Laxman Narasimhan, the now-former CEO of Starbucks, deserved to be fired.
When Starbucks filed its initial public offering (aka went public) in 1992, CEO Howard Schultz oversaw the company’s market capitalization growth to around $8 billion by 2000. (Schultz was not the founder of the nationally recognized coffee shop but shaped the brand as we know it today.)
Schultz stepped down in 2000 and returned as CEO in 2008 when the company’s market capitalization was about $10 billion. By the time Schultz stepped down again in 2017, the market cap had reached approximately $84 billion. He stepped back into the CEO role on an interim basis before handpicking Narasimhan as his successor in March 2023.
During just 18 months under Narasimhan, Starbucks’s value dropped $32 billion, while the S&P 500 stock market index was up more than 20 percent. The board let him go in August 2024.
However, if you ask me, Narasimhan should have been released sooner, on July 7, 2024, when he said in an interview that he “almost never” worked past 6 p.m. “I am very disciplined about balance,” he said. “If there’s anything after 6 p.m and I am in town, it’s got to be a pretty high bar to keep me away from the family. Anybody who gets a minute of time after that better be sure that it’s important … . Because if not, it will just wait for another day.”
In 2023, Narasimhan’s total pay package was valued at $14.6 million.
HE TRIED TO HAVE IT ALL
If you are a successful owner or CEO of an organization and can outpace your competition and gain market share, then you deserve to be paid well (I’m not sure about that well!). A lucky few in such positions can have it all — great pay, all the family time you want, world traveling, you name it — you just can’t have it all at once.
Before we delve deeper, let’s acknowledge that not every owner or CEO is charged with growth by their board or even by their desire. Some boards may hire for a strategic turnaround or to cut bloated costs. Some private company owners may simply love their craft, be happy paying their bills, and prioritize the “now” in life.
Richard, an accountant in Burlington, Vt., who has what is known as a “lifestyle practice,” is one of them. He’s a three-person shop. He files the IRS forms, a junior staff accountant supports him, and there is an administrative professional who glues it all together.
One weekday, Richard drove 10 minutes from his home to his favorite skiing mountain. While in the lodge, Richard met Fletcher, a big-wig partner of a large CPA firm out of New York City. The two of them struck up a conversation about business.
Fletcher was trying to be polite but accidentally condescended about how adorably cute Richard’s little practice was. To which Richard couldn’t help but point out that, for Fletcher, traveling up to this massive, beautiful, snow-topped mountain was a rare luxury. For Richard, it was just another Tuesday. We all have different priorities.
If you’re an ambitious CEO, your job is to sacrifice some of the “just another Tuesdays” to build the future of your company. In doing so, you also position yourself to have the rest of having it all — just later.
THE ROLE OF THE CEO
If you are the CEO, you’re paid well because you provide your customers with the highest level of service and products. In May 2024, after Starbucks released disappointing earnings, Schultz posted on LinkedIn that the CEO’s role is to “inspire your people” and “exceed the expectations of your customers.”
Providing the best customer experience is accomplished, in part, by giving your team the best possible tools and training. Further, to inspire those employees, you must offer growth potential.
As CEO, you are not doing what you are paid for (growing the company) unless you’re available to your people 24 hours a day, seven days a week. Note that I said 24/7, not 24/7/365. CEOs and owners (humans!) will operate best with recharged batteries and a happy home life. Vacations are not just necessary; they are energy.
A well-run team can manage without you. In fact, it should be run without you from time to time. Your absence will stress test your succession plan. Also, being away from the office occasionally will instill in your team confidence in decision-making autonomy. However, not being available to your team when they need you is ridiculous — if they’re working past 6 p.m., what kind of signal is it to them if you, the CEO, won’t take their calls?
CREATING BALANCE
A CEO should understand that if you give employees the right tools, technologies and workflows, they can get their jobs done in fewer hours. My company, Berkshire Money Management, works from 9 a.m. to 4 p.m., with an hour off for lunch. That’s only 30 hours per week, fewer than many — if not most — companies. To give teams the flexibility to work such short hours, the CEO must always be reachable.
There is nothing wrong with CEOs working 9 a.m. to 4 p.m. and prioritizing family and work-life balance. However, if you are ambitious and want the best for your clients and team, your attitude must be that you are always available. Yes, you need to carve out time for your family and to unwind. You should build time into your after-work schedule to rest. Even during the day, you should schedule time to reflect.
To help your employees maintain their balance, you need to abandon yours and aim for harmony. It’s not about dismissing the importance of personal time; for ambitious CEOs, work and life should be interconnected.
Work-life harmony doesn’t require excessive sacrifice. It means recognizing that work will take precedence over downtime some days, whether due to clients or employees. Because while you can have it all, you may not be able to have it all at once.
This article first appeared in the Berkshire Eagle on August 30, 2024.