Sitting at the helm of a corporation entails additional responsibilities and a shift in attitude and strategy for 2011.
According to Heidrick & Struggles, a Chicago-based leadership and advisory service, CEOs should expect to take on a greater range of responsibilities in the face of changing regulation and shutting expectations of stakeholders.
‘Today's challenges require someone who can demonstrate a much broader and more strategic perspective than in the past,’ says Stephen Miles, vice chairman of Heidrick & Struggles. ‘Leading a company now demands that the CEO take on the mantle of chief diplomat, chief talent officer and chief image manager, in addition to his/her traditional responsibilities.’
The top 10 key challenges, according to the report, that loom over these executives for 2011 are as follows:
Transitioning from ‘business case’ to ‘social business case’: When companies enter new markets overseas, they must present a case that shows local stakeholders the benefit of launching a new operation in their area. ‘The transformation of developing local economies due to a major corporate presence can affect the original business case: new unionization and increasing wealth may impact the decision,’ says Miles.
Stepping into the role of ‘ambassador’: It is now essential for CEOs to open the lines of communication with politicians and regulators around the world. ‘Given this, the CEO must act as diplomat and build these relationships him-or himself [and] only unusually qualified delegates- like former politicians …can effectively step into this role and supplement the CEO.’
Repairing the corporate image problem: With the introduction of the Dodd-Frank Act, Miles says that the image of many corporations has been tarnished. Integrating corporate social responsibility efforts into the overall business model will help to gloss over the ‘negative press’ the company received.
Making the board an ally: After the global financial crisis and Sarbanes-Oxley, corporate boards have become more ‘executive by instilling themselves further into the role of scrutinizing and interrogating management.’ Due to this, CEOs might have to step in and attempt to build a strong relationship with these stakeholders. ‘Conversely, treating the board as a partner along a strategic path will only help your cause,’ Miles says.
Building a global leadership pipeline: A recent company survey revealed that 51 percent of companies are unable to name a CEO successor immediately while 39 percent have no internal candidates who are qualified for the position.
To that end, Miles suggests that a ‘global pipeline of talent’ is seen as an investment and should be added to the organization at the senior levels so a CEO can be efficiently replaced when needed.
Grappling with China: Since the country is the home to a growing consumer market and supply chains, many companies are trying to set up shop, launch joint ventures and build partnerships. But, if a qualified individual is not on board, there might be some negative implications to this relationship. ‘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,’ says Miles. Now, the CEOs must be aware that they might create competitors.
Understanding shifting employee values: With the change in demographics and baby boomers move to retirement, ‘millennials’ who have different values and objectives are moving up through the ranks and ‘this is something no CEO should neglect.’ These employees will likely have different goals and greater mobility so executives now must understand the risks associated with ‘less loyal’ employees.
Social media evolution: Some CEOs are now getting acquainted to the fact that their thoughts and actions are being broadcasted via Twitter and Facebook. Leveraging this new medium instead of dismissing it can create a new opportunities. Miles says, ‘combating negative public opinion and forging a dialogue with younger employees,’ can move the company closer to achieving its goals.
Driving Diversity: Miles points out that diversity is no longer purely an HR issue, but is becoming a more fundamental business consideration. ‘A number of countries are taking a legislative view regarding gender diversity on boards (Norway, UK and Australia), and are set to begin to mandate the percentage of female directors that must be on boards.’
Managing a globally distributed leadership team: ‘CEOs must think differently about where a division is led or who should lead it. Increasingly CEOs are thinking locally.’ By recruiting teams around the world, Miles anticipates that the local executives will stay longer and this will promote a stronger competition with local competitors who may surface on the market overtime.
Overall, the CEOs are being hit with a high margin of challenges for 2011. As the financial markets slowly combine their efforts, these executives are now being forced to step up to the game, or step down.
‘The impact of the financial crisis combined with the new requirements for conducting business on a global scale have transformed the office of CEO,’ says Miles.