5 Ways to Cement a Leader’s Legacy

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The decisions made by CEOs will ultimately define the legacy they leave behind. Richard Branson is the inspired entrepreneur. Steve Jobs the genius who changed our relationship with technology, while Jack Welch is famed for his no-nonsense management style. So what plans should a business leader be putting in place to ensure their long-term reputation is synonymous with a company’s success?

Firstly, it’s a case of accepting that the average CEO doesn’t have the time in charge afforded to the likes of Branson, Jobs and Welch. Kai Peters, CEO of Ashridge Business School and a Criticaleye Thought Leader, says: “A lot of CEOs aren’t in the job long enough to leave much of a legacy. Tenure is less than five years on average and declining… and research indicates that to make a significant change in an organisation it takes a little bit longer than that.”

So, from day one, you’ll be under pressure, balancing short-term priorities with long-term strategic goals. Criticaleye spoke to a range of business leaders to find out the five steps that need to be taken in order to make the right kind of impression as a CEO.

1)  Know Your Purpose

A leader who fails to articulate a compelling vision for a business will not last long. Andrew Heath, President of Energy at engine maker Rolls-Royce, says: “It’s about focusing on what really matters and finding that in the business that you’re running. You’ve got a responsibility to be the architect for the future of the business… [so] it’s a matter of focusing on that sense of higher purpose, the direction you’re trying to take it in and it’s about getting strategic coherence across the organisation.”

Colin Hatfield, Senior Partner and Founder of Visible Leaders, a consultancy that specialises in leadership communication, says: “I always get a little worried when I hear leaders saying that their ‘going in’ position is to build a legacy. I think they should start by saying: ‘I’ve got to do what I think is the right thing for this organisation’… Leadership generally is about making change happen and the CEO is the epitome of that.”

2) Be Realistic

Only so much can be achieved by a CEO at any given moment in time, particularly in the early days. Matthew Wright, Chief Executive of Southern Water, comments: “Whether it’s a cultural legacy; a [track record] of under-spending on asset maintenance or whatever, there is often a period where you’re trying to dig yourself out from under a legacy that isn’t entirely positive.”

Howard Kerr, Chief Executive at standards and training provider BSI, says: “As an incoming CEO, you’re always very conscious of what your predecessor leaves you. When I leave there will be something that my successor will have to work on that I haven’t necessarily addressed effectively. You’ve got to be very honest about what… you are leaving behind and recognise that no CEO or organisation is perfect.”

3) Get the Team Behind You

Teams will perform to a much higher level if they believe in what they’re doing. Peter Horrocks, Director of BBC Global News and World Service, comments: “The key is to convince people that the changes you want to make during your period in charge are not contrary to the central values of the organisation, but that they will help to sustain it and to make it more successful in the future… You can get into a situation where people see that someone is changing things in such a way or to such an extent that they react against it.”

Matthew comments: “We go on the road, meet all our employees and talk about how they can start to influence the direction of the company… [we’re] very clear about why we’re here, what our vision and mission are and what roles people have within that so that they can connect with the organisation and its objectives.”

4) Cast a Shadow

“If they don’t notice when you arrive, they’re unlikely to notice when you leave,” says Lucy Dimes, Non-executive Director at textile services company Berendsen and former UK & Ireland CEO of telecoms concern Alcatel-Lucent.

Andrew comments: “I try and put my personal mark on things, so I do a weekly blog in which I talk about the key strategic themes and priorities, such as health and safety, and the values we have around ethics and compliance. I talk about what I see is going well and where I see things not going so well, reinforcing positive behaviour and recognising individuals who portray the right values and who are being highly supportive of executing the strategy.”

For Lucy, a leader must be capable of engaging. “Did people remember it as a good era, a time when things changed and when the leader touched their lives rather than just operating aloofly over the organisation?’

“The leader sets a tone and casts a long shadow on the organisation, so you’ve got to make a personal impact. At the same time you want to create things that everybody agrees are right for the organisation and not just the way that [you] do things, so that when you leave they are seen as changes that everybody has played a part in creating.”

