Tag Archives: ceo

CEO-to-CEO Lessons Learned– Peek in Corner Office: Challenges, Frustrations– Failure, Crisis, Fear, Uncertainty…

Being CEO is tough; world economies are expanding rapidly and companies are shaped by changing trends in– technology, internet, social media… and changing consumer mindsets and consumption patterns… New markets are emerging, old markets are disrupted, business models are becoming obsolete, new business models are pushing boundaries for the ways business is done.. No wonder the role of CEO is changing, but many fail to learn the lessons required to survive and thrive…

According to Evan Davies; CEOs must expand their thinking and become knowledge seekers, even when they think they know it all. They must make learning an active part of their day, seeking out experts, and encouraging the same of their team… It’s a global economy and CEOs would do well to understand the big picture– the business climate, market conditions, competitive landscape, regulatory environment, and strategic risks… Prevailing standards for corporate governance have become more formal, more rigidly codified, and more universal across international boundaries…

According to Kathleen Ekins: CEOs are sticking around longer than they should… The average tenure of a departing S&P 500 company CEO is 9.7 years. It hasn’t been that long since 2002, and study by Temple University suggests that this number could be problematic for many companies… The study measured the performance of CEOs over time and found the ‘optimal life span’ of CEOs is just 4.8 years. It concluded that after about five years, chief executives will rely more on their internal network rather than information that comes from outside markets…

This tendency to focus inward causes for some CEOs to become less attune to market conditions, customers, which ultimately hurts the company…  So, why do many CEOs over-stay their welcome when it can jeopardize the organization? According to Charles Wardell; there are three main reasons CEOs either, step down or are asked to leave:

  • Burn out or loss of enthusiasm for the job:  When CEOs begin to realize that their skills aren’t matching-up, or their enthusiasm is waning, or they’re tired of the constant responsibility…
  • External changes in the market: Often times the market dictates, causing the business proposition to change so radically that the skills of the CEO don’t mesh-up with needs of the organization…
  • Board of Directors decides enough is enough: Pushing a CEO out for whatever reason– age, competency, vulnerability… can cause turbulence and tension within a company, making for a less than ideal transition. A smooth transition at the top can never be guaranteed. This makes the change in leadership that much more scary, causing CEOs to stay-put longer than they should…

In the article Lessons CEOs Need to Learn by Rick Spence writes: Today, the captains of industry aren’t so much running the ship as manning the pumps, trying to stay afloat in the global marketplace. Not just in economic terms, but in all the categories that count, e.g.; leadership, innovation, leveraging technology, finding new ways to sell globally and mastering social media, which is crucial to reaching niche audiences…

According to Michael E. Porter, Jay W. Lorsch, Nitin Nohria; CEOs must come face-to-face with some paradoxes in leadership, e.g.; the more power CEOs have the harder it is to wield it without demoralizing other stakeholders in the organization… Although the CEO bears full responsibility for the organization’s fate… but often they don’t control most of what determines it…

So how does a CEO succeed? First, he/she must understand the essence of the role, such as ; creating conditions that help others excel, spend time articulating strategy, installing sound processes, mentoring key people... Second, CEOs must learn and master the skills and insights that are required to run 21st Century organization… For example:

  • CEOs cannot run organization alone: As demands from external constituencies (shareholders, board members, politicians) mount, control over internal operations recedes… Shift from direct to indirect means of influence; articulate clear strategy, establish guiding structures and processes, setting values and tones… while selecting the right management team to help run the company…
  • CEOs giving orders is costly: Over-ruling the thoughtful decisions made at lower management levels erodes confidence… Decision-making grinds to a halt as subordinates begin checking with the boss before proceeding on anything. Instead, promote agreement about decision-making criteria, share power, and trust others to make key decisions…
  • CEOs often don’t know what’s really going-on: Bad news is often withheld from CEOs fearing that they will shoot the messenger. How to get solid information? Engage managers, employees… at all levels to hear– ideas, opinions, suggestions…
  • CEOs are always sending a message: CEOs every move and every message– inside and outside the organization– is scrutinized and interpreted… CEOs must carefully consider how audiences might interpret their every actions, communications…
  • CEOs are not the boss: CEOs boss is the board of directors. They set compensation, evaluate performance, overturn strategy, and fire the CEO… Yet many directors have limited knowledge of the organization– its industry, markets, competition, technology, management, employees, partners… It’s in best interest of the CEO to educate and regularly collaborate with the board…
  • CEOs are only human: The rewards and adulation that come with being CEO can tempt acts of hubris… Make a disciplined effort to stay humble. Revisit decisions. Find forthright people and listen… Maintain connections to family, friends, community, hobbies… to avoid being consumed by the job…

Why do CEOs Fail? According to Ram Charan, Geoffrey Colvin; It’s an intriguing question and one of deep importance not just to CEOs and boards of directors, but also to investors, customers, suppliers, alliance partners, employees, and the many others who suffer when the top man stumbles… Some pundits opine when they see problems with CEO’s grand-scale vision, strategy… Yep, CEO must go because his/her strategy is not working…

But is it really a flawed strategy? Not according to others who say; the strategy is sound, but it was bad execution; it’s not getting things done, indecisive, not delivering on commitments… Although pundits are not saying; the CEOs who fail are dumb or evil… In fact, they tend to be intelligent, articulate, dedicated, accomplished… They work hard, made sacrifices, and have performed terrifically for years… So how do CEOs blow it? Probably the most often cited reason it that they fail to put the right people in the right jobs… and the related failure to fix people problems in time…

Also, what is so striking is that most CEOs usually know that there is a problem but their inner voice suppresses it and they won’t openly acknowledge it, and take remedial action… As one CEO said; it was staring them in the face but they refused to see it; the failure was one of– emotional strength… They just weren’t worrying enough about the right things: execution, decisiveness, follow-through, people, delivering on commitments…

 

Corner Office to Oval Office– CEO to Politician to U.S. President: How Do Lessons of Business Apply to Running Government?

