Most companies face critical or challenging situations from time to time—and in these situations, most leaders fail, according to the Boston Consulting Group.

This statement is backed by research into the effect of mergers and acquisitions on enterprise value, which shows that more than 60 per cent of transactions actually reduce shareholder value.

There are three related reasons for a significant rate of failure during a crisis or challenging times, including personality issues, information overload and/or denial, and flawed execution.

Personality issues

When dealing with highly stressful situations such as a failing business, a leader’s personality can cause them to get in the way of turning the business around. A leader’s ability to recognise this fact and take steps to seek outside support can often be the key to the success of a turnaround.

There are a number of traps for different personalities.

Perfectionists can find it hard to admit they have done anything wrong or are the actual cause of business woes. An inability to admit mistakes might mean an inability to try new things to turn around a failing business.

People-pleasers can be so worried about what others think of them that they avoid making the tough decisions necessary for rescuing a sinking ship.

Goal-focused leaders can work themselves to burnout point trying to save a business, but this can be at the cost of other important parts of their life, such as family.

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