Over the past few months, some of the world’s biggest companies’ CEOs have reasserted themselves in ways they haven’t in the past.
Facebook’s Mark Zuckerberg has “jumped into action steering Facebook (FB) into a high-profile campaign,” the Wall Street Journal recently wrote after consolidating power on Facebook’s board last December.
Bob Iger, the longtime CEO of Disney (DIS), retired from top management in February, postponing something that he had planned to do for many years. He stayed on as the company’s chair, overseeing his successor Bob Chapek. But after a few weeks, as the New York Times reported, Iger has “smoothly reasserted control.”
The trend was solidified when Amazon CEO Jeff Bezos “took back the wheel” at the company, putting a pause on rubbing elbows in Paris with French president Emmanuel Macron and Diane von Furstenberg to go back to day-to-day operations, personally managing the company’s responses to the COVID crisis, the surge in online shopping, and public safety issues.
Not everyone is opting for more control, however. AT&T’s (T) longtime CEO Randall Stephenson announced his retirement on April 24.
CEOs, especially at mega-caps like Amazon, Disney, and Facebook, often delegate much of their tasks to their direct reports, teams, chiefs of staff, much like a government executive. But when things get tough, executives often retrieve the control they’ve ceded and take matters into their own hands.
Leading in crisis
The most common reason for this phenomenon, according to Mary-Hunter McDonnell, a professor in management at the Wharton School at the University of Pennsylvania, is because people – employees, shareholders, customers – look to decisive and rock-solid leadership during periods of uncertainty, chaos, and fear.
“Even unpopular presidents will see this bump in support and polling,” she said. “I think the same is true in a corporate setting. A CEO, if they’ve taken a step back, needs to be front-stage to rally around.”
Though companies are often governed by committee, executive leadership is key, and people want to believe there’s one person protecting the company and taking it forward.
“Given the extent of the disruption to people’s lives that this pandemic is introducing, everyone in every organization is looking to their leader for what to do next,” said McDonnell. “I know we’re doing it at the University of Pennsylvania and everyone is waiting to hear what they’re supposed to do.“
It’s also a question of morale. As the crisis has raged, over 143 CEOs cut executive pay, with CEOs like Delta’s Ed Bastian leading the way trying to stave off layoffs and lobbying the government for assistance. Employees appreciate when management fights for their benefit.
Morale, McDonnell said, cannot be delegated, so when it’s needed, the CEO’s job is clear-cut.
“When facing stressful events with uncertainty in stressful situations — tender offers, hostile takeovers, changes in control — people are worried about losing jobs, and a CEO's job in those moments is to keep morale high,” she said.
The coronavirus is an exaggerated example.
More than morale
It’s not just a matter people needing a leader in a psychological sense. McDonnell said it’s just as much a matter of efficiency. During crises, the usual operation channels are rattled, turning expected events and processes chaotic.
“It’s often necessary for the CEO to step forward because all the communication channels are disrupted,” McDonnell said. “When you have a decentralized government structure, it’s just too chaotic.”
There certainly can be a Machiavellian aspect to it. For a CEO in the midst of a power struggle, a disruptive event favors having the incumbent and consistency. For some founder-type CEOs, a feeling that the company needs their vision may provide the motivation.
“You see CEOs that want to increase their power using political opportunities to do that,” said McDonnell. “This is certainly a political opportunity to mobilize your power because all firms’ operation channels are disrupted.”
With everything up in the air, many of the decisions that CEOs had previously delegated need to be reconfigured — a process that strongly favors incumbent, centralized leadership.
“I think CEOs can delegate a lot of things that can be routinized — contracts, shipping, manufacturing — but the problem is that the pandemic has disrupted all of those things,” said McDonnell. “Someone needs to make a decision, and since so many different appendages of firms have been upended simultaneously, you need to make sure that the firm is coherently responding.”
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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