Why Confidence Matters in a CEO
By Mark Athitakis for Associations Now
A confident CEO is a good thing: Not only can they serve as an inspiration to a team, they can move markets. A recent EY report on CEO confidence notes that much of the global economy turns on leaders’ decisions in the face of risk. “History shows that a lack of confidence among business leaders can significantly contribute to or worsen economic downturns,” the report says. When CEOs are cautious, “pessimism can become a self-fulfilling prophecy…further eroding confidence and perpetuating the cycle of economic contraction, potentially deepening a recession, or prolonging a downturn.”
In short, the well-being of the economy relies a lot on your personal attitude. No pressure!
The need to be decisive and risk-friendly can feel overwhelming for new and seasoned leaders alike. But the EY report doesn’t prescribe blind optimism, or just muscling through. Rather, more confident CEOs make assessments of the threats their organizations face—economic, technological, sociopolitical—and tailor their decisions accordingly. The time taken to assess makes a difference. For instance, leaders who EY’s survey identified as confident are more likely to consider political risk when making decisions—85 percent do it often or always, compared to 64 percent of those who are least confident.
There are similar distinctions when it comes to handling prominent disruptions like AI, regulation, and supply chain issues: More than half of confident CEOs say they’re “ahead of the curve and effectively addressing their most pressing disruptions.” Only 8 percent of the least-confident CEOs say the same.
Acquiring this confidence, the report suggests, starts with data gathering and analysis: “CEOs and all decision-makers need to understand how each development is likely to unfold in the year ahead (scan), assess the impact of each development on specific business functions (focus), and provide considerations for how the company can successfully manage them (act).”
This is all well and good, but gaining confidence is a little messier than the Spock-like demeanor the EY report promotes. Confidence is a practice, so by definition, newer leaders have a harder time with it. In the Harvard Business Review, CEO coach David Lancefield identifies a handful of errors that people make when they transition into leadership roles. To a large extent, the mistakes that erode confidence have a lot to do with issues on an emotional level: failures to relax into their role, to listen to feedback, to adjust their leadership styles to the reality of the culture they’re asked to lead.
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