5) Build Long-Term Value

Sam Ferguson, Group CEO and President of EDM, an information management provider, says: “There is a short-termism in business… which means, instead of investing to create the right business for the future, many people end up maximising profits now so that the chief exec can get his bonus… I think there’s a bit of that in the UK that needs to be rectified, so that [CEOs] are more focused on building businesses with the long-term future in mind.”

When it comes to creating value, a CEO will make a lasting impression by getting good financial results and by leaving behind a capable team. Kai comments: “You should be investing for the long term. You bring talent in and you make sure you facilitate the capacity for people to talk to each other without you having to be the omniscient one in the middle. Between bringing in some new faces and getting people to talk to each other, hopefully you generate some intellectual property.”

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In the final analysis, a CEO should realise that their role requires them to be a steward, serving the company to the best of their ability before moving on. “No one individual is bigger than any organisation, whether they’re the chief executive or in any other position,” says Howard. “The company’s interests always trump those of the CEO.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Chairing the First 100 Days

Chairmen are defined by the legacy they leave at the end of their tenure, but their first 100 days in the role will be a key milestone. In that brief period, they must build bridges with management, glean insight from around the business and identify what needs to change in the boardroom. Success will largely be determined by the key conclusions made in that valuable first quarter at the board’s helm.

In a recent Chairman’s Lunch hosted by Criticaleye, Leslie Van de Walle, Criticaleye Associate and Chairman of building material company SIG plc, reflected on his first 100 days as chairman and outlined the following as crucial for success:

• Build relationships – with all stakeholders, but particularly with the CEO and shareholders
• Understand the business – the financials, culture and industry competitors
• Set the tone – outline your objectives, what should stay the same and what could be improved
• Be ready for anything – your broad experience should always enable you to improvise

For any chairman, the relationship with the CEO is the lynchpin for the success of the business. The chairman should assess whether the CEO lacks experience in a particular field of expertise and add value by plugging those gaps with his/her own experience.

Simon Laffin, Independent NED of market research business Aegis Group plc, says: “The new chairman’s most important task is to establish the relationship with the CEO. The CEO will worry that the chairman will interfere too much, and the new chairman will want reassurance that the CEO won’t give him any nasty surprises. It’s a bit like an arranged marriage. Both parties are chosen by others, but you’ve still got to live together.”

Ian Durant, Chairman of real estate firm, Capital & Counties Properties plc (Capco), adds: “Within the initial months, the chairman can encourage informal communication among directors, including NED interaction with management and, crucially, establish their relationship with the chief executive informally.”

Only fools rush in

While ‘100 days’ may seem a little arbitrary, it will be an important period for the chairman to take stock. It will give them time to get to know the executives, to find out not only how they can best support them, but also to challenge them on all areas of the business. This should also be time enough to engage the board’s non-executives to understand what they like about the company and what they want to change.

Sir Peter Mason, Chairman of Thames Water Utilities Ltd and Senior Independent Director at BAE Systems plc, says: “Spend as much time as possible with senior executives, both on a one-to-one and a group basis. This will help you to form an early view of the skills and experience around the boardroom table and enable you to begin to think of first steps in board succession, even in those first few months. You should also develop an understanding of the risks inherent in the business.”

Rick Haythornthwaite, Non-executive Chairman of MasterCard Inc and Network Rail Ltd, suggests informal meetings might aid the bonding process. “Get to know the NEDs, in particular their style and experience,” he says. “They will be wary of your arrival so decide early whether there is a need for change and get on with it – the sooner that you get to a stable board the better. Establish NED dinners if they do not exist and put a date in the diary to meet the board with partners in a social setting. Both steps deepen relationships quicker and make for better dialogues.”

But to gauge what kind of board has really been inherited, the chairman can always hold a board strategy day, as Alison Carnwath, Chairman of commercial property company Land Securities plc, explains: “Once you have spent time with the CEO and other senior management and talked to shareholders, you should assess your board and begin to form a view of what the critical short to medium-term challenges are. Holding a board strategy day is one way of bringing this all together.”

