Managing Tomorrow’s Leaders

Having grown up with broadband, social media and smartphones, millennials expect instant results and are often turned off by rigid corporate structures and siloes. As the proportion of millennials in the workforce grows, leaders are having to rethink traditional organisational design and management styles.

“Millennials expect a far more open, networked and flatter organisation. They are looking to collaborate across different areas and crowdsource ideas irrespective of hierarchy,” says Payal Vasudeva, Managing Director, Talent & Organisation Lead and Strategy People Lead for the UK&I at Accenture.

“In return they want investment in their capabilities, proactive learning and development opportunities that build their skills. They have longer-term aspirations and it’s a life of jobs, not a job for life.”

Mark Nichols, Director of Customer Support at Skype, which is owned by Microsoft, recognises that career progression is no longer viewed in a linear manner and notes there is now an inclination towards ‘serial learning’.

“At Skype and Microsoft, while there is a very robust hierarchy, people do move around a lot more and spend time in other divisions. It may not look like there is progression to the next level but there will be accrued learning,” he says. “I don’t think the formal model of ‘complete modules one, two, three and then you’re competent’ stacks up.”

As a result, the weighting in job interviews has changed with candidates expecting to be sold to just as much as they pitch themselves. And according to Mark, millennials want to see “under the covers” of an organisation before they commit.

They want a job where they can add real value to an organisation. Erica Smart, Vice President of Developments for Brazil at BG Group, says: “They want to be doing something useful and see the value in the role they’re playing. The best outcomes are when they have work that is intimately tied to the main objectives of the group.”
This point is echoed by Alison Mills, Relationship Manager at Criticaleye: “It’s important to provide meaningful roles from day one of employment, rather than to expect that a promise of success and status at a later date will provide sufficient motivation.”

The millennial mindset 
With an affinity for digital technology, millennials are the first generation to grasp a key business tool more so than some senior workers – it can give millennials the edge.

“We have certain leadership teams within our organisation that actually have millennials in them – really high-performing individuals,” Payal says. “It’s about making it truly collaborative.”

Mark recognises that a younger workforce can offer insight into your future customers, including what they expect from your products and services and how they might use them.

He gives his experience of how interns at Skype are providing considerable value: “Some millennials use Skype but only to communicate with their parents; it’s the only user case they have. That’s starting to give us a different perspective on some of the core basics.

“Having a handful of people in their late 30s and 40s who have served their time in customer service doesn’t really pay off when we’re trying to understand the global position on what live chat and in-app support really means.”

It’s true that a fresh perspective can open up possibilities in any industry. Laura Haynes, Chairman at brand and design consultancy Appetite, comments: “The needs of businesses are changing, there are new markets, new channels and there’s a call for innovation. We are doing things today we didn’t even know existed five or 10 years ago, so new thinking is essential.

“Companies need to be more agile, they should be creative. While experience is still valuable, there is a requirement to bring diversity of thought into the way we work and approach things. That’s creating new business models and changing thoughts about business structure.”

Whichever way organisations look to engage and integrate the younger workforce, there is much to be learned from these future leaders that could benefit the entire workforce. “Some of the things millennials are demanding are actually things that all of us would like,” says Payal “It’s all about creating the millennial mindset.”

These comments were taken from a recent Criticaleye Global Conference Call, Millennials: Reshaping the Workplace, held in association with Accenture Strategy. 

By Dawn Murden, Editor, Advisory

Do you have a view on this subject? If you have an opinion you’d like to share, please email Dawn at: dawn@criticaleye.com

https://twitter.com/criticaleyeuk

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Talent Strategies for High-Growth Markets

Comm update_24 SeptemberIt’s tough to formulate an effective strategy for managing talent in high-growth markets. While it’s tempting for companies to repeatedly opt for short-term fixes given the speed at which individuals move between roles, it’s not a sustainable approach. Instead, if you want to maximise the chances of keeping your best people, you also need to have a long-term plan in place which allows them to develop and grow as leaders.

According to Jack Wood, Criticaleye Thought Leader and Professor of Management Practice at China Europe International Business School (CEIBS), the onus is on CEOs and Divisional MDs to start thinking ahead: “Companies are really short-term focused nowadays; setting aside long-term developmental systems doesn’t get much support. It takes an unusually wise senior executive to have that kind of vision for his or her people and organisation.”

César Cernuda, President of Microsoft Asia Pacific, acknowledges that it can be challenging. “It is sometimes easier to look for short-term fixes rather than building for the future,” he says. “It [can be] hard to strike the balance of how much development investments we need to make to realise optimal ROI and not become a training ground for our competitors.”