CEOs who build corporations often think they can master anything, including the maelstrom of modern politics… According to Economist; the skills demanded in politics and business are different. Politicians need to seek consensus; bosses can demand it. Politicians need to woo their foes… Executives can get them fired… Running a large company is complicated, but not as complex as overseeing a government in which diversity, competing interests, and many other factors… must be weighed and reconciled for the public good… But how do lessons of business– from deal-making to large-scale management– apply to the work of government?

Ross Perot in 1992, who perfectly encapsulated the pro-business argument in the presidential debates with George H.W. Bush and Bill Clinton said (n reply to his opponents’ observation that he lacked political experience): Well they have a point; I don’t have experience in running up a $4 trillion debt (now it’s about $20 trillion)… I don’t have experience in gridlock where no one takes responsibility for anything and everyone blames everyone else… But I do have much experience in getting things done…

According to Jon Meacham; business leaders often go to Washington thinking that focus on results produces shareholder value for taxpayers. The problem, of course, is that government is not a business. The public sphere is far less accountable to market measures than it is to the amorphous but real incentives and vicissitudes of politics… The main goal of business is– profitability, growth, productivity… And,  government’s main goal, in the words of John Locke, is nothing less than the good of mankind… However that’s not to say that experience in running large, complicated companies isn’t valuable in preparation for running large, complicated government…

In the article CEOs in Politics by David Brooks writes: At first blush, business success would seem to be good preparation for political success. A CEO learns to set priorities, manage organizations and hone analytic skills… However when you look back over history, there’s little correlation between business success and political success. The traits that correlate with successful presidents have deeper roots…

According to Richard Neustadt; many leaders who come from a hierarchical environment, such as; military, business… find it hard to make the transition to be an effective political deal-maker, where the premium is on persuasive ability… Bullying people who have their own independent constituencies is not really effective governing technique.

In the article Do CEO’s Make Good Presidents? by hxv112 writes: Political leadership has a set of challenges unique to public office because there is a formalized balance of power. In other words, a president is not able to do much without the other two branches of the federal government agreeing… Whereas in business, CEOs worry less about hurting feelings or being politically correct, as long as the company produces favorable results… According to Mickey Edwards; being a CEO from business is not a dis-qualifier to holding public office but it’s not a qualifier, either…

In the article Myths That Government Should Be Run Like Business by Philip Joyce writes: Some consensus has developed among scholars about the fundamental ways that running a government is different from running a business. It’s important to know that government, particularly large ones are complex organizations to manage, much more so than any business… Here are a few reasons:

  • Government is about serving the public interest:  Business care about stakeholders and customers; they do not generally care about people who do not invest in their company or buy things from them. Thus, accountability is by necessity much broader in government; it’s much more difficult to ignore particular groups or people…
  • Business performance is measured by profitability: Government performance must focus on the achievement of outcomes. And the lifeblood of business is profitability…
  • Compromise is fundamental to success in government: No one owns controlling share of the government… The notion of a separation of powers is anathema to an effective business. But it’s central to the design of government…
  • Government must constantly confront competing values: Efficiency in business is value number one… and in government, it’s just one of many values. In fact, efficient solution may disadvantage some groups, trample on individual constitutional rights of others…
  • Government actions take place in public: In government there is the watchful eye of– press, groups, public… In business, leaders do not find it necessary to explain their every decision to anyone except stakeholders…

In the article CEOs as Effective Political Leaders by David Davenport writes: Leaders in business are accountable for well-defined goals, e.g.; profit, growth, productivity… By contrast political leaders often have ill-defined, unclear goals… They have multiple constituencies and plethora of responsibilities measured primarily by vagaries of political polls, elections. They have much responsibility but unlike business CEOs, relatively little authority to get things done; it’s the realm of persuasion, not power. They only get things done when they can convince congress and others to join in…

According to Milton Friedman; business leaders must be pragmatic, they must make things work, they are responsible for the bottom line, and rarely are they philosophers… As a consequence, when you look at great presidents you don’t see many business leaders on the list. According to William W. Campbell; majority of U.S. presidents were lawyers or career politicians; there were eight generals, some engineers and professors, an actor, and a smattering from other professions… but none were CEOs from business…

In the article Pitfalls of a CEO President  by Susan Milligan writes: Some experts say that being a CEO in the business world doesn’t prepare one for government…. Being the boss in business, they say, simply does not translate into being the boss in government with over 300 million-plus citizens and lower ranking co-workers… who they can easily push around, let alone fire… According to Marie McKendall; most business people don’t understand how government works, e.g.; They must share power. They must collaborate. They must be sensitive to interests of people… Government is a regulatory maze with checks and balance… Whereas CEOs are accustomed to making things happen, quickly; well that doesn’t often happen in government.

CEOs are often motivated to run for political office because they share the frustration of many citizens– that the government is not working effectively or efficiently… According to Susan McManus; CEOs see government as a financial mess and they think they can fix it… But very nature of government is dramatically different from business…

Business exists to produce products/services and generate a profitable return for stakeholders investment… Government exists to take care of its citizens by doing tasks that are by definition not profitable, such as; caring for poor and elderly, fighting terrorist and wars, fixing roads and bridges… Although there are overlap in skill-sets, there are personality traits that are required when running a country that are different when running a business…

Expose Confessions of CEOs– A Peek into the Corner Office: Lesson Learned From– Failure, Crisis, Fear, Chaos, Uncertainty…

Expose Confessions of CEOs– really; but could it be that executive leaders who appear boldly confident are wracked by personal doubt? Aren’t the men-women who spend their days in the C-Suite immune to human foibles that plague most mere mortals?

