CEO’s seek better tools


Most Global organizations do not have succession plans in place. This trend means that new CEOs frequently walk into unpredictable and unstable situations. The result is that the skills increasingly required by CEOs are those usually equated with turn around CEOs meaning they should be able to change a loss making company into one that makes profit. Investors are impatient CEOs come and go. Investors look for new blood at the slightest suggestion that the pace of growth is slackening. The result is that the turnover of CEOs is accelerating. The average tenure of CEOs is now a mere 18 to 24 months.

CEOs must develop an entry strategy even before starting work. The process has four phases in anticipation, exploration, building and contributing. They must look at their role; set expectations; discuss any issues which need immediate clarity; and enter into an honest exchange of views and hopes. Clearly they must be careful not to make drastic changes too soon or to become too involved faster than required.

The CEO is often in a new industry with a new team. And everyone expects instant results. The potential for isolation is enormous. The loneliest job in the world is when a CEO is brought in and the company founder is still in situ as chairman. Think of Phil Knight at Nike who brought in William Perez as CEO. Perez lasted a mere 13 months (and left with a $10.6 million severance payment). At Apple Computers in the 1980s, Steve Jobs recruited John Sculley to take the company on to the next level with his marketing experience at Pepsi. It didn’t last.

People don’t switch jobs because of money. 60% of people who have left organizations cite reasons other than money for their departure. People want meaningful, enjoyable and rewarding working lives. It is part of the CEO’s job to convince people that their organization can meet their aspirations.

In turnarounds it is quite striking how much fresh leadership can accomplish by unlocking talent and potential which was already there in the organization but was stifled by rules, regulations and bureaucracy and the leadership skills required to make them happen says a Harvard Business School’s turnaround expert.

The best CEOs are adept at applying their analytical skills and their emotional skills at the right times. They aren’t purely people, but can make sense of complex market data and strategic plans. The important thing is that they are able to balance the two elements.

A CEO can’t be a dictator or someone who listens to everyone. He must strike a balance and make independent judgments. People put in the job to represent the collective will of the organization, not to respond to every fad and fashion of the moment.

Turnaround CEOs constantly communicate. A CEO on being asked about how he spends his time estimates that around 5% is spent on board and corporate governance matters; 25% to 30% on meeting with industry officials, politicians and other regulators; and 10% to 15% in some form of interaction with customers. Whatever the split, it is clear that communicating with people inside and outside the organization lies at the heart of the CEO’s job.

It is commonly argued that change begins with the CEO achieving some easy wins which signal that new rules now apply. News travels fast in organizations and it needs to work in the new CEO’s favor. Executives sometimes think of things like changing the culture or getting good result from people as something that requires very elaborate, long program.

There is one final element. It is inexplicable and beyond management luck. Napoleon hoped to recruit lucky generals and so, too, must organizations. CEOs have no control over the vicissitudes of global markets. Turnaround plus CEOs maximize their influence over what matters to the organization and over the aspects of its performance they can influence. And then, hopefully, there is the added spice of good fortune.