It’s a case of accepting that in high-growth markets a degree of mobility is inevitable. Bryan Marcus, former Regional Head for Latin America at Volkswagen Financial Services, observes: “Within certain skill-sets, particularly IT, you’re always struggling to find and retain the best talent because somebody is always potentially outbidding you.”

Of course, this doesn’t mean leaders should shy away from devising solutions. “At Microsoft, intentional talent planning and development is a key part of our strategy, especially in high growth, emerging markets like Asia Pacific,” says César. “We need to balance both short and long-term priorities in order to build the right overall foundation and be constantly evaluating, for each market, whether we need to build, borrow or buy talent.

“Often, all three strategies have to work hand-in-hand or in parallel against a clear two to three-year backdrop…. It is also vital that clear accountabilities are placed on expat senior managers to build local talent and drive a good succession and development plan.”

Yetunde Hofmann, former Global HR Director at Imperial Tobacco, suggests that problems will occur when the senior leadership team doesn’t take a step back to identify local capability requirements: “The questions you need to ask are: What are you trying to achieve in that local market and, therefore, what specific needs do you have in that market from a leadership or talent perspective?”

There needs to be an underlying knowledge of people’s capabilities throughout an organisation. Robert Bailey, President and CEO of Singapore-based travel specialist Abacus International, comments: “One of the things which we’ve done since I arrived, which has helped immensely, is create a competency-based performance management system.

“High-potential [employees] may not be [recognised] on [the] first pass… [so the] system was extremely helpful in both logging talent and identifying opportunities for development and rotation of promising individuals.”

On the ground

The temptation for foreign corporates operating in emerging markets is to fill senior positions with expats. Naturally, there are logical reasons for doing this but if there is a real lack of understanding about how a local market works, problems will soon arise.

Mei Wong, Affiliate Partner for Asia at executive search firm Warren Partners, comments: “You have to first of all question why you are sending expats: is it because they understand the company and the culture? Because they are people whom you trust? Or is it because you can’t find the right talent locally?”

For many medium-sized companies, a limited talent pool can result in a lack of managers with international experience. Mei says: “I have seen companies sending people to Asia who’ve never worked outside of the UK, so they don’t have the local market knowledge. That’s going to be challenging.”

In addition to this, organisations can’t be seen to be preferential in terms of who comprises management and the senior team. David Best, President for Asia Pacific at global aviation services provider BBA Aviation, says that “knowing that the top position will always be filled by an expat is no motivator for high-potential local talent”.

Els Vandecandelaere, Vice President of HR at pharmaceutical company Janssen, agrees: “There must be a healthy balance between expats and local talent. I don’t believe in an organisation where its strategy is to have expats fill the senior positions for all of their emerging markets…

“Hence our focus is on developing local talent to accelerate them through a diverse set of experiences so they can get to the top positions…. This includes working for a couple of years in an established market.”

It comes back to creating a talent map which accommodates the idiosyncrasies of local markets. Rob Atkinson, Chief Executive of Adshel, the Australian subsidiary of outdoor advertising company Clear Channel, explains that leadership development training, mentorships, participation in special projects and opportunities for secondment to other areas of the business are all vital in pushing people to the next level.

Alan Bannatyne, CFO at recruitment company Robert Walters, says: “I think you’re just always trying to keep the standards as high as you possibly can, and that by itself challenges people – it keeps them on their toes, allows them to grow their capabilities and therefore develops their career.”

The proverbial war for talent in high-growth markets is as intense as ever. Whether it’s Asia, Africa or Latin America, people with the right skills are in serious demand. That won’t change any time soon, so it makes sense to ensure you’re doing all you can to give your best people every possible reason to stay.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Making the Move to Group CEO

CE update 19.02.14Becoming Group CEO is the pinnacle of an executive career, but those with ambitions of taking the helm of a global business should be careful what they wish for. From managing the board and marshalling the views of divisional heads, to communicating with the media, analysts and shareholders, it’s a 24/7 responsibility which provides the ultimate test of a person’s ability to lead.

“The biggest impact for me was recognising the demands of the City and shareholders,” says Mike Turner, Non-executive Chairman at engineering concern GKN and formerly Group CEO of BAE Systems. “What surprised me at first was that at the half-yearly or yearly presentation the shareholders and analysts weren’t interested in the results, they really wanted to know about the future growth prospects of the company. That brought home to me the need to be able to articulate a clear, long-term growth strategy.”

Pim Vervaat, who became Group CEO of plastic manufacturing company RPC following five-and-a-half-years as CFO, comments: “Being good at governance, numbers, talking to banks; this alone is not enough to make the transition to CEO. You really need to have an interest in the people and the key strategic drivers of the business.”