According to Jan Hill; I bear witness that the inner world of many organizations’ most senior leaders, and many have confirmed, that these executives doubt themselves more often than you might think…  Here are a few CEO confessions that I’ve heard: *Every day I’m disabled by an overarching irrational fear that I will fail… *I’m just sitting here playing with broken toys. Why doesn’t my executive team get it? Where did I go wrong?… *I feel like I’m an imposter. What if they find me out?… *We all scream in different ways: I just scream softly, but no one hears it…

According tomicah; I confess that the lessons learned from getting punched in the face, as a CEO, is life changing: I am not a CEO today. I know now what a CEO should be, and I am not it. I don’t have the love or understanding of structure to be effective. Instead, what I am really good at is introducing people and finding ways for companies to work collaboratively, which is my current role and I am happy with it… I often think about what I could have accomplished if I had a bit more maturity about the management of the business. While the sale of the company certainly was a success, in terms of being a CEO, I failed…

ceo untitled

As producer of ‘The Motley Fool Radio Show’, Mac Greer heard a number of CEOs fess-up to their failures– business decisions that didn’t ultimately make for great business. Here are a few favorites:

  • According to Jim Keyes, 7-Eleven:We packaged a more convenient pantyhose for ladies and it has helped us to bring more female shoppers into the store, but we were a little bit out-there when we introduced fish-net hose at 7-Eleven Stores. I would say that was one of the dumber decisions…
  • According to Dick Kinzel, Cedar Fair: We put a $4 million building around this dog ride and named it ‘Disaster Transport’. I remember on opening day a gentleman walked out of the ride and came over to me and said; You named that one right– that’s a disaster. And you know what, he was right. That was by far the dumbest thing I ever did…
  • According to Bob Davies, Church & Dwight: In the mid-’70s, we went zooming into the personal deodorant and antiperspirant business with an aerosolized can of baking soda. We had two huge problems. Many of the cans clogged, and those that didn’t clog did worse– they massively stung people’s underarms. We lost around $6 million in that venture and that was back when we were a tiny little company. I almost lost my job…
  • According to Jack Soden, Elvis Enterprises: We licensed a company that made bedroom slippers. They were big, furry slippers and they had a rubber image of Elvis’ head on the toes. It was one of those things that when you saw them in the store, it was like: What were we thinking? We pulled the license and got them off the market as fast as we could…

In the article Confessions of Remarkable CEO by Kevin Song writes: Our experience at coaching, advising CEOs has allowed us to distill key insights into challenges that confront many CEOs. While CEOs encounter countless obstacles, we have found truth in these four confessions, with our added notes:

  • Confession #1: I am frustrated with politics and discord among my leadership team. They do not seem to get along, and we are not achieving the execution we need to grow the organization… When an executive team does not function well together, the organization suffers– sometimes, individual executives may simply not work well together or seem to be working from ‘a different page’. Other times, an individual executive is simply not performing at a level worthy of the organization’s highest leadership team. In any case, an under-performing executive team should alarm the CEO…
  • Confession #2: We lack effective planning sessions that generate real and desirable results — our meeting sessions lack passion, direction, and focus, which are needed in order to produce action and positive outcomes… Does your organization wrestle to gaining advancement in executing strategic goals? Maybe your organization is slow to act on a new plan. One manifestation of this confession is unlikely in your strategic planning process. Or, it might just be the feeling that– we don’t need more knowing, we need more doing; for some reason, you are not performing on the fundamentals you already know well…
  • Confession #3: We cannot seem to get ahead of the competitors– after all research and money we spent; we did not gain much competitive advantage… No one sees this more clearly than CEOs. No matter how good results of the organization happen to be, you see weaknesses, breakdowns in systems and performance. An opportunity exists to tighten process, remove waste… while continuing to optimize business results. There are numerous gaps that, when closed, produce strong financial performance…
  • Confession #4: We tried many ways to improve bottom-line, but they don’t seem to give us the results we need; I know we are not producing the most effective results from our talents and resources… At some point, it’s natural for CEOs to wonder if they have hit personal limits as leaders. They may express feeling of swimming in water that is over their heads. While the feeling is more personal than organizational in nature, it can impact the organization’s ability to produce results as greatly as any of the other challenges…

ceo 1-confessions-of-a-ceo1

In the article Top CEO Challenges by Dominic Barton (McKinsey Partner) with notes by McDwight Frindt writes: As someone who spends much time with many CEOs from the world’s leading companies, I have gain interesting insights, which are very consistent with the overall CEO population. Here they are:

  • Struggle with loneliness: The higher you get, the harder it is to find the right sources to trust… Having access to a peer group and being able to work issues with people who face the same types of challenges you do every day can be amazingly helpful for a top leader…
  • Lack of time: CEOs continue to balance an overflowing plate and prioritizing becomes key… This is something everyone is facing these days from the top office throughout an organization. We have found that the key issues here are in the ‘human dimension’– meaning that things often get slowed down between people through miscommunications, misunderstandings and upsets…
  • Appetite for cross-sector knowledge: CEOs and companies across the globe are looking at what can be learned from industries, companies… other than their own. Cross-pollination at its best. What can marketers learn from HR? What can IT learn from sales? This is another area we find that communication is critical and is not happening at an optimum level. Often groups, teams, and departments become ‘silos’. There is usually a lot that can be learned by an organization and its leaders from within, from its own people. The challenge is opening up the flow for that to happen…
  • Understanding transitions: Leaders transition in and out of positions, jobs, and companies. They are consistently looking for help with these transitions… Transitions are often fraught with emotions and complexities…
  • Battle for talent: The biggest competitive advantage of any company in the future is going to be people. Often CEOs don’t know the scope of talent available to them within their own company. This is a source of frustration for many… It’s amazing how much knowledge and information inside a company does not flow. Again, challenges in the ‘human dimension’ often hinder this flow. Fear, politics and other factors can keep key information like ‘how talented is your talent pool’ from being clear to those at the top…

In the article Confessions of a Natural Born Follower by Kelly McCausey writes: I don’t consider myself a natural-born leader; in fact, I’m exact opposite – I was a natural-born follower… Being a leader was so ‘not’ natural for me. Any time I found myself having to make decisions, I naturally sought guidance from other sources to figure out what I need to do, next... I didn’t trust myself, didn’t trust my experience, and just desperately wanted someone to tell me what I needed to do and where I should be headed, e.g.: What if I led people in wrong direction? What if I made mistake and hurt someone? What if I wasn’t smart enough to handle the job? What if, what if, what if???

