CHICAGO and NEW YORK, Nov. 30, 2010 /PRNewswire/ -- "Leading a company now demands that the chief executive officer take on the mantle of Chief Diplomat, Chief Talent Officer, and Chief Image Manager, in addition to his or her more traditional responsibilities," says Stephen A. Miles, Vice Chairman of Heidrick & Struggles and head of the firm's Leadership Advisory Services.
"CEOs will encounter a wealth of new challenges in 2011, further complicating a role that has become more highly scrutinized over the past two years than ever before. The impact of the financial crisis combined with the new requirements for conducting business on a global scale have transformed the office of CEO. Today's challenges require someone who can demonstrate a much broader and more strategic perspective than in the past."
10 Key Challenges for 2011
Mr. Miles sees ten major challenges for CEOs in 2011:
1. Moving from "business case" to "social business case"
"As companies weigh decisions such as entering a new market or embarking on a multi-jurisdictional acquisition, the 'business case' must now be viewed through a new lens: how will this business decision impact the country/region/state/province they are going into? It is no longer enough for companies to simply make a good business case or meet the 'legal requirements'; they must make the case to the local stakeholders that this move will benefit the target community, who may have concerns about, for instance, the environmental impact. On the flip side, the transformation of developing local economies due to a major corporate presence can then affect the original business case: new unionization and increasing wealth may impact the decision as to whether to grow operations in the area or call into question whether the original business case was a sound one."
2. Stepping into the role of "ambassador"
"Related to the development above, we are seeing that the CEO must actively engage with politicians and regulators around the world. The CEO must be conversant on policy – be it financial regulation or healthcare reform – that affects his or her company and industry. Policy makers or regulators do not want to speak with delegates, but to the CEO. Given this, the CEO must act as diplomat and build these relationships him- or herself. Only unusually qualified delegates – such as a former top politician who still carries much influence – can effectively step into this role and supplement the CEO."
3. Repairing the corporate image problem
"One of the many lasting legacies of the financial crisis will be the image of corporations around the world as 'bad,' a view that politicians and shareholder activists have taken hold of with developments such as the Dodd-Frank Act. In this environment, CEOs in all industries – not just financial services – must work assiduously to repair their reputations among the media, regulators, investors, and the public at large. One way of doing this is through earnest CSR. Taking corporate social responsibility seriously not only helps to balance out the negative press, but also jibes in particular with the priorities of today's younger employees – another important constituent that companies must consider. CEOs must do this without losing focus on their corporate strategy and mission."
4. Making the board an ally
"With first Sarbanes-Oxley and then the global financial crisis, corporate boards have stepped in to become more 'executive,' instilling themselves further into the role of scrutinizing and interrogating management. The CEO must build a strong relationship with these key stakeholders and bring them on a 'journey' against his/her (or their) desired initiatives, operating with transparency. If you treat the board as your enemy, you will get the enemy you deserve! Conversely, treating the board as a partner along a strategic path will only help your cause."
5. Building a global leadership pipeline
"It is incumbent upon every CEO to ensure that he or she has a robust and 'global' pipeline of talent throughout the organization, especially at the senior-most levels, and that multi-year succession is regularly discussed at the management and board levels. It is critical that investment in these programs is a priority regardless of the economic cycle – they cannot be 'fair weather' programs. As the recent survey that Heidrick & Struggles conducted with Stanford's Rock Center found, 51% of companies cannot name a CEO immediately if needed, and 39% have no internal candidates whatsoever. To that end, it is important that CEOs encourage their boards to recruit directors with succession expertise and experience, and to help make the all-important issue of succession a top corporate priority."
6. Grappling with China
"If their company isn't there already, almost every CEO is eyeing China – either as a consumer market or supply chain base. But partnerships there can carry much risk. As the joint venture partners in China begin to learn and then take over the technological developments and processes introduced by their Western partners, these Western companies may be uninvited to the party. Chinese companies, supported by their government, are aggressively acquiring intellectual property, and are increasingly looking to go it alone in competing on the world stage. CEOs must thus be aware that they may be creating competitors if they enter into a JV in China – and manage this risk accordingly."
7. Understanding shifting employee values
"Managing the demographic changes as baby boomers move into retirement and 'millennials' come up through the ranks is something no CEO should overlook or just delegate to HR. The CEO needs to understand the motivations and values of his or her workforce in order to leverage organizational capabilities. He or she must also know the risks involved in a less 'loyal' employee base who may not, for instance, be as willing to move for a job as were the 'company people' in previous generations. The need for constant real-time feedback and sharing of information is something new. Software applications like Rypple allow CEOs a vehicle to communicate deeply across the organization in a reciprocal manner."
8. Operating in a world of social media
"Today's CEO is coming to realize that potentially all of his or her decisions and actions are broadcast in real time on company blogs or on Twitter and Facebook. Instead of being a 'victim' of this new exposure, CEOs must embrace and become part of the new media social discourse. Indeed, carefully leveraging this new medium instead of running away from it can do much to help tackle other challenges, such as combating negative public opinion and forging a dialogue with younger employees."
9. Driving diversity
"We have now spent decades talking about diversity, and it is now time to move from a compliance-based approach to one where we truly build (and value) diverse companies and boards. As part of their greater engagement with recruiting and talent management, CEOs will need to drive diversity in their organizations rather than making this an HR issue. A number of countries are taking a legislative view regarding gender diversity on boards (UK and Australia), and are set to begin to mandate the percentage of female directors that must be on boards. With the combined drivers of a renewed call for quotas and the growing business case in support of diversity, the CEO will be expected to take concrete action steps toward creating a diverse workplace."
10. Managing a globally distributed leadership team
"A corollary to a more diverse and more geographically diffuse management team is the complexity of actually managing a team that is so spread out. Expatriate programs – in which companies send executives abroad for experience – carry the risk of having those employees scooped up by competitors, erasing the value of the company's investment unless you have an equally robust repatriation program. As attrition rates continue to rise for these expatriates, CEOs must think differently about where a division is led or who should lead it. Increasingly CEOs are thinking locally. Hiring local teams around the world has two distinct advantages - the local executives may be more likely to stay with the company and they may also be better able to compete with any local competitors who emerge on the market."
For more information, or to speak with Stephen Miles, please contact Davia Temin or Suzanne Oaks of Temin and Company at 212-588-8788 or [email protected].
Stephen A. Miles is a Vice Chairman of Heidrick & Struggles. With more than 15 years of experience in top-level succession planning, he runs the firm's Leadership Advisory Services and is also a member of Heidrick & Struggles' CEO & Board Practice.
About Heidrick & Struggles
Heidrick & Struggles International, Inc., (NASDAQ: HSII) is the leadership advisory firm providing senior-level executive search and leadership consulting services, including succession planning, executive assessment and development, talent retention management, transition consulting for newly appointed executives, and M&A human capital integration consulting. For almost 60 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles' leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit www.heidrick.com.
SOURCE Heidrick & Struggles
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