A change of mindset will be needed by those who’ve stepped up from a divisional CEO or regional MD role. Leslie Van de Walle, Chairman at building material company SIG, who made the transition from Divisional CEO to Group CEO at United Biscuits, says: “Divisional heads often underestimate the difficulty of always getting the right compromise between the various stakeholder objectives. When you get to group level you have to balance decisions against the needs of the business, the shareholders, the wishes of the board… and the interests of suppliers and customers.”

Carl-Peter Forster, Non-executive Director at engineering company IMI and formerly Group CEO at Tata Motors, says: “You have to move on from being very operationally focused, which most divisional CEOs are, to becoming much more strategic. Leading a group calls for a more indirect way of influencing and motivating people.”

In focus

The pressure of being the public face of the business can come as a shock to the uninitiated. Judith Nicol, Director at executive and non-executive recruitment specialist Warren Partners, says: “Most people at the very top of organisations are absolutely gobsmacked by how much everyone scrutinises them on a daily basis.

“You become the cultural compass and people take in everything from how you’re walking around the building, how you look, your mood… It all becomes so much more important when you’re a chief executive.”

Mike comments: “The UK press is pretty demanding, and that was a challenge, but the biggest struggle I had was in dealing with the government… In the end I had to talk with then Prime Minister Tony Blair to try and get him to understand that this county’s defence equipment base would just disappear unless he adopted a defence industrial strategy.

“In business, you’ve got to look to the long term. I’m afraid a lot of politicians just look to the next election.”

To make it as a Group CEO, you need experience across a range of functions and situations to understand how a business operates. Pim comments: “As CFO you have got to deal with shareholders, the board, and all the stakeholders quite closely already…  Working closely alongside the chief executive in a public company for five years has helped me immensely.”

Likewise, taking on a NED role as an executive will certainly give you valuable insights. Carl-Peter says: “Dealing with the board was certainly something I found to be a bit of a challenge and it was the one area I wasn’t particularly well prepared for… An external NED role would have helped massively because it puts you in a position where you can observe things objectively.”

The real differentiator for the best CEOs is the ability to see the bigger picture, showing superb leadership skills and possessing the strength of character to handle the constant pressure of being in the spotlight. Leslie says: “You have to be clear not only about the attraction of the role and the power associated with it but also the downside, which is the fact that you are alone and that you are ultimately responsible and accountable for whatever your team and the group does.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Is Your Digital Strategy on the Money?

Comm update_11 FebrSo you’ve gone through the headaches and heartbreak of constructing a digital offering. You’ve evolved from multichannel to omnichannel, striving to provide a consistent – seamless may be a stretch too far – level of service via stores, the web and mobile. Now the real hard work begins as it’s time to make full use of data and analytics to establish a clear return on investment.

Charlie Johnstone, Origination Partner at private equity firm ECI, says: “Customers increasingly shop across channels which makes it hard to attribute revenue to one particular area of spend. For example, a straight measure of PPC [pay-per-click] may suggest it is unprofitable, but this could ignore customers who are originally attracted through PPC and subsequently come to the site organically to shop, or indeed transact through another channel.

“Successful businesses are those which not only take a holistic view of the customer but are also able to understand shopping habits through analytics and behavioural insight rather than seeing each channel in isolation.”

By investing in data companies will start to see a difference. Jonathan Elliott, Europe Head of Business Transformation and of Digital Enterprise for Tata Consultancy Services, says: “Smarter businesses use analytics to micro-segment their customers, to better profile their products and also to look at how to use technology to spot bottlenecks in their operations.”

Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, provides the example of DBS Bank, one of the largest in South-East Asia: “[It] has done a great job by enriching customer service through digital… In terms of cash allocation in ATMs, where Singaporean customers use them a lot more than in Europe, they’ve invested in data and analytics to understand everything from amounts of cash withdrawn, speed of dispensing it and where it’s being withdrawn the most…

“It took six months to develop an algorithm which they then tested for a year, but the net result was a massive improvement in cash allocation across the country and customer satisfaction went through the roof.”

At the end of last year, Gary Favell, CEO of retail concern Bathstore, launched a new e-commerce platform. He explains: “If you truly have an omnichannel strategy, the first thing you need to be able to do is track the return on investment on what you’re spending. If you haven’t got software that can track your customers and a data management system that isn’t totally integrated, you can’t tell that.”

