The Calls That Tell Us a Company Is in Trouble
- Marion Heil
- vor 6 Tagen
- 7 Min. Lesezeit
Aktualisiert: vor 5 Tagen
I had a call yesterday from someone I've known for years. A really good person, senior role, successful company, been there for over a decade. Always happy, always turned down approaches from us and other headhunters.
"Just checking in," they said. "Wondering what's out there. Not urgent, but… you know”.
We know.
We in executive search often see problems brewing in companies long before they hit the headlines or the quarterly reports.
We in executive search often see problems brewing in companies long before they hit the headlines or the quarterly reports. It's one of the side effects of our job – we become early warning systems. When the phone starts ringing more often than usual from people at the same company, when those "just checking in" calls multiply, when people who were previously unrecrutable suddenly want to "explore options" – we know something's wrong. The conversations change too – less about career ambition, more about survival. Less "I'm looking for my next challenge," more "I need to get out before this gets worse."
The reasons vary. Sometimes it's a new CEO who destroys the company culture. Sometimes it's an existing CEO who's been there too long and has become increasingly erratic, demanding, wearing people down with relentless pressure and impossible expectations. Sometimes it's a takeover where the new owners don't understand what they bought and start "optimizing" the life out of the place. Sometimes it's the fifth restructuring program in two years, and people are just exhausted and done.
But whatever the specific trigger, the pattern is the same: something fundamental breaks in the culture, trust evaporates, and the best people start looking for the exits.
Today I want to talk about one particular version of this: a new CEO who treats culture change like a demolition project, and who destroys in months what took decades to build.
A typical pattern
It usually starts with the board getting nervous. Growth has slowed, the market is changing, competitors are moving faster. They want transformation. They want disruption. They want someone who "won't be held back by the old ways."
So they bring in a new CEO. Often from outside the industry. Sometimes from a turnaround background. Always with a mandate to "shake things up."
And shake things up they do.
Within weeks, the new leader makes it clear: everything that came before was wrong. The old culture? Weak. The old leadership? Too soft. The way things were done? Outdated. Trust? That's for losers. You prove yourself every day or you're out.
Meetings become interrogations. Collaboration becomes competition. Mistakes become career-ending events. People stop speaking up because speaking up gets you targeted. The grapevine, once full of normal gossip and complaints like in any company, turns into a network of fear and paranoia. Who's next? Who said what? Who can you trust?
The exodus is just the beginning
Yes, people leave. Often the best ones first – they're the ones with options. I recently heard about a well-known company with an estimated 75 out of the 100 key people leaving.
I seriously hope this number is exaggerated – but even if it was only 25 or 30 or 40, this is still a brutal blow to the company.
And so much more breaks in the company
The leadership layer gets crushed.
The B-1 level – the CEO's direct reports – are often the first casualties. They get pressure from above and pressure from below. The CEO wants results yesterday and doesn't want to hear about problems. Their teams are confused, scared, looking to them for answers they don't have. They're expected to execute strategies they weren't involved in creating, defend decisions they don't agree with, and somehow keep their people motivated in an environment of fear. It's an impossible position.
And when these people break or leave, you lose the crucial translation layer between strategy and execution – the people who actually know how to get things done in the company.
The B-1 level – the CEO's direct reports – are often the first casualties.
The institutional memory evaporates.
Those people who leave? They don't just take their skills. They take the knowledge of why things work the way they do, which customers are actually profitable versus just loud, what's been tried before and why it failed, where the real risks are buried. The new CEO doesn't care – they didn't build those systems, so they assume they're all bad. Two years later, the company is reinventing wheels and stepping on rakes that were clearly marked on the old map.
Innovation dies overnight.
You want people to take risks and think creatively? You need psychological safety. You need people to feel like they can experiment, fail, learn. The moment you create a culture of fear and mistrust, that dies. Everyone goes into defensive mode. Politics become more important than products. Covering your ass becomes more important than covering new ground. The company doesn't just lose its current innovators – it becomes institutionally incapable of innovation.
Customer relationships crater.
Long-term customers don't just buy products or services. They buy relationships. They have people they trust, people who understand their business, people they can call when things go wrong. When those people leave or become fearful automatons, customers notice. They start looking around. They stop giving you the benefit of the doubt. They certainly stop giving you their most interesting projects.
