Reflections on life at the top
Special skills and a great team are needed if chief executives are to beat the trend for short tenures
The global credit crunch and the financial turmoil in the United States capital market have transformed the role of chief executives, according to the author of a new book on what it takes to hold down the top job in organisations.
Speaking one recent afternoon at a hotel coffee lounge in Hong Kong, Kevin Kelly, chief executive of the US leadership advisory firm Heidrick & Struggles, said he believed that recent events in the business world had further changed what it takes to succeed in the top job.
'The skills and requirements to be a CEO have changed in the past year. It's shocking if you think back to the 1990s when the average tenure of a CEO in the US was roughly nine years. Today, it is 18 to 24 months,' he said.
In fact, tenures in some organisations this year have dramatically reduced. Robert Willumstad, for example, recently lost his job as chief executive of global insurance giant AIG after only three months. The CEOs of Wachovia and Washington Mutual measured their tenures in weeks.
Mr Kelly is the author of the recently released book, CEO: The Low-down on the Top Job, in which he interviews top executives from around the world in an attempt to find out what it really means to be a CEO in the 21st century and what it takes to succeed in that role.
The shortness of tenure was just one reason why taking on the top job was a challenge, he said. Other issues that Mr Kelly addresses in his book include work-life imbalance, the need for a CEO to communicate to all levels of the organisation and across broad cultures, how to drive change in an organisation, the emotive issue of compensation and attempting to do what is right versus what is popular, even though it might hurt the organisation.
To be a CEO a person needed a special list of skills to succeed, Mr Kelly said. His wish list of critical requirements includes global knowledge, clarity, communication, the ability to influence people, execution skills, agility and a sense of humour.
'You need to understand what's happening around the globe because most organisations now have more than 50 per cent of their revenues outside their home country. Clarity as to where the business opportunities are is also crucial,' he said.
Communication is third on Kelly's list because without it a CEO cannot articulate his or her business strategies and why he or she is pursuing certain opportunities.
'We've moved towards the model CEO who has to influence and bring people along. So you need the clarity, the vision and the strategy, and you need to articulate them through communication,' he said. 'Then you have to be able to bring people along with you to make that strategy work because individuals have a lot of choices in terms of whom they work for.'
Execution is his fifth requirement and he recounted a tale about one CEO who got into trouble because she was unable to execute the strategy.
'Carly Fiorina, at Hewlett-Packard, had a great strategy, but she wasn't able to execute it and the people around her didn't execute it either. But if you look at Mark Hurd, who succeeded her, he's using the exact same strategy, the difference being that he's actually executing it,' Mr Kelly said.
The sixth requirement on the list is the ability to be agile, a skill that has particular relevance at a time of fast-changing markets and concurrent opportunities. 'We don't have time for five-year or 10-year strategies, given how quickly the world is moving. You need to be agile to see where the opportunities are,' he said.
His final requirement, a sense of humour, means not taking yourself too seriously.
The CEOs in his book come across more as business leaders and strategists than the cult personalities that they were in the 1990s. Kim Seung-yu, CEO of Hana Financial Group in South Korea, for example, visits the bank's branch offices and takes staff pizza at night. Not surprisingly, he has a loyal following. Taking over as CEO during the Asian financial crisis when the Korean won was weak, he told his employees: 'This is your company, not my company. My tenure is only three years and the shareholders decide whether they are going to re-elect me. But your tenure is 58 years, so it's your company, not mine.'
According to Mr Kelly, balancing the needs of employees against those of the shareholders and board is key.
'It's difficult as a public company because the board is gauging the CEO on the retention rates of executives who will leave if they're not happy and don't believe in you,' he said.
'At the same time, you have pressure from the shareholders and the board. Trying to manage all three is extremely difficult. During certain times, most CEOs probably lean more towards one group and, to a degree, mostly towards their employees. This is because they believe that they're only going to get to where they're going if they have individuals who believe in what they're doing.'
That is reflected by his own experiences and those of the CEOs in the book. Every one talked about the necessity of having a great team in place in order to achieve. One CEO commented that 20 per cent of the people in an organisation do 80 per cent of the work. 'He told me his job as CEO was to get the other 80 per cent just to do anything. What a remarkable organisation if you get them just to do something. In most organisations, this is a challenge,' Mr Kelly said.
In his first year as CEO of Heidrick & Struggles, putting his own team in place was a challenge despite having spent 12 years with the firm prior to his appointment. 'That first year I spent most time on employees, specifically making sure that I got the right team in place around me. This means that now I can spend more time with clients, analysts and in making sure the board understands the strategy and succession planning,' he said.
Indeed, Mr Kelly describes himself as the organisation's 'chief people officer' in making sure all the right people are in place to drive and execute his strategy. At the end of the day, the job was all about having the right people, he said.
To be remembered as the best CEO, however, it is also important to leave a legacy. In the last chapter of the book, entitled The Life Beyond, those interviewed talked about leaving a legacy. 'Leaders have to see the future; they can't celebrate together with other executives when things go well today,' one CEO said.
Takeshi Niinami, president and CEO of Lawson in Japan, has a vision that a few years after his departure people will see his role as great. 'Because what I left is the people - that's why the company can enjoy a legacy of great people,' he said.
How to land the top job
Chop the wood in front of you. If you are talented, you will have the opportunity to take on a senior executive position. What prevents most people from doing this is a lack of patience. 'You run out of patience and leave the company to take on a bigger job, sometimes to the detriment of your career. Don't jump ship too quickly,' Mr Kelly says.
Keep your own pace and work at your own tempo. Mr Kelly uses the following analogy to illustrate his point: what happens when you tee off and swing a golf club too quickly? You either miss the ball or the ball goes astray.
It's what you learn after you know everything that counts. Don't make the mistake of thinking that you know everything.