Heather Savory, who chairs the Open Data User Group, which provides independent advice to the UK Government’s Data Strategy Board, comments: “Any business that doesn’t have a digital strategy at its heart will find it difficult to continue to do business in the medium term.  For example, the use of both demographic and geospatial data allows large supermarkets and other retail outlets to work with local government to plan where they should locate their new stores.”

Taking the lead

The use of data as a way to inform and shape strategy is only going to increase, whether that’s from pricing – Amazon reportedly makes 2.5 million price changes a day – to gathering intelligence on purchasing habits.

For those companies struggling to identify an ROI, a change in thinking is required. Jay Patel, CEO of mobile data provider IMImobile, says: “A lot of the return on investment hasn’t occurred because multichannel strategies are being applied to situations where companies are trying to win new customers.

“The acquisition of customers is difficult and competitive and just because you can do multichannel doesn’t mean you are going to [be successful].”

Martyn Phillips, former CEO for the UK & Ireland at DIY retailer B&Q, which in 2011 spent £35 million improving its online business, says: “You make certain decisions and review them quarterly, determine what success looks like, plan your investments for that quarter, and then stick with it.

“It changes so quickly and you can just get lost very quickly… [so] you’ll need to be prepared to change your view and rebalance your investments for the next quarter.”

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “Most of our customers have a multichannel approach to some extent but the crucial bit is developing some clarity around why you need to be in the digital space, how it’s going to benefit your customers and how your organisation is going to use it.

“There are often different silos within the business that have different objectives… but if channels aren’t connected and you can’t start a conversation in one that can be continued in another, then it’s not only disappointing for the customer but ultimately expensive for you as an organisation.”

Incentives will need to be aligned across platforms, a decision which may cause unrest among employees but one that is necessary if an organisation is to mature and move beyond the outdated dichotomy of digital versus physical. Training, development and new hires will also need to be undertaken if a company is going to succeed in building its brand and, in the process, winning and retaining customers.

John Allan, Chairman at electrical goods chain Dixons, which recently created a new Chief Marketing Officer position in order to bolster its multichannel capability, says: “Every management team benefits from having a blend of experienced people who understand the business and people with expertise from outside it, perhaps from other industry sectors… We have to keep moving forward as a business, particularly in terms of digital marketing, and having a new CMO will certainly help us to do this.”

When it comes to best practice, the airline and leisure sectors, plus elements of retail, are often heralded for executing digital strategies to a high level. However, far too many board-level executives continue to be tentative about reshaping business models in order to create that single-view of the customer.

Steve says: “You need to have a five or ten year vision for the digital side of the business and obviously the companies that succeed big time are the ones that double their revenues. They have this big ambition rather than settling for a couple of per cent of online sales in the first year and thinking that’s ok.

“What we see is that a lot of executives are afraid of engaging in digital because of fear of cannibalisation… that’s why you must have top management commitment from the start and make sure that the business is crystal clear on its online positioning to the customer.”

Be concerned if doubts and uncertainty continue to hold back progress in your company. The debate over whether or not to invest in digital moved on long ago, as the main focus for companies today is how to extract, understand and act on data to drive the best service for customers and the highest value for the business across each channel.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Finding Your Voice as a NED

Comm update_15 JanWhile landing a position as a non-executive director may be difficult enough in itself, more mysterious still can be what to expect around the boardroom table in those early days. The real challenge for first-timers in the role, especially if they’ve had limited interaction with NEDs in their executive career, is in knowing how to influence other directors and when to keep opinions to themselves.

“I couldn’t have been a non-executive director earlier on in my executive career because I probably wasn’t as confident as I needed to be,” says Cath Keers, Non-executive Director at Home Retail Group. “It’s important to gain solid boardroom experience as an executive director to build your confidence before moving to a NED role, because you need to be able to challenge constructively and act independently and impartially. You should also prepare to be a lone voice around the table as, sometimes, even the other NEDs might not agree with you.”

Anthony Fry, Chairman of UK dairy foods processor Dairy Crest Group, comments: “For people who have not spent their careers in boardrooms, my advice would be: learn how to read the room. It’s not just important to be right on an issue – it’s working out how to persuade your colleagues that you are.

“It’s also critical to learn how to challenge executives in a positive but not aggressive manner – many new NEDs make the mistake of confusing the need for critical judgement and comment with negativity which can often create an ‘us and them’ atmosphere.”

Even those with a wealth of boardroom experience must learn to adapt their approach. Michael Benson, Chairman of emerging market investment management firm Ashmore Group, comments: “Having been a pretty hands-on executive director, I had to remind myself what my new role [entailed]. Remember that the role of a NED is essentially to ensure the financial well-being of the company, to be the guardian of all aspects of governance and to approve the top-line strategy and monitor its implementation.”

