an audience. “Any layperson or shareholder would look at this characteristic alone and correctly interpret that this is a nervous man who’s bit off more than he can chew.”
Bill Mayew, an accounting professor at Duke University who analyzes conference calls of bellwether companies, said audiences are on alert when a potential crisis looms or targets are missed. They listen intently to changes in voice pitch and tone. “The listening goes up, and so does the intensity—it heightens the stress,” he noted.
Executive coaching
This is why corporations spend $2 billion a year on executive coaching, Ms. Grant estimates. Advances in technology make the examination of communications patterns more accurate and more widespread!
“The explosion in the research is happening because the power of statistical measures has gone way up,” Mr. Mayew said. Even with all that data, chiefs need to choose their words wisely. Consequences of CEOs’ missteps can prove fatal, or leave a permanent dent in corporate reputation!”
The article, “CEO’s Guide to Prime-Time Survival: No Hard Swallows,” is available to Wall Street Journal subscribers at https://www.wsj.com/articles/the-ceos-guide-to-prime-time-survival-no-hard-swallows-1542431001