You may not believe me, but still today I sometimes have to force myself to ‘be’ the leader. When I was a follower, I saw leaders as– confident, powerful, popular people who seemed to be naturally gifted in the art of– perfect words, actions… What I am finding more and more is that most of the time, even with a plan, experience and even guidance, we (leaders-CEOs) sometimes feel like we are free-falling off of a cliff…

However, what I’ve learned is that perhaps none of us-CEOs are the kind of leaders that I assumed existed; none are perfect and none found success easily. All of us are often scared, even terrified from time-to-time. All of us have faced and overcome our own; What Ifs… Most of all, I got the realization that it doesn’t matter if you aren’t born and bred to be a leader. In fact, most people aren’t… What does matter is how much you are willing to face your fears, and do what you must do…

ceo images3R061A6I

All too often, we see CEOs make critical mistakes that can lead to dangerous repercussions for them and their organizations… According to Ken Sundheim; since I started my firm, you could say that my philosophies and practices have changed dramatically. But rather than ‘change’, my business philosophies and skills have a more positive– ‘evolutionary’ trajectory… whereas, ‘change’ is more abrupt  manifestation of motion, improvement… In the end, my ‘confession’ is that as a young CEO, or in any state of business leadership, you can never stop examining yourself, and you can never be afraid to try, and fail…

At a layer barely below the conscious surface, we all know and recognize the key behaviors that separate effective leaders from train wrecks… Rarely do we get such crisp opportunities to observe and learn… and that old cliché about– crises being the true proving grounds for leaders will never become obsolete… According to Andreas Souvaliotis; it all really comes down to the three classic; ‘Cs’ of leadership, when faced with a sudden challenge:

Confront! Leaders are human and the vast majority of humans are actually afraid of confrontation. Our instincts guide us to avoid conflict for as long as possible and yet, when a crisis is headed our way and we’re in charge of any kind of human organization, our best bet is to confront the crisis early…

Communicate! Leaders who rely on ‘spokespeople’ at a time of crisis are abdicators. That’s a catastrophic misstep and, sadly, a very common one…

Care! Don’t just say you ‘do’ — show it; prove it, own the problem… Empathy counts for more than just about anything else at a time of crisis… Failure is in the eye of the beholder and confessions are for wimps… You should not ask; Who am I to do this? but rather; Who am I ‘not ‘to do this? A great CEO is someone who can live in uncertainty, chaos… and say: I know there is a better way

Rethink-Reshape– Board of Directors Model for Global-Social-Mobile Digital Age: New World, New Reality, New Economics…

There is one thing all Board of Directors have in common… they do not function. ~Peter Drucker…

Ninety-five percent of Board of Directors are not fully doing what they are legally, morally and ethically supposed to do. ~Harold Geneen

Board of Directors must begin to rethink the meaning of corporate governance in today’s digital world. In addition to existing roles, boards now have responsibility for shepherding their leaders and organizations in the fast emerging global-social-mobile age… And, Board of Directors that avoid this obligation will risk having the organization fall prey to today’s fast moving social networks that are actively seeking corporate reform, accountability…

According to ‘Kleiner Perkins 2012 Internet Trends Report’; reality of digital age is creating unprecedented risks-rewards for corporation directors, leaders, shareholders... According to research by MIT and Cap Gemini; enterprises that fully deploy social and mobile technologies to engage their crowds (i.e., customers, prospects, alumni…) in the cloud; produce– 9% more revenues, 26% more profits, and 12% higher market valuation than their peers.

According to research; less than 30% of CEOs use social media, despite the fact that more than one billion people, customers, employees… doThe ‘Conference Board for Corporate Governance at Stanford University’ report ; 93% Board of Directors don’t use social-data intelligence to make informed decisions about their networks’ sentiments or engagement.

Also, research at University of California at Berkeley and MIT reveals that social media is a leading indicator of stock price movement. As such, Board of Directors of publicly traded companies need to be engaged with their stakeholders and know how they will act based on insights derived from social and cloud networks.

Bottom line: Board of Directors must begin to rethink-reshape their role in today’s digital world; more important, they must join the global-social-mobile ranks

In the article Rules for Corporate Governance in Social Age by Barry Libert writes: Corporate Board of Directors must rethink the role of corporate governance in today’s connected age, for example:

  • Rethink Strategy: Board of Directors must align their strategy with where value is found in today digital age. Corporate strategists are rethinking how to use technologies and people with common interests and passions to improve their performance…
  • Rethink People: As corporate directors, board members must fully understand that an organization’s next big idea may come from anywhere and anyone. As such, corporate directors must ask their management teams; how they are leveraging their collective wisdom…
  • Rethink Processes: Board of Directors must ask management how they are shifting their focus from inside-out to outside-in to drive growth and innovation. Social networks are most often outside the company and to tap this wisdom an organization  must shift its focus from inside-to-outside…
  • Rethink Technology: Technology is a strategic asset that must be leveraged for success. Boards must play a prodding, if not active role in ensuring that management rethink-reshape its technology strategy, such that it adds value-minimize risks by actively integrating today’s social-mobile-cloud and big-data technologies into everything it does.
  • Rethink Leadership: The concept of traditional, top-down management is quickly losing steam in world in which everyone has a voice, including; customers, employees, partners, investors… In context of increasing demand for accountability, transparency and openness involving all stakeholders– corporate directors must rethink the board composition and competencies.
  • Rethink Finance: Board of Directors and leaders can hold some historical and framing biases that make it a challenge for them to see and invest in today’s– intangible and unmeasured sources of value– social network, data intelligence… Leaders  must  rethink capital reallocation strategies, especially given research by McKinsey that indicates; most companies continue to invest in same things as they did last year…
  • Rethink Governance: The future for Board of Directors is less about traditional governance and regulatory compliance, and more about network alignment, capital reallocation to new sources of value and technology and business model strategies. However, looking backward through the lens of financial reporting will only go so far. Whereas, leveraging real-time data from social technologies and mobile networks offers a more complete view about the future desires and needs of their stakeholders.