Use your initiative

The skills required to be successful in the role are changing which means that a lot of work has to be put in if you’re going to make the grade. According to Joelle Warren, Chairman of executive and NED recruitment specialist Warren Partners, companies are looking for “broad experience to be able to assess and comment on a full range of commercial and governance issues… [and] as far as personal qualities, we’re looking for team players with small egos; people with self-confidence and good judgement…

“The Combined Code talks about five aspects of the NED role: constructive challenge; scrutiny of performance; risk assurance; remuneration and succession planning for executive directors; and stakeholder engagement. Look for opportunities to demonstrate these in your executive role – potentially with subsidiaries or joint ventures.”

Ian Durant, Chairman of property investment and development company, Capital and Counties Properties, comments: “The role has changed over the last five years or so. There’s a bit more governance structure and technicalities required, and a greater sense that institutional investors are interested and want to be engaged with what boards do and how they go about their roles… [so] you need a softer way of delivering your challenges in order to become more effective as a NED.”

The onus is on a NED to make sure he or she is up to speed. Carl-Peter Forster, Non-executive Director at engineering concern IMI, who took on his first NED role at Rolls-Royce in 2003, says: “I was very much in listening and learning mode to begin with, although I didn’t feel uncomfortable with this because UK corporate governance is really quite complicated these days. Everybody initially has to learn a lot… so I would recommend asking for formal training sessions in all aspects of corporate governance early on – and it’s very much up to the NED to actively pursue this.”

Don’t rush it

Dedicating plenty of time to the role early on will certainly help you feel more comfortable sitting on the board. Jeremy Williams, Non-executive Chairman of Assembly Studios, an international design and digital services company, says: “My first [NED] role was as chairman for a marketing services business… [and] I devoted a lot of time to this… and as a consequence felt comfortable from the beginning. As part of my contract I made a set of recommendations to the board after the first three months and [was] influential in helping to create a full turnaround and growth plans for the business.

“It takes care, confidence and a fully immersive induction programme, looking at the major challenges, issues and functions of the business. Over six weeks I sat in on key meetings within the business, be they business development, marketing, operations or finance related… had one-to-ones with all of the key managers and held video calls with those in the international offices.”

Ian comments: “Those early months are as much about getting to know the business and feeling comfortable about your own contribution in a board situation… Take your time, observe the behaviour of other NEDs, get to know the business as well as you can and develop credibility with the management – not just the board – by getting out and about in the business and meeting people.”

Bearing in mind the higher expectations and increased scrutiny now placed on NEDs, it’s a case of taking nothing for granted and going all out to do the hard yards in those early days to make sure you’re properly informed about the business.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Five Reasons to Plan for CEO Succession

Earmarking successors for the role of CEO should never be something that’s left to the last minute and boards that persist in skirting around the issue are failing in their duties to stakeholders. Likewise, CEOs who are passionate about a business should be fast tracking the brightest talent so ready-made replacements exist when the time comes to move on.

The reasons for having a CEO succession plan are simple:

The tenure of the CEO is getting shorter;
It better prepares a business to communicate change at the top;
This is now a key part of the chairman’s role;
Done properly, it harnesses talent and promotes ambition;
It is in the long-term interests of the business.
In short, this is not something to be ignored or put on the back burner. Brendan Hynes, CEO of the soft drinks business Nichols, says: “This is one of the most critical issues on the board agenda, particularly for public companies. For a Plc, how well succession is handled can significantly impact on the investment decision for existing and potential shareholders.”

The responsibility for finding a successor falls squarely on the shoulders of the chairman. If the board has enough confidence in the CEO, then they too can be involved in the process, in an advisory capacity, as they know the role better than anybody else and it should be in their interests for their heir apparent to take an organisation forward.

Mike Tye, CEO of Spirit Pub Company, says: “It is a critical role for the chairman, but almost more so for the CEO to be creating their own successor. Part of the measure of the incumbent CEO is their ability to employ great talent that is good enough to succeed them… [and it requires] having a really high calibre executive board team and, just as importantly, the level below that too.”

That approach is also supported by Ian Toal, CEO of the cheese company Adams Foods, a division of the Irish Dairy Board which functions as a co-operative and therefore does not have a traditional chairman. An expert in turnarounds, Ian joined in July last year and has had to use his experience to streamline operations, cutting some £5 million of costs out of the business to put it on a profitable footing.

“When I leave in a year or so, the business will be in a very different situation as it will be fairly stable, and it will need someone to manage [operations] rather than to create masses of change,” he says, adding that his focus is very much on trying to groom internal candidates, each of which possesses different skills and styles, so they have a chance of taking on the CEO role once he departs.

