Executive Outlook: CEO Spotlight
Filter tag: Culture & Organisational Effectiveness, Leadership Capability
Career transitions can be challenging for most executives, but there is an extra level of scrutiny, responsibility, and forward thinking that comes with considering a career as a Chief Executive Officer (CEO). These individuals are at the helm of the organisation and are tasked with driving the business forward. They are often credited for their company’s success, and on many occasions the first to be blamed when things go wrong.
But what does it take to be a CEO today? And what do current and aspiring CEOs need to build for future stages of their career? Here is the latest outlook and key considerations for current and aspiring CEOs.
Our research has found that the average age for a CEO is 58 years old. Based on the current metric that only 5% of FTSE 100 and 2% of FTSE 250 CEOs are female, the CEO is more likely to be male. While this split is heavily unbalanced at present, we have seen the number of female chief executives rise in recent years as boards look to appoint more diverse leaders.
The average tenure for the role is 6 years. It is most likely that the CEO was appointed to the position through internal succession, as supported by recent research which found that 72% of new CEOs are promoted internally, and 8.4% are former executives or current or former board members. That means that only 19.6% of CEOs are brought in externally for the role, but most of these ‘outsiders’ are not as disconnected as one might think. More than 90% of these candidates have pre-existing connections to the firm or its leadership. Most outsider hires are not CEOs poached from other firms (3.2%) but are instead in roles below the CEO or Board at other firms (55%) or those not currently in an executive position (31%).
For those considering a transition into a career as a CEO, it is worth examining the connections and networks you already have, and the need to invest in developing new ones within the companies and sectors you would like to work for.
Top Market Challenges impacting CEO’S
If you are a current or aspiring CEO, these three areas of concern will be most prevalent in coming months according to our research:
- COVID-19 As we transition out of lockdown and face the economic repercussions of the pandemic, CEOs will be tasked with helping their company to thrive in the next normal. This may mean spearheading a change project, making tough decisions about the organisational structure, or creating a new strategy for the business and developing and launching innovations whist workforces get used to hybrid working.
- Technology Adoption of new technology and artificial intelligence (AI) is accelerating in every industry across the world. Contributing to the creation of a new digital strategy will be a critical responsibility for the foreseeable future. Future-ready CEOs have a duty to understand the technology, its impacts on their industry and beyond, the potential benefits to the business, and any ethical risks or consequences for human staff.
- Environmental Impact Sustainability and greener practices have become a top priority for both businesses and consumers in recent years. This issue is expected to remain prevalent, and responsible CEOs should understand their organisation’s impact and participate in any plans to help reduce it.
Top CEO Priorities
Current and aspiring CEOs should expect to focus their energy in the following three areas:
- Data to Drive Execution Data has become a critical component of the digital-driven business landscape. This data can be harnessed and analysed by AI to make decisions based on insight rather than intuition. CEOs need to understand how their organisational and customers’ data can be safely collected and used, and how instrumental it can be in turning the generated insights into real, actionable strategy for the organisation.
- Agility and Speed A crucial capability for today’s CEOs is the ability to pivot. They need to understand how to adapt their businesses and deliver sustained outcomes in a rapidly changing external environment. All of the challenges listed above will require CEOs to embrace a lot of change over the next several years, and the ability to be flexible without losing momentum is imperative for success.
- Digital Evolution The future of business is digital, and the companies who are leading the pack in implementing digital technologies have radically improved their operational efficiency and their customers’ experiences. Understanding the capabilities available from harnessing digital technologies will help CEOs guide their organisation in reimagining its purpose and business models.
- Linking the Company with the World at Large: The role of the CEO is that of the figurehead of their company, serving as the liaison between the organisation, the industry, and the world at large. Fulfilling this responsibility effectively is more important than ever for today’s CEOs as they navigate an era of digital technologies, social consciousness, and scrutiny across a vast range of media platforms. A CEO needs to be able to react quickly and effectively to a crisis should one arise.
A CEO is ultimately a leader and is responsible for guiding the organisation and its people into the future. CEOs should expect to focus on these people-centric priorities for the foreseeable future:
- Hybrid Working The pandemic required teams to adjust to remote work models, and this way of working looks poised to stay in some form as we return to normalcy. CEOs will need to adopt a leadership style that is effective both in person and virtually, setting a precedent for leaders around them to follow. There needs to be an understanding of how staff work best, and clear communication of responsibilities and expectations in order to maintain productivity and wellbeing.
- Productivity For many organisations, this past year has produced a lot of creativity and productivity. The CEO needs to be able to capitalise on this in order to ramp up innovation capabilities. Some organisations struggled to adapt to remote working formats, or to the overall challenges posed by the pandemic. Within these companies, the CEO should prioritise a review of what needs improving and iron out any issues before proceeding with new initiatives.
- Board Make-up and Upskilling The CEO often plays an integral role in the hiring decisions for other top roles within the company. Who are you seating at the table alongside you? Are you willing to champion, digital savviness, experimentation, diversity, inclusion, and or sustainability within your organisation? How do you plan to reflect this dedication in the decisions you make? These are all essential questions for CEOs to have in mind. Not only that, but consideration needs to be given to how existing staff will be supported and invested in long-term. The pace of change and rise in digital technology is going to cause potential displacement of staff and a critical need for upskilling. The CEO should work with the rest of the board to devise a strategy for supporting people through the transition, whether that means investing in training and development opportunities or making touch decisions investing and providing outplacement and career transition services.
Personal development is a critical component of a successful professional career, and your efforts here can make or break your career transition. Based on our research, we advise focusing on these core areas:
- Being Accessible, Inclusive and Transparent The priorities and needs of staff have shifted in recent years to become more purpose driven. Our research shows that it is not just millennials and Gen Z staff who feel this way, as older employees expressed similar views. Staff want to work at a company that stands for something, and follow leaders who they respect and admire. It falls on the CEO to set the tone for the culture of the organisation and to ensure that the purpose statement is lived out day-to-day. Learn to be respectful of diverse viewpoints, be transparent, and work on your communication skills.
- Experimentation Strategic, contemporary CEOs do not look for a niche but instead study the changes in the marketplace, actively seeking out new opportunities, and seizing them. Radical change, pivots, and growth rarely happen overnight or at the first attempt. A successful CEO is one who understands that they need to take risks but knows when to switch gear or change direction to achieve the right results. Be open and ready to sprint in the short term and set realistic goals to focus on and achieve.
- Building Knowledge and Networks As mentioned, a majority of CEO roles are obtained through connections. ‘Who you know’ has always been an important aspect of business life, but it is even more imperative for the CEO. While your connections may open the door to your next role, they will also be valuable for your success once you are firmly rooted in your role. It is common and highly beneficial for CEOs to connect with other CEOs to share ideas and experiences, encourage and support one another, and create a dialogue surrounding the challenges or opportunities in the market. Factors such as the COVID-19 pandemic and the rise in digital technology have accelerated this dialogue and fostered greater learning across industries. This has provided CEOs with the opportunity to share their successes, failures and best practice. Do not simply view your network as a potential gateway to your next job, though this may be the case. Identify peers that you admire, can learn from, or can engage with in thought-provoking and insightful discussion about the role.
The role of Chief Executive can be one of the most demanding and most rewarding executive positions available. This individual is responsible for the future of the organisation and its people. Success takes innovative thinking, resilience, flexibility, transparency, and initiative.