Today’s environment for CEOs is challenging and, at times, almost inhospitable. How can consultants help leaders feel less overwhelmed?
There was an air of excited expectation in the build up to BMW’s recent Frankfurt motor show (above the usual anticipation that petrol heads feel before an event where shiny new cars will be unveiled). It was one of the first public appearances for BMW’s new CEO Harald Kruger, who had assumed the position just four months earlier in May 2015.
Kruger shocked spectators by collapsing on stage, before being whisked away by colleagues. BMW were quick to release a statement saying that he was “recovering well” and commentators suggested that Kruger was suffering from a bug he picked up on his travels. But the question many asked is: if he was feeling so unwell, was it so important to risk concern and humiliation by honoring his speaking commitment? The footage resembles that of George H.W. Bush collapsing at a banquet in Japan in 1992, or Margaret Thatcher fainting during a speech in Chile. Are the pressures on private sector CEOs so significant today that they are equal to that of a head of state?
After all, Kruger isn’t the only CEO to suffer from stress in recent years. Lloyds Banking Group’s Antonio Horta-Osorio took an extended period of leave at the end of 2011 due to stress, less than a year after becoming CEO; Masataka Shimizu, president of Tokyo Electric Power, had to take a leave of absence in the middle of a nuclear crisis, blaming “overwork and lack of sleep”; Akzo Nobel’s CEO Tom Buchner had to take similar evasive action due to stress, less than a year into his tenure, during which the company, rather sympathetically, said “CEOs are also human beings”.
What can sitting CEOs do to manage stress?
Nicola Brazil, Global Leader of Assessment Practices at Spencer Stuart, explains that the increased pressure has created another factor to assess during a search assignment: “CEOs operate in an increasingly complex and volatile environment. The ground has shifted, even for sitting CEOs, and there is a 24/7 nature to the role now. We often hear about how much more impactful the role is on people’s lives. When we are talking to candidates, we now have to assess not only whether someone can do the role from a capability perspective, but also whether they understand what this role will mean for them and their family life.”
The CEO role of the past is now impossible to do.
In the last issue of Executive Talent, we spoke to Richard Dobbs, Director of the McKinsey Global Institute, who explained that it will be imperative in the future to shift some of the pressure from CEOs by changing our expectations of other C-suite executives – notably CFOs and CHROs. “The CEO role of the past is now impossible to do,” he said, outlining that successful leaders will need to be externally focused, be good at building agility into their organization, have a positive outlook, and be data savvy.
Aimee Williamson, Executive Director of Leadership & Succession – Australia at Russell Reynolds Associates, agrees. “Boards are increasingly looking for leaders who can reimagine the future in a world that is constantly shifting,” she says. “They are seeking leaders who can drive and respond rapidly to change, while bringing the organization along with them. In response to this, we evaluate executives with a sharp eye toward the psychological attributes that position them well to create breakthrough strategies, drive growth and lead change.”
How can we get more scientific about the selection of CEOs?
So while the landscape for CEOs today is one of increased scrutiny and unpredictable challenges, there is, at least, a brief roadmap about what they can proactively do to make the position more tenable. Of course, a by-product of the increased scrutiny that CEOs are subjected to is that boards have also come under increased pressure. “We know the costs of making the wrong hire are spiraling,” Spencer Stuart’s Brazil says. “We know that boards are under increased pressure from shareholders. The time that new CEOs get to prove themselves is decreasing. There is no tolerance for error, so board involvement in CEO and senior executive talent management is growing.”
The number one derailer of a new hire is a cultural mismatch. If we miss on that, the culture acts as antibodies and rejects the CEO.
Of course, a board is more likely to have a successful CEO, content shareholders, and loyal customers, if they find the right CEO in the first place. But, do we need to change the way we examine whether someone is “right” for the role? It is imperative that an incumbent CEO understands how to change culture, and boards presiding over a CEO search ignore the existing culture of their organization at their peril. Jim Hart, CEO of Senn Delaney – A Heidrick & Struggles Company, says: “The number one derailer of a new hire is a cultural mismatch. If we miss on that, the culture acts as antibodies and rejects the CEO. All the while, the board is saying they need a CEO who is a change leader. You need to follow up with processes around cultural fit and help them see the cultural landmines they might step on; otherwise you end up with the equivalent of a parent telling a teenager not to do something.” Senn Delaney’s decades of success as a cultural assessment firm indicate that this is nothing new, but there is some genuine excitement around combining this with executive search in a more concerted manner to elevate the intelligence behind executive search and leadership consulting services.
Advice from leadership experts
By covering the ways in which the CEO role can be changed to reduce stress, and updating the way that CEOs are selected, executive search firms can provide valuable advice to organizations about how they can proceed most effectively. From here, the best-in-class executive search and leadership consultants distinguish themselves as trusted advisors. It is often said that the CEO’s corner office can be a lonely place (especially now that their family lives are placed under great pressure due to longer hours), so it is essential that they have external, and experienced, leadership advisors.
Eric Beaudan, Leadership Practice Leader at Odgers Berndtson Canada, explains: “We’re privy to some of the issues and inner thoughts that senior executives face. It gives us a much better appreciation of how a new CEO can take stock of what’s in the organization, the talent, the strategy, and working with the board. Most people don’t have exposure to those issues, but we are able to relate in a way that reflects the complexity that they experience.”
Operating as a CEO in today’s environment increasingly sounds similar to being a racing driver: the landscape races past at breakneck speed, a wrong decision could lead to disastrous consequences, and there is a team relying on them to perform every day. Much like the race car driver, who relies on a team of mechanics that specialize in high-speed engineering for optimum performance and safety, CEOs can rely on leadership experts to provide expert, relevant knowledge, based on extensive experience and exposure to executives in similar positions. An example of this level of support and thought leadership can be seen in Bonnie Gwin’s recent article: “How CEOs manage doubt”. In the article, Gwin, the Vice-Chair of Heidrick & Struggles’ board practice writes: “Understanding the risks and remedies for doubt enables leaders to mitigate their discomfort, whether its source is cognitive or emotional, and return to a zone where they can make more productive and well-considered choices, turning doubt into a powerful decision tool.” For an anxious CEO to hear that kind of advice from someone who has been privy to many other leaders must provide some solace.
By providing these more sophisticated executive search tools, firms are making themselves even more valuable to their clients. And by providing counsel for potentially isolated and overwhelmed CEOs, leadership consultants are proving invaluable to CEOs today.