Spencer Stuart U.S. Board Index 2012: This annual study examines the state of corporate governance among S&P 500 companies. The 27th edition reveals critical trends in director recruitment, board processes, compensation… Among the notable takeaways from this year’s proxy analyses are:

  • Board of Directors turnover continues to decline: S&P 500 boards elected just 291 new directors in the 2012 proxy year– the smallest intake in 10 years and a 27% drop over the past 10 years.
  • Restrictions on other corporate directorships more common: Given the time commitment required for effective board service, 74% of S&P 500 companies now limit other corporate directorships for their board members versus 55% five years ago.
  • First-timers and other corporate executives prove to be attractive pool: Board of Directors is recruiting more retired top executives and other corporate executives. Division/ subsidiary presidents and other line and functional leaders now make-up 22% of all new directors, versus 7% a decade ago. 30% of new independent directors are newcomers to outside public-company board service.
  • Mandatory retirement age rising: Nearly three-quarters of all S&P 500 Board of Directors –up from 55% in 2002 — set a mandatory retirement age for directors. Of that group, 22% set the age limit at 75 or older, versus just 2% in 2002.
  • Independent Board of Directors leadership becoming norm: Only 3% of S&P 500 boards have neither an independent chairman nor a lead or presiding director. And, while only 18  companies report a formal policy to split the chair/CEO role; 43% of boards– up from 25% in 2002 – now split the chairman and CEO roles.

In the article Measuring Effectiveness of Corporate Governance by Dr. Yilmaz Argüden writes: The essence of good corporate governance is ensuring trustworthy relations between the corporation and its stakeholders. Therefore, good governance involves a lot more than compliance. Good corporate governance is culture and climate including: Consistency, Responsibility, Accountability, Fairness, Transparency, and Effectiveness that is Deployed throughout the organization (i.e., ‘CRAFTED principles of governance’).

Board of Directors has the basic responsibility to ensure sustainable improvements in corporate valuations by providing strategic guidance and oversight regarding management decisions, as well as, selecting-changing management whenever necessary. Success can only be achieved on a sustainable basis, if Board of Directors behaves as role model for implementing the ‘CRAFTED principles of governance’ as well as, ensuring that the corporation follows the principles in making key decisions.

The Board of Directors is the most important element in corporate structures: The tone at the top determines the tune in the middle… The quality of governance must be continuously improved, but what is not measured, cannot be improved. Most attempts to measure the quality of corporate governance focus on compliance-related issues. Numerous rating models also seem to focus on the inputs of governance, such as, the composition of boards and the separation of the CEO and chairman roles.

However, they do not pay sufficient attention to the quality of information, decision-making processes, nor link the effectiveness of governance to output measures, such as; brand image, employees, customer satisfaction, profitability, value creation… The backbone of an effective evaluation model must focus on four main areas; three are Inputs and Output, namely;  Inputs: • The right people • The right team • The right processes… Output: • Improvement in business results.

In the article Cultural Dependence of Corporate Governance by Bob Tricker writes: The concept of the ‘corporation’ is a creation of the Western world and rooted in the notion that shareholder democracy, stewardship of directors, trust, and the belief that Board of Directors recognize their fiduciary duty to company. But today’s corporate structures have outgrown this simple notion. The corporate concept is now rooted in law and legitimacy of the corporate entity rests on regulation and litigation.

The Western world has created the most expensive and litigious corporate regulatory regime the world has yet seen. However, this is not the only approach; and certainly not necessarily the best. The Asian reliance on relationships and trust in governing the enterprise may be closer to original concept.

Hence, there is need to rethink-reshape the underlying idea of the corporation; contingent with the reality of power that can (or could) be wielded. Such a concept must be pluralistic, rather than ethnocentric; if it’s to be applicable to corporate groups and strategic alliance networks that are now emerging as the basis of the business world of the future.

The traditional Board of Directors governance model has been challenged for some time. While the model continues to evolve, it is not changing nearly fast enough to keep up with world around it. According to John Griswold; in the new world, the task before Board of Directors is; first, to acknowledge and identify the new priorities; second, to think in nontraditional ways in order to adapt their organization’s processes, policies, people.

As business reinvent themselves, so must Board of Directors. Effective boards ensure that they have– the right process, the right people at the right time. Great boards consist of independent directors who are ‘rowing together in the boat’. They see the development of strategy as a collective and collaborative effort between themselves and management, rather than the question of; ‘us vs. them’. The board must review its risk appetite on regular basis.

A great board will make succession planning a regular agenda item, and it will start the process as early as possible– even if it makes incumbents uncomfortable… it will also consider succession for chairman and rest of the board. Board of Directors of listed companies has an obligation to build and protect long-term– all stakeholders value and to ensure short-term decisions don’t jeopardize sustainability of the enterprise. Changing models is like changing lifestyles; well-established ideas and patterns of behavior are abandoned and replaced with new ideas, roles, activities…

According to John Carver; boards must govern with emphasis on; (a) outward vision rather than internal preoccupation, (b)encouragement of diversity in viewpoints, (c) strategic leadership more than administrative detail, (d) clear distinction of board and chief executive roles, (e) collective rather than individual decisions, (f) future rather than past or present, and (g) proactively rather than reactivity.

Reshaping the Role of Corporate Executive Leadership: Rearranging Executive Power Sharing in the C-Suite– CEO, CFO, CLO…

New research suggests that having a single leader, the CEO, will no longer work in this era of globalization.

The rapid evolution of executive roles in today’s hyper-dynamic business climate is like the game of ‘musical chairs’, where roles in the executive suit are constantly evolving with the ever-changing globalization of the business environment.

The fundamental concept of executive leadership is changing. CxOs must have a radically new type of creative, innovative mindset. According to Andrew Stein, the roles and responsibilities of just a few years ago of the CEO, CFO, CLO… is much different today, and it’s still changing. Sometraditional tasks have even shifted from one title to another. Today, every executive in the C-suite must communicate effectively, confidently, and convincingly to all stakeholders, partners, and especially customers and employees.