Time and effort

Succession matters for both public and private companies. As everyone knows, the shelf life of CEOs is decreasing (and good ones are being poached) so the other side of this is that possessing a plan B falls under plain old best practice. Sir Brian Bender, Chairman of the London Metal Exchange, says: “A good company board will review HR issues periodically, perhaps even once a year, including recruitment, retention and succession planning for the most senior posts.”

Yvonne Sell, Director and Head of Leadership and Talent at consultancy firm Hay Group, says: “A CEO’s tenure is getting shorter while more regulation is demanding that boards keep closer tabs on performance. People know CEOs change but if you do treat it as business-as-usual, and you have planned for succession, with a CEO elect working closely with the incumbent some 18 months before the handover, it shouldn’t be too disruptive. If events do call for a rapid change, you need communication around why you are doing it.”

This is where it’s easy to make mistakes. Brendan says: “My view on succession planning is that it needs handling very carefully indeed. A regime change at the CEO level sends a very important signal to the market and it is vital that the correct message is conveyed when announcing a change. Ideally, this should be planned well in advance, with the reasons for the change clearly spelled out.”

There are no hard and fast rules about whether a candidate should be internal or external. Richard Ackroyd, Chief Executive of Scottish Water, says: “The important thing is that for every key role in an organisation you’ve got some possibilities for succession and ideally you’d like a good proportion of those to be internal, but there’s nothing wrong with external succession at the right time and in the right context.”

The primary driver is to find the best person for the job, but within the business there will be ambitious and talented individuals who expect a shot at the title. This is where diplomacy and tact is required because it’s easy to lose good people at this stage as, like Yvonne warns,“something has gone wrong internally when you have the scenario of the CFO assuming they’ll get the job and then they don’t”.

Ian says that, for him, continuity in the organisation matters for his succession planning at Adams. “The candidates are all ambitious and very good at their functional roles; I haven’t set them against each other. I’ve made [the process] competitive but not political or divisive. I’ve been quite deliberate in making sure that they are very close and that they interact with each other, but I’ve been clear that I haven’t made my mind up about which way this could go. There isn’t a timescale for my departure, which also generates a bit of hunger.”

According to Mike, it presents a great opportunity to shake things up. “Disruption can be a natural consequence of the succession process. Done the right way, highlighting possible successors can create healthy competition and high-charged performance. By contrast, if done in an insensitive way it can be potentially destructive.

“It’s important to be very straight with each candidate therefore and stress that their behaviour, in the way they vie for the top job, is critical. If you have a set of leadership behaviours they should be adhered to – either get it right or count yourself out of the race. You can’t avoid the internal challenge, but there is constructive and destructive competition.”

Alison Carnwath, Chairman of Land Securities Group, comments: “You should always do a job spec and discuss this with the nominations committee. The most important quality is leadership and a proven verifiable track record; a candidate should have a great desire to listen and learn as well as preach and direct.

“Integrity and hard work are always staple requirements, as is a stable home environment. If possible, a pleasant personality and appropriate board experience should also be sought as they will help to smooth the integration process – at least initially.”

There are no excuses for allowing a leadership vacuum to exist in a business. Besides, as Brendan says, “succession planning should be a core process for the whole business, not just the CEO role”.

Mike adds: “You can’t start this process too early either. If it’s planned succession, it should be anywhere between 18 and 24 months. Sadly, it can’t always be planned, so it’s a mistake to be unaware of the succession issues on an ongoing basis.

“And while one can’t always have an instant successor, to have identified who the successors are internally, and to have development plans for at least a couple of people, seems sensible.”

The way circumstances change so swiftly in business today, anything else would be reckless.

The Eurozone: What’s Your Plan B?

Focus on the world’s fastest growing economies – that’s the message from business leaders on how to deal with Europe’s currency calamity. With Greece remaining mired in debt, and Spain, Italy and Portugal relying on the positive signals coming from the European Central Bank to buy sovereign bonds, the fact is that businesses simply cannot afford to adopt the equivalent of austerity measures if they want to prosper.

Jim Wilkinson, Group Finance Director at online gaming company Sportingbet, has needed to act quickly as Spain and Greece accounted for about 50 per cent of the European business. “We have withdrawn any cash balances out of those countries on a frequent basis and have reorganised our European business to match costs to revenue in local terms.”

Part of the solution, for Jim, has been to develop a standalone business in Australia: “It is well away from what may be happening in Spain and Greece and completely separate and immune to the currency troubles in Europe, to the extent that other currencies ever can be immune.”

