Have our expectations of leaders changed in recent years?
The vast changes that have happened to the world in the past 25 years affect how we look at leadership and our expectations of our leaders – especially our chief executives.
How do these changes impact on today’s CEOs?
I see enormous tension between globalisation and nativeness – the strongly felt sense that we have to retain our regional culture – that affects how organisations behave. We see this tension in terms of the World Trade Organisation and in the resistance to McDonald’s or Starbucks. CEOs have to find way to navigate this.
Leaders everywhere are faced with this issue of globalisation versus nativism. Also the issues of terrorism and short-termism. The showing of financial results on quarterly basis leads to flagrant short-term thinking by boards and CEOs.
Because of short-termism, there’s less indulgence and patience for leadership. There’s more clogged cartography of stakeholders. This creates expectations that burn people out more quickly. It is one reason why the number of ousted CEOs is rising worldwide.
Will CEO churn, the speed with which CEOs are hired and fired, impact the way business leaders do the job?
The pressures on CEOs have increased dramatically, particularly in terms of the legal ramifications of new transparency laws. We’ll see more separation between the CEO and non-executive chairman to limit CEO excesses. CEOs will be more accountable, and more wary. The up side, is more transparency. The negative is that it could make CEOs more risk averse in their leadership. This is another big tension in CEO life today. The days when CEOs enjoyed cosy relationships with their boards are gone. They will have to be trusting and trustworthy relationships.
Leadership is difficult to quantify. How should we judge CEO’s success?
There are number of key performance indicators and questions you must ask.
Is there alignment of the organisation? In other words, is there collectively shared definition of success that is understood, and rewarded, throughout the organisation? Is there adaptive capacity? Is there resilience – sense of being able to look into the future and adapt to continual change? And does this happen without the habit of success getting in the way? In Samuel Beckett’s play Waiting for Godot, Didi, one of the two tramps says to Gogo, the other tramp: “Habit is great deadener.” That’s great line. Successful habits are even more of deadener.
Financial results are another indicator, irrespective of how they are measured. It might be market capitalisation, return on investment, or some means of looking at the success or otherwise of acquisitions or divestitures.
Are there others?
Other indicators include whether the organisation is developing bench – cadre of future leaders. Is mentoring taking place? Does the workforce feel motivated, empowered, animated, and engaged? Is the organisation relatively open (transparent)? And finally, to what extent are resources being put into future research and development? These are the major factors I would measure. Not necessarily characteristics of the leader, which is another matter.
What are the key qualities of successful leaders?
Leaders, like CEOs for example, should possess number of characteristics.
A leader must provide direction, it’s the vision thing. To get collective definition of success leaders must engage, motivate and animate people. It isn’t enough just to have the vision; they must engage with their people. Look at some of the leaders who failed, Eckhard Pfeiffer at Compaq, Douglas Ivester at Coca-Cola or Dirk Jager at Procter & Gamble. They failed because they failed to understand the kinds of changes taking place in their worlds, worlds that were vastly different from when they first started working for the company. It wasn’t lack of interesting ideas, it was an inability to engage, motivate and animate people in their organisations, to incarnate their ideas.
Leaders must demonstrate adaptive capacity and be alert to inflection points in the cartography of stakeholders. Successful leaders should also be personally involved with leadership development programmes and mentoring. certain amount of emotional intelligence, as Dan Goleman calls it, is also essential.
How can the board/CEO relationship work more effectively?
You need as much transparency and candour as possible. That requires an almost obsessive degree of communication between board and its executive directors – including the CEO. It also means generating and sustaining trust. Boards must not comprise buddies, cronies and old school chums.
I’d like to see more of the UK model, with its separation of non-executive chairman and CEO roles. That’s very healthy thing to do. It means that key aspect of the CEO/board relationship is to continually work on communications to develop and sustain trust. This requires transparency about what’s going on. In some cases it means independent auditors – independent of the compensation and audit committees. So, there are lot more safeguards.
Can you tell when it is time for business leader to step down?
Asking how long CEO should stay in the job is like asking how long his or her legs should be. There is no one answer. Boards should review CEO’s performance in the job every three to five years. These days three rather than five years would be better.
But you wouldn’t support compulsory retirement age for CEOs?
Sidney Harman, who runs Harman International Industries, is 85 and still going strong. The head of Viacom is almost that age. In the past year or so several older CEOs have been pressed back into service. Gerry Grinstein was brought in at Delta Airlines at the age of 71. John Reed was no kid when he went to the New York Stock Exchange.
No, I’m not in favour of gerontology among executives. Using age is not the way forward. It’s an excuse. Term reviews are more useful. They short-circuit the need for mandatory retirement.
What is the most important challenge facing CEOs today?
Restoring confidence and honour to the profession of management.
The second challenge is to become first-class noticer. To be aware of the people you are directing and have excellent sources of information so that you are aware of what’s going on in the world.
I find this in my work as teacher. My undergraduate class here at University of Southern California (USC) is so different. I’ve been teaching for the past nine years with the same co-teacher so we get good sense of the changes. The changes in the students’ cognitive apparatus and their ethnicity are stunning.
With so much going on in the world it is difficult to keep in touch with the changes that can make difference to your life. It is grind, but it is also exciting. Tomorrow’s successful CEOs will need incredibly wide-ranging and diverse sources of information.