The business priority has changed, it was compliance but now technology innovation is the most profound driver of role change. As a baseline, corporations were historically measured by revenue and profit, whereas  today companies are measured on creative ability to innovate in all aspects; functions and service levels across the business.

The economic drivers of the last few years forced global businesses to innovate to a higher level and at a faster rate, than ever before. It forced the executive team to make innovative decisions that forced seismic-level change. Shifts from efficiency measures to innovation initiatives produced profound results.

Customers are seeking out the innovative companies over those just holding on and riding out the economic storm. Leaders that want to stay on top must reinvent their role; they must be visible and build trust with their organization and extended stakeholders…

In the article “CEO or CFO: Who’s in Driver Seat?” by Lisa Yoon writes:  In a study by Deloitte titled ‘Chemistry of CEO/CFO Relationships’, they identified four personality types that CEOs and CFOs fall into:

  • Drivers: Analytical,  logical, experimental, determined, decisive, direct, tough, competitive, pragmatic.
  • Guardians: Concrete, process-detail-oriented, traditional, socially connected, loyal, conscientious.
  • Pioneers: Adventurous, creative, interested in new experiences, high-energy, spontaneous, optimistic, adaptable.
  • Integrators: Web-thinking, intuitive, imaginative, empathic, expressive, diplomatic.

In this study, researchers at Deloitte asked 91 large-company CFOs which personality type they themselves identified with, as well as the type that described their CEO. Just over half the finance chiefs self-identified as ‘drivers’, while 29% said they were ‘guardians’. The other 20% split evenly between ‘integrators’ (11%) and ‘pioneers’ (10%).  While, 34% said their CEO was a ‘driver’, another 33% called the CEO a ‘pioneer’; even though that was the category were the fewest CFOs saw themselves.

Also, CFOs saw CEOs as ‘guardians’ 22%, and ‘integrators’ 11% of the time. In terms of CFO-CEO pairings, it appears ‘drivers’ are the key component in amicable and lasting partnerships. More than three-quarters of the pairs (77%) had at least one ‘driver’. According to Deloitte, this suggests the versatility of ‘driver’ type; it’s harmonious in pairings with any personality type. It may also be that the decisive and practical styles of ‘drivers’ are simply an essential part of an effective CFO-CEO partnership.

In this Deloitte view ‘driver’ CFOs, presumably, being able to pair well with different CEO types, enjoy important benefits among other CFO types. The ‘drivers’ versatility affords them more career options, better partnerships with their CEOs, and the ability to adapt to CEO changes. That same flexibility, meanwhile, might even help ambitious CFOs ‘drive’ toward the CEO role in the future.

In the article “Chief Legal Officers Have More Power Than Ever Before” by ‘The Economist’ writes: The Chief Legal Officer (CLO) is now one of the mightiest figures in the C-suite. The main reason is that the legal thicket has grown thicker. In the U.S., the 2002 Sarbanes-Oxley act inserted federal law deep into corporate governance. The Dodd-Frank act of 2010 made running a financial business much more complicated.  

In the book ‘Indispensable Counsel’ by Norman Veasey, Christine Di Guglielmo, they argue that a CLO must be a ‘courageous renaissance person’. He must be a business partner and a guardian of corporate integrity. He (or she; 20% of big-company CLOs are women) represents the entire corporate entity, not just its managers. He answers directly to the CEO and the Board of Directors, as well.

Professional ethics often require the CLO to say ‘no’, to the other suits in the C-suite. Sarbanes-Oxley, in particular, has increased the lawyer’s responsibility to keep his company straight, or face punishment. The CLO must protect the company’s reputation with customers, suppliers, journalists and non-governmental organizations. Perhaps the hardest balancing act for a CLO is that he/she must be both a cautious lawyer and a member of the strategy team. Only the best CLOs excel in both roles.

A visionary thinks about the future, but a lawyer’s stock-in-trade is precedent. If he gets too involved in business, he may forget to be a lawyer. (The U.S. courts have ruled that a CLO’s purely business advice is not covered under attorney-client privilege.) Good lawyering can be good for business. For example; sharp legal departments can enforce a sound anti-bribery policy, while rival firms run into swamps.

It can knock down competitors’ patents; handy when so many technology firms are warring over intellectual property. It can smooth takeovers; tricky in any industry under scrutiny by trustbusters…

In the article “Two Leaders in the Corporation of the Future” by Marianne Lepa writes: New research suggests that having a single leader no longer works for the corporation of the future, and that the roles of CEO, CFO, CTO… should be given equal say. The Chief Executive Officer (CEO) as visionary leader is a thing of the past, says Dr. Philip Tulimieri. Dr. Tulimieri believes that the Chief Financial Officer (CFO) should also have equal billing and responsibility for corporate leadership.

Tulimieri says his research suggests that the  distinction between the two roles is blurring and that changes in corporate structure and in society at large indicate that the two roles are merging in many ways. Tulimieri says the forces of globalization have created a confusing and complex set of responsibilities for corporate leaders. The two positions of CEO and CFO while very distinct in duties tend to be recognized now as ‘necessary counterforce’ in the business structure… 

The CEO is the ‘eternal optimist’ leading the way and the CFO is ‘the realist’ being cautious and warning of risk. The two roles, both address the need for growth and responsibility must function as a team rather than adversaries. The CEO-CFO partnership provide the engine for the new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.

In the article “The New Path To the C-Suite” by Boris Groysberg, L. Kevin Kelly, and Bryan MacDonald write:  We know that different times and different circumstances call for different leadership skills. Prior to the early 2000s the typical CFO was a bean counter, responsible mainly for reporting the numbers, measuring performance with integrity and accuracy, and managing the company’s checks-and-balances processes.

CFOs had accounting and financial acumen, as well, as strong quantitative skills but their purview was relatively narrow and confined mostly to their department. The typical CFO was also country-centric, even at firms with an international presence, operating on the theory that regulatory differences made global finance too complicated.