Stephen Dury, Strategy & Market Development Director at Santander Corporate, Commercial & Business Banking, says: “Many of the SMEs that we have been working with are looking at the fast growth markets in China, India and Latin America to diversify outside the eurozone [and]… deliver more stable and sustainable income growth.”

The crisis reaches across all sectors. In British farming, for instance, there is a particular threat through the weakened currency. Tom Taylor, Chief Executive of the Agriculture and Horticulture Development Board, says: “The weak euro is giving imported pig meat a price advantage when compared to the UK product, and European pork is 12 per cent cheaper, just because of the euro, than it was a year ago, so the ability to sell UK products is being affected.”

In response to this, British farmers have also been looking to Asia. Tom says: “We’re actually now exporting to 50 countries where the currency isn’t having as big an impact… The first contract for pig meat to go to China was signed only a month ago for a £50 million deal and the first shipment went last fortnight.”

With there being so many variables to the crisis, each leadership team will need to devise their own solutions. Mary Jo Jacobi, NED at Mulvaney Capital Management and a Criticaleye Associate, says: “This macroeconomic uncertainty forces businesses to reconsider their plans yet makes developing new ones nearly impossible.

“Leaders need to remain focused on their primary objectives, factor in what has changed and what is changing and be confident that their strategy is sufficiently flexible; snap decisions based on today’s headlines are unlikely to yield positive results.”

Crystal ball gazing

Naturally, international expansion won’t necessarily be right for every business, but it does make sense to factor in and reduce exposure to particular eurozone risks. Nigel Burbidge, Risk Advisory partner at professional services firm BDO, says: “We have worked with economists to provide tailored workshops and economic forecasting for specific businesses, looking at the key risks for them and possible ways to mitigate those and gone from there. The problem is there is no one-size fits all answers for this – you have to form judgments for your case.”

Fortunately, leaders are recognising the scale of the risks, especially around areas like supply chains, and are taking the initiative to combat them. Paul Staples, Head of Corporate Finance at BNP Paribas, says: “The level of contingency planning being implemented by corporate clients with existing operations or exposure to the eurozone has accelerated markedly during the last six months.

“[From] how companies achieve access to funding, to reviewing the local banks who are deemed to be suitable counterparties, [and] how they seek to protect their own infrastructure and investments in a volatile market environment… this level of preparedness is no longer seen as overly conservative, which is testament to increasing concern over weakening economic data across both the European periphery and major Northern European economies.”

Mark Spelman, Global Head of Strategy at Accenture, notes: “While a combination of the European Central Bank’s action on liquidity and the European Union’s rescue funds have bolstered the fiscal system, the key structural problems of competitiveness [in the Union] remain unanswered… Business leaders must look into the abyss and have a base case for how they manage continued uncertainty.”

As ever, the best defence will remain a calm and confident leadership team equipped with a sound understanding of their business, its risks, and agility when it comes to strategy.

David Garman, Chairman of commercial laundry suppliers JLA, takes a pragmatic approach amid the endless speculation: “I don’t know what’s going to happen in the future and neither does anybody else… Decide what you want to do about any particular scenario when it becomes a reality, rather than wasting time that you could be spending on improving the fundamentals of your own business.”

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

Tomorrow’s Leaders

There is a distinct lack of imagination among many businesses when it comes to developing the next generation of leaders. All too often, when the best and brightest minds get their chance to lead, their lack of preparation for the top job leaves them unable to see the bigger picture, lacking the perspective necessary to be effective in the role.

Serious competitive advantage is being lost, not to mention talent wasted, as bad habits and shortcomings are allowed to become ingrained over the years. Rudi Kindts, Former Group HR Director of British American Tobacco, says, “The ideal development for the C-Suite begins early in a manager’s career. Through a mix of experiences (strategic, commercial and leadership challenges), hard-nosed performance feedback and coaching combined with a willingness to listen and learn, future leaders understand what it means to transition from one leadership level to another.”

It’s unwise for those managers who are destined for greater things to be left for too long as masters of a particular channel or area of operation. They should be tested and challenged and, importantly, encouraged to question themselves, meeting new people through networking, so they are consistently seeking to improve their knowledge and ability to inspire others.

Gary Kildare, Vice President of Human Resources for Americas, Europe and Asia Pacific at IBM, says, “It is evident that the level of global thinking and citizenship required from leaders today is absolutely unprecedented. They can help to provide a view of the future through their creativity and vision; it is they who will encourage collaboration through teamwork and open access… Leaders must be able to shift from strategy to operations swiftly to ensure they can execute regardless of the business environment.”