The brand takes a hit – both externally and internally.
Word spreads fast in every industry. "Don't go there, the place is toxic now." "They're not the company they used to be." The employer brand collapses. Recruiting becomes harder. The talent that is being brought in is either desperate, or ignorant, or just as toxic as the new culture – which creates a death spiral.
Suppliers and partners hedge their bets.
If you're ruthless internally, people assume you'll be ruthless externally. Partners start building backup plans. Suppliers stop giving you their best people or their priority capacity. Those informal advantages that came from trusted relationships – the ones that don't show up in contracts – disappear.
The board starts getting nervous.
Ironically, the same board that hired this CEO to shake things up starts worrying about the shaking. Financial performance doesn't improve – how could it, when you've destroyed the engine that generates value? They're in too deep to admit the mistake quickly, so they wait, and things get worse.
Compliance and legal risks spike.
When trust breaks down and fear takes over, people do desperate things. They cut corners. They hide problems. They fudge numbers. They don't escalate issues because escalating issues gets you blamed for the issues. The CEO wanted results "by any means necessary," and people take that literally.
The culture becomes unfixable.
And the worst part: after 18-24 months of this, it's not just about replacing the CEO again anymore. The damage to the culture is so deep that even a great new leader can't fix it quickly. People don't trust anymore. Period. They've been burned. They've seen colleagues destroyed. They've learned that loyalty is a sucker's game. That scar tissue doesn't heal easily.
How can this happen?
Because boards – and the CEOs they hire – sometimes misunderstand what culture is.
They may think culture is ping pong tables and casual Fridays. Or they may think it's something soft, something that gets in the way of "real business." So they bring in someone who'll "make things happen" and "focus on results."
But culture isn't separate from results. Culture IS how results get generated. It's the operating system. You can't just delete the OS and expect the applications to run faster.
But culture isn't separate from results. Culture IS how results get generated.
The new CEO doesn't understand this. They don't see that the "old way" of doing things – the trust networks, the informal collaboration, the institutional knowledge, the relationships – weren't obstacles to performance. They WERE an important part of the performance.
And because they're often brought in from outside, they have no feel for what made this particular company special. Every company has its own rhythm, its own culture, its own way of getting things done.
The best leaders learn that rhythm and evolve it. The worst leaders bring a hammer and smash it to pieces.
The best leaders learn that rhythm and evolve it. The worst leaders bring a hammer and smash it to pieces.
What should happen instead?
Look, I'm not arguing for complacency or protecting underperformers. Sometimes companies DO need tough love. Sometimes the old culture really is holding things back.
But there's a universe of difference between high expectations and toxic pressure.
The best new leaders spend their first 90-120 days mostly listening. Really listening. Understanding what works, why it works, where the real problems are versus where the symptoms are. They identify the culture's strengths and build on them while addressing the real weaknesses. They earn trust before they spend it.
They bring people along rather than running them over.
They understand that respect isn't weakness, that trust isn't naïve, that treating people with dignity isn't soft – it's actually the hardest thing to do consistently and the most powerful.
When my phone starts ringing with those "just checking in" calls from multiple people at the same company, I know that company is in trouble. Real trouble. The kind that's eating away at the foundations.
We're usually the first to know. Long before the board realizes the mistake. Long before it hits the numbers. Long before the market catches on.
And that's the real tragedy – by the time everyone else sees the problem, it's often too late to fix it easily.
Change is hard. Change requires courage, clarity, and often tough decisions. But change doesn't require cruelty. It doesn't require mistrust. It doesn't require treating people like expendable resources rather than the actual source of value.
When a CEO – new or old – breaks the culture, everyone loses. The people who leave. The people who stay. The customers. The shareholders. Even the CEO, eventually.
When a CEO – new or old – breaks the culture, everyone loses.
So the next time a board is looking for someone to "shake things up," ask yourselves: do we want transformation or destruction? Do we want change or carnage?
Those calls we get? They’re the canary in the coal mine. And people tell us what’s wrong often months before they’d speak up internally, let alone raise concerns with the board.
ABOUT THE AUTHOR
Marion Heil is the founder and managing director of Board+CEO Advisors. She is based in Vienna.