Today, however, regional differences loom larger than ever, and multinationals no longer have the luxury of keeping finance issues within geographical boundaries. As the retired head of finance of one U.S. manufacturer pointed out to us; ‘CFOs now need experience with capital markets, mergers, and information technologies’. The CFOs of the future will operate around the globe, in multiple time zones, and will regularly partner with nonfinancial areas of the business on growth initiatives and international expansion. Thus they will need both a commercial sensibility and a global mind-set.

Whereas, today CFOs are required to develop and implement systems and processes for budgeting and performance metrics, tomorrow they’ll also be required to provide the management team with real-time, operational, and financial data and analyses. They’ll continue to perform the traditional functions of managing the finances, reducing costs, and putting in place the appropriate controls, but strategic thinking will become more important…

Corporate executive leadership can be divided: The positions of CEO, CFO, CLO… while very distinct in duties tend to be recognized now as ‘necessary counter-forces’ in the business structure. The top job has simply become too large, too complex and too demanding for one person.  A CEO-CFO-CLO partnership will provide the engine for this new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.

For the Chief Executive Officer (CEO), a few trends are emerging that are influencing the direction of the role, such as; strong communication, empathy, collaboration, and trust building. As the face of the company, one skill of foremost importance is the ability to elicit public trust. As one executive put it, ‘The C-level person today needs to be more team-oriented, capable of multitasking continuously, leading without rank, and having an open office plan. In other words, a whole new breed of top executive’.

For the Chief Financial Officer (CFO), trends show an active role in talent management, contributing to areas beyond finance, and assuming the role of CEO designate. No longer is the CFO only preoccupied in building credibility for the finance function, he must instill a sense of confidence among employees, customers, partners… It goes without saying that the CFO’s level of understanding of the business has evolved tremendously from what it was a few years ago.

For Chief Legal Officer (CLO), trends show heightened attention to risk management, which includes; safety, security, and reputational risks, which are all central to the senior team’s agenda. The CLO reports directly to CEO, but also functions as high-level advisers to the Board of Directors in matters affecting corporation. Whereas, corporate lawyers were once expected to understand just the rules in ones own country; today the CLO needs to operate across geographic boundaries, and deal with a range of new and evolving challenges in the era of globalization...

The CEO is the moral and ethical leader that bring a sense of optimism and purpose. The CFO is naturally prudent and cautious having developed in an environment of statutory financial information. The CLO is the risk manager and provider of corporate stability. These roles working together, in partnership, is the ‘platform’ for building a successful
enterprise
.

Changing Face of Women in Business Leadership: Reality or Myth… Stereotyping Executives– Women Take Care and Men Take Charge…

Ultimately it’s about business performance… and the best companies in terms of performance will be those that truly embrace diversity [by] hiring, developing, and promoting women to key business leadership roles.~ Mary Fontaine

Women are transforming the face of business and society, moving into leadership roles as business owners and corporation executives. The business case for gender diversity is tangible and straightforward, and it is a platform that should resonate with all executives.

A study titled “The Bottom Line: Connecting Corporate Performance and Gender Diversity” by Catalyst, examined 353 Fortune 500 companies and proved the correlation between increased gender diversity at highest levels and improved financial performance. The findings assert that “the group of companies with the highest representation of women on their top management teams experienced better financial performance than the group of companies with the lowest women’s representation”, with a 35.1% higher ‘Return on Equity’ (ROE) and 34% higher ‘Total Return to Shareholders’ (TRS).

Another study reported in the Harvard Business Review; 215 Fortune 500 firms were evaluated for their support of women executives and respective profitability. The results of this survey demonstrated that Fortune 500 companies with a higher number of women executives outperformed the median firms in their industry. Other studies have found a correlation between gender diverse boards of directors, particularly boards with female directors, improved performance, including higher revenues.

Women currently earn more than one half of all bachelor’s and master’s degrees in the U.S. (57.3% and 58.5%, respectively), nearly one half of all doctorates and law degrees (44.9% and 47.3%, respectively), and comprise about one half of the U.S. paid labor force (46.5%).  However, women are under-represented in business leadership throughout the U.S. Women hold only less than 20% of board seats for U.S. Fortune 500 companies.

Women are also under-represented in executive positions, representing less than 20% of Fortune 500 executives. These statistics suggest that although women are viewed as an important factor in an organization’s success, their limited advancement into executive and director roles indicates that barriers continue to exist.

In the report “Women and the Paradox of Power” by Dr. Anne Perschel and Jane Perdue write: Many women relate to power in ways that prevent them from attaining senior level positions, be it lack of confidence; cultural conditioning; or simply not understanding what power is. In comparison, interviews with women in senor business leadership roles at the highest levels of corporations, reveal that they have a different understanding of power and use different approaches to gain more of it.

They then use their power and influence to make important changes to culture and to leadership practices. Reshaping a male-dominated business culture, changing the ratio of women to men, and thereby improving bottom line results; requires a very specific set of actions by those currently in leadership positions, as well as by women themselves. The authors identify the key issues and solutions:

  • Know power and be powerful: Sixty-one percent of survey participants hold mistaken views about how to advance their power (and themselves). The authors emphasize that women must study power, understand power, and use their power to change the culture of business.
  • Ditch Cinderella: Over sixty percent of the participants preferred passive approaches to gaining power, opting to be granted access, rather than actively taking it. Women cannot passively wait on the business sidelines, hoping business culture will change and hand them the most powerful decision-making positions.
  • Show up. Stand Up. Voice Up: Women comprising nearly forty-seven percent of the entire workforce, holding forty percent of all management jobs, and earning sixty-one percent of all master’s degrees, they are uniquely positioned to work together and with interested men to dismantle legacy organizational barriers and stereotypes.
  • Forge strategic connections: Relationships are the currency of the workplace, yet sixty-seven percent of the women in this study are not taking charge of building their networks.
  • Unstick their thinking: Thirty-eight percent of participants opted for being well-liked rather than powerful. The authors contend this is an area where some women need to re-order their preferences and adopt both.