Match fit 

In practical terms, a manager who is moving to an executive or even non-executive role has to accept that a different approach will be required. Fiona Briault, Retail Director for George, the clothing chain of Asda, says, “I thought long and hard about how I would flex my style and behaviour as I moved to a board position… The focus required a shift from [resolving] business challenges to asking the right questions to stimulate others to debate and find solutions.”

Executives need to have their horizons broadened. Mark Phillips, SVP for Medicine and Process Delivery at GlaxoSmithKline, comments, “You have got to be able to provide insight and context and that has to come from a broader understanding around the company. That means the environment you’re operating in; what you’re trying to achieve as a business and from customers and business partners.

“The bottom line is that, as you go up the corporate ladder, it’s not about you doing it but getting other people to do it. A lot of that comes from understanding where to make the connections and how to unlock things – if you think you’re going to do it all by yourself then you shouldn’t be in the role as you’re restricting the bandwidth of the organisation.”

Nandani Lynton, Criticaleye Thought Leader and Adjunct Professor of Management at China Europe International Business School in Shanghai, says that it’s a case of putting talented individuals into various front line situations. “Senior execs should be allowed to experience the day-to-day reality of another market… You don’t need a structured development programme to organise this – one day a year would make a huge difference.”

In addition to this, she suggests that “high potentials” could take responsible positions within voluntary organisations for a year. “They will learn how to influence without power, how to deal with egos in a different setting and gain experience of the NGO (non-governmental organisation) view that can be extremely helpful in the future.”

Support mechanisms

This level of commitment is notable by its absence in the majority of companies. Jacqui Grey, Managing Director of leadership and executive coaching company, Transition Ltd, comments, “Whilst [individuals] are happy to present and go to conferences, the idea that they may need any form of development is often overlooked. There is a tendency to do this outside of the organisation either by attending a top business school ‘one off’ course in an exotic location, or by engaging an executive coach where human frailties may be discussed in private.”

A business must have clarity about what it wants from its designated ‘special ones’. Neil Braithwaite, Managing Director for Specialist Retail at the Co-operative Group, comments, “In looking to develop their current and potential business leaders, organisations should first ensure they have the right foundations in place. This means having a clear definition of the leadership model that is right for them, such as what are the behaviours that define a good leader in an organisation.

“There should also be a strong performance management system that clearly identifies high performance and potential, allied to a mature approach to succession planning, matching gaps and potential exposures to the development needs of key individuals.”

If this is to work effectively, it must have full endorsement from the existing leadership team. Neil explains, “For development programmes to succeed, not only do they need to be built with solid foundations but also, and probably more importantly, they need the demonstrable commitment of the CEO and the most senior management in the business.

“This can take many forms, but fundamentally it requires them to take some risk in pushing good people to stretch themselves away from their comfort zone to ensure they really broaden out as leaders.”

The consensus from discussions with Members of the Criticaleye Community is that sound leadership qualities are created by:

•    Effective communication – From being able inspire all levels of staff to engaging with the media, clarity and visibility are expected from leaders

•    Networking – Future business leaders aren’t afraid to leave their comfort zones. They are keen to meet new people and, in addition to this, they will be eager to gain experience by shifting to different areas of the business, taking on secondments elsewhere and being assigned challenging projects in order to develop agile thinking and problem solving skills

•    Personal awareness – Invariably, businesses make the mistake of teaching technical expertise first, while people skills and emotional intelligence are deemed secondary

•    Mentoring / coaching –  Whether they’re inside or outside a company, having someone as a sounding board can lead to invaluable insights

•    Walking the ‘shop floor’ – Diversity of experience is invaluable, but the best executives are also in touch with customers, products and the services of a business

None of this is to suggest that technical expertise and training programmes are not to be held in high regard. Of course they are but in the competitive global markets that companies operate in today, it is simply a fact that this is no longer enough and that the best leaders need a more rounded set of skills and qualities to be successful.

Gary Browning, Chief Executive of HR consulting and people performance company Penna, says, “Good leaders must communicate with inspiration and passion, building trust, belief and engagement throughout the organisation. Engagement is one of the closest factors correlated to organisational performance. This, I believe, is harder to develop but it’s not impossible to get improvements.”

The fact is that anyone aspiring to a position of leadership within an organisation cannot be one dimensional. Mark comments, “If you have only achieved in a particular area and dabbled in another, I struggle to understand how that is going to make you capable of being a senior leader. There are very few senior leadership positions where your value depends purely on the expertise you bring in one area.”

Excellence is a given. Leadership requires something different and a large number of companies continue to misunderstand and underestimate what is required to forge individuals who can drive and deliver outstanding results.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

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