Explain your raison d’être

Fundamentally, you should be clear about your objectives as incoming chairman. “It’s important for the chairman to set the tone,” says Leslie. “Show that you are keen to understand the business and its culture but also communicate clearly the areas that you want to focus on. In doing so, for a medium-sized company, you should also keep in mind the need to balance the level of entrepreneurial flair on the board with the need for corporate strategising.”

Ian says: “Establish a simple articulation of what you want to achieve as chairman. You should lead a debate among the directors about what culture and tone the board wants to achieve for the company and its board and identify any governance black holes ahead.”

Expect the unexpected

Before the chairman embarks on the first 100 days, there are certain things he/she should already know and be prepared for: if they are joining a distressed business, for example, those initial three or so months might require a more direct, forceful approach.

Steve Marshall, Chairman of construction and engineering services company Balfour Beatty plc, says: “The default setting for the role of the chairman, as dictated by UK Corporate Governance, is one of a back-seat facilitator. In reality, the scope of the role does vary and much depends on the personality of the CEO, the specific nature of the company and its relative health. In a turnaround, for example, you’ll have to step-in and be more hands-on.”

Martin Bloom, Non-executive Chairman of the renewable energy venture Renesola Ltd, adds: “Outside factors will influence your relative success at being adaptable. Whether it’s changing risk profiles from earthquakes or volcanic ash or other external influences that require the board to refocus strategy or personnel, the business you came into at the start of your tenure as chairman is bound to change significantly, sometimes in those first 100 days. The chairman should always be aware of the need to improvise and this is where their broad range of experience in different countries, sectors and specialisms can add real value.”

In short, the role is also about being able to handle surprises confidently, as Steve says: “Stay completely balanced at the back of your corporate toboggan wherever possible, but always be prepared to redistribute your weight from one side to the other very quickly indeed.”

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

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

The Art of CEO Succession

CEOs should view succession as a critical part of their role. One of the most likely indicators of successful CEOs is their ability to create and develop a top team that’s aligned to the future capability requirements of the organisation. But to what extent should CEOs nurture the process of succession in their organisation?

There’s no reason why a company’s success shouldn’t continue under a different leader, but a smooth transition frequently depends upon the quality of the top management team. And the CEO has a role to play here, not only as the organisation’s current leader but also as steward of its future direction.

Darryl Eales, CEO, Lloyds Development Capital, says: “The thing that occupies me more than anything else is how to build a sustainable business – one with a clear succession. In every business, a key role of the CEO should be to consider the long-term strategic objectives for the business and, within this, how to develop a team that can maintain the growth of the business when the incumbent moves on.”

The CEO as steward

In his article, Heir to the Throne, leadership expert Kai Peters, Chief Executive of Ashridge Business School, says that: “The CEO sees within his/her organisation that there are many talented individuals, each with a role to play and some that have the ability to fulfil many important leading roles. The CEO, as steward of the organisation, is clearly interested in having the best people possible to achieve the strategic goals that have been identified.”

Don Elgie, founder and CEO of Creston plc, says: “One of the key functions of the CEO is to lay down a succession plan, to build it carefully and internally. But choose your own retirement date. You should not announce it externally until quite close to the exit point, or your role will risk being seen as a lame duck. For an example of how to do it right, see Sir Terry Leahy and his succession plan for the CEO of Tesco. He waited until just six months before his exit date to announce it formally and the perception was that he was still fully functional, even past that point. He chose when it was time to leave.”

In Tesco’s recent baton-passing, while new CEO Phillip Clarke appears more media savvy than Sir Terry Leahy (for one thing, he tweets!), both men are Tesco ‘lifers’: they are the product of the brand’s resilience and a testament to the culture it has nurtured. For the retailer, it’s just another chapter in an ongoing story of succession that regularly garners praise.

Lynda Gratton, Professor of Management Practice at London Business School, says: “Fostering resilience is crucial to the long-term success of a company, and one of the core aspects of this is the way in which the CEO succession is managed. I remember talking to Sir Terry Leahy when he was still the CEO of Tesco, and his pride in the stability and resilience of the company reflected in a succession process that had seen only five CEOs since its early growth.”