In the report “Global Gender Gap Report” by ‘The World Economic Forum’ measured the performance of 134 countries on gender-equality by looking at gender disparities in access to resources and opportunity over-time along economic, political, education, and health-based indicators. Iceland, Norway, Finland and Sweden maintain top rankings closing over 80% of their gender gaps, and the U.S., Mali, Pakistan, Chad, and Yemen taking the lowest rankings with around 50% of their gender-gaps yet to close.

New quota requirements in Europe are placing more women at key leadership levels in European companies; reports ‘Corporate Women Directors International’ (CWDI), a non-profit research organization on women directors.

In its latest report, CWDI examines the gender-diversity on corporate boards of Fortune Global 200 Companies. In Europe; Norway, Spain, France, the Netherlands, Iceland, Italy and Belgium currently uphold government-issued quotas mandating the number of seats reserved for women on corporate boards. France and Italy are showing strong gains in women’s boardroom representation with women directors comprising 20.1% and 9.2% of seats on corporate boards, respectively.

In the article Why Women Leaders Need Self-Confidence by Leslie Pratch writes: I headed research at the University of Chicago investigating the longer-term personality predictors of leadership. Among the relationships examined were those among gender; coping and motivation, in the evaluation of leadership effectiveness. Among the particularly striking findings of this research were the differences between men and women on measures of active coping. In a nutshell, we took measures of; coping, motivation, and intelligence at the beginning of the study.

At the end of the study, we assessed the ability of these measures to predict leadership effectiveness as evaluated by peers, superiors, and subordinates. We found that the only measure that predicted leadership for men and women alike was an overall measure of active coping, which  indicates the ability to respond adaptively to stress and to grow. Gender-based expectations for behavior, influence the styles and evaluations of leaders.

Women are expected to display high levels of social (communal) qualities, including; needs for affiliation, a tendency to be self-sacrificing, concern with others, spontaneity, and emotional expressiveness. Men are expected to display high levels of agentic qualities, those associated with acting or exerting power, including; independence, assertiveness, self-confidence, and instrumental competence.

The correlation between self-confidence and leadership effectiveness was also overwhelmingly statistically significant. As a whole, these findings indicate that women have to have high self-esteem and high self-confidence while leading in a communal style, in order to be perceived as effective leaders. In short, they must be stronger copers in order to transcend the constraints placed on their business leadership style.

In the articleAs Leaders, Women Rule by Rochelle Sharpe writes:  New studies find that female managers outshine their male counterparts in almost every measure. That’s the essential finding of a growing number of comprehensive management studies conducted by consultants across the country for companies ranging from high-tech to manufacturing to consumer services. By and large, the studies show that women executives, when rated by their peers, underlings, and bosses score higher than their male counterparts on a wide variety of measures; from producing high-quality work to goal-setting to mentoring employees.

Using elaborate performance evaluations of executives, researchers found that women got higher ratings than men on almost every skill measured. Ironically, the researchers weren’t looking to ferret-out gender differences. They accidentally stumbled on the findings when they were compiling hundreds of routine performance evaluations and then analyzing the results. The gender differences were often small, and men sometimes earned higher marks in some critical areas, such as strategic ability and technical analysis.

But overall, female executives were judged more effective than their male counterparts. ”Women are scoring higher on almost everything we look at,” says Shirley Ross. Women think through decisions better than men, are more collaborative, and seek less personal glory; says the head of IBM’s Global Services Div., Douglas Elix.

Instead of being motivated by self-interest, women are more driven by ”what they can do for the company”,  Elix says. Professor Rosabeth Moss Kanter, Harvard Business School, author of the 20-year-old management classic book, Men and Women of the Corporation’, says; ”Women get high ratings on exactly those skills needed to succeed in the global Information Age, where teamwork and partnering are so important.”

The concept of business leadership is changing; however, there is a clear double standard: Studies show: Male CEOs and senior vice-presidents got high marks from their bosses when they were forceful and assertive and lower scores if they were cooperative and empathic. The opposite was true for women: Female CEOs got downgraded for being assertive and got better scores when they were cooperative’. Concluding that at the highest levels, bosses are still evaluating people in the most stereotypical ways.

That means that even though women have proven their readiness to lead companies into the future, they’re not likely to get a shot until their bosses are ready to stop living in the past. But if women are so great, why aren’t more of them running big companies? According to ‘boomerdivanation.org’; there’s still a pipeline problem: Most women get stuck in jobs that involve human resources or public relations; posts that rarely lead to the top.

At the same time, female managers’ strengths have long been undervalued, and their contributions in the workplace have gone largely unnoticed and unrewarded. Companies are now saying they want the skills women typically bring to the job, but such rhetoric doesn’t always translate into reality. These under-currents of bias are forcing many women to seek other career opportunities, such as, starting their own businesses.

As of March 2011, there were 10.1 million businesses owned by women, making up 40% of all private businesses. Many women admit that because they spend so much time focusing on getting results, they don’t think enough about strategy and vision; qualities that Harvard’s Kanter says, are still the most important in a top executive. ”If women are seen as only glorified office facilitators but not as tough-minded risk-takers… they will be held back from the CEO jobs. says Kanter,

In the end, it takes a lot more than competence to make it to the top. Getting the best performance evaluations in the company’s history may not be nearly enough. ”When you actually sit down in a selection committee to choose the CEO, lots of subtle assumptions come into play, said Deborah Merrill Sands. Companies may say they want collaborative leaders, but they still hold deep-seated beliefs that top managers need to be heroic figures.

The bottom line is that the business case for diversity is strong. Companies with gender diverse leadership teams have seen the positive results and are outperforming those without women at the helm. The prospect for improved financial performance is a business case that cannot be ignored.

We knew we had to be twice as good, twice as reliable, and twice as tough-minded as the bright young men who surrounded us, and we worked like horses to prove our worth. ~Ellen Kaden