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10 ways to fail as a CEO

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The year 2013 has begun, and with it a new year of scrutinizing CEO performance. It’s worth taking one last look at 2012’s poor performers to see what we can learn for this year.

In case you haven’t seen one yet, here’s a compilation of the 2012 lists:

1. The Bloomberg Businessweek Worst CEOs of 2012

Sydney Finkelstein, a professor at Dartmouth College’s Tuck School of Business, has been doing his list for three years now. Brian Dunn, formerly of Best Buy, has the honor of topping his list.

2. Forbes the Worst CEO Screw-ups of 2012

Forbes staff writer Susan Adams borrowed from Finkelstein’s list and also consulted with another business school professor and a consultant. Aubrey McClendon, CEO, Chesapeake Energy, made the top of the list, although it’s not ranked.

3. Herb Greenberg’s Worst CEO of 2012 (CNBC)

The veteran “Worst CEO” writer and market insider Greenberg picked Groupon’s Andrew Mason, who didn’t appear on either of the first two lists.

4. Valuewalk’s Worst CEOs of 2012

Valuewalk says it “used our own proprietary technology to make the final decisions.” Its pick: McClendon.

5. Motley Fool’s Worst CEO of 2012

You gotta love The Fool. The people there used an NCAA basketball-style bracket and had readers vote to come up with their champ: Zynga’s Mark Pincus, who made all of the other lists.

So what can we learn from this rouge’s gallery of CEO failures? How can CEOs avoid ending up on the “Worst CEOs of 2013”?

First and foremost, financial results seem to matter the most, which shouldn’t come as any surprise, especially given three of the lists were created by Wall Street analysts and a plunging stock price is sure to call attention to a company’s CEO.

I suspect there are lots of crummy CEOs out there who fly under the radar with decent financial results in spite of their incompetence or boorish behavior. Unfortunately, many of them actual believe there is a correlation between their actions and the company’s results, which encourages them even more.

The decisions that CEOs make are usually so broad and long-term that the financial results often take years to catch up to them. Just give them a little more time, and they’ll end up on a list at some point.

It’s only once the stock price drops that the outside world starts asking questions and looking under the hood. That’s when we learn about things like:

  • Poor decision making.
  • Hubris and arrogance.
  • Financial scandals — interest rate manipulation, money laundering, undisclosed personal loans, bribery, etc.
  • Inappropriate relationships and affairs.
  • Use of the company jet and employees for personal reasons.
  • Poor public, customer and employee communication.
  • Failure to address lingering operational problems.
  • Comparing yourself to Steve Jobs.
  • Poor talent management.
  • And just plain immature, inappropriate, and outright goofy behavior and antics, which again, you can get away with if you’re insanely successful, but at some point, it’s going to affect the bottom line and you’ll be busted.

There’s nothing new about this “10 ways to fail as a CEO” list. I’ll bet if we went back and reviewed the last five years, we’d find the same patterns of nonsense leading to the same disastrous results.

But then again, it’s way too easy to play Monday morning quarterback and point out the faults of someone after they fail. I think what I’d really like to see is a list of “CEOs that are going to fail if they don’t knock off the nonsense and get their act together.”

Anyone have any nominations?

Dan McCarthy is the director of Executive Development Programs at the University of New Hampshire. He writes the award-winning leadership-development blog Great Leadership and is consistently ranked as one of the top digital influencers in leadership and talent management. He’s a regular contributor to SmartBlog on Leadership. E-mail McCarthy.