The risk of ill-judged choices for successive leaders, and exchanging them too frequently, can play havoc with your share price in the short-term and can do lasting damage to the brand. While uncertainty prevails outside your organisation, the importance of a strong, dependable leader that is the product of a solid succession plan should not be underestimated.

Lynda adds: “Stability can be reinforced by a smooth and dignified transition of the CEO, where the incumbent CEO is seen to support and nurture the succession process and, by doing so, to steward the senior team into the next phase of their development. It is this calm and this stewardship that, in the longer-term, become such a crucial element of resilience.”

Don’t fit the mould; lead by example

In his article, The Perils of Being Shaped for LeadershipGianpiero Petriglieri, Affiliate Professor of Organisational Behaviour at INSEAD, says: “Most people groomed to be future leaders are chosen because they seem to fit current leaders’ ideas of what good ones should be like. These ideas are captured succinctly in lists of corporate values and leadership competencies. In picking potential successors and prescribing their profiles, senior managers seek to ensure their organisation’s future and perpetuate their own legacy.”

Of course, different organisations present different challenges. If the Founder is still present, for example, it is often difficult to find someone with the right qualities to take over the role: whatever the new CEO’s credentials, he or she will not have founded the business.

Bob Holt, Chairman of Mears Group, agrees: “This is always difficult in an entrepreneurially driven organisation. The CEO must therefore encourage individuals to be their own person and to form their own views, which will challenge and enrich the management team.”

The type of successor should also depend on the stage of a business’ development, explains Chris Merry, CEO of investment banking group Matrix (and a former CEO of the executive recruitment firm Whitehead Mann): “A growing business needs different skills in order to mature from the start-up phase. This might be difficult for an incumbent CEO to see and to understand, and this is largely the chairman’s responsibility, supported by NEDs. Culture and fit are vital in most organisations and the tone should be set from the top.”

‘Grow your own’ or recruit externally?

“Fundamental to the whole issue of succession is whether the company is doing well, or not,” says Tony Cowling, President of TNS Group (and a Criticaleye Associate), who helped found Taylor Nelson Ltd in 1965 and, as CEO, led the company through a prolific number of acquisitions, including a merger with Sofres in 1997. “Where the company looks to be in a strong position in its market, such as Tesco, then recruitment from within should be best. It maintains stability, is good for staff morale and lessens the risk of disruption. When companies have performed badly or disasters have occurred – banking comes to mind – then bringing in outside management that is not tainted with these problems must be a favoured, though not essential, option. In fact, since the crisis, many banks have completely changed their management – and rightly so, many would say.”

Numerous studies highlight the preference for recruiting from within. One of the latest, by The Kelley School of Business at Indiana University and global management consulting firm A.T. Kearney, analyses data from S&P 500 non-financial companies over 20 years (1988-2007) and finds that those companies that exclusively promote CEOs from within outperform companies that recruit CEOs from outside the company.

Kelvin Harrison, Chairman of Maxima Holdings plc, says: “All the CEO’s direct reports should want his/her job and at least one of them ought to be capable of it. If this is not the case, the management team needs to be strengthened. However, a good CEO is always keeping an eye out for external talent. It is a very weak CEO that does not have diversity in his/her senior management team. When the CEO reaches the point at which he or she wishes to move on, or is taken out, then the nomination committee, or the board, should have a choice of internal and external candidates, to which they may choose to add.”

Don adds: “I would call into question any management that doesn’t have a succession plan. It should be seen as a clear risk to business continuity. Statistically, recruiting from within is considerably less risky than recruiting from outside. Often, CEOs are brought in externally when there’s a performance problem or the board does not have confidence in the current team. The CEO should work with the board to put in place, on a confidential basis, a ‘train list’ of potential candidates – those potential suitors that can take up the reigns in the event of sudden or unexpected departure.”

The risk of unplanned succession

Tom Taylor, Chief Executive of the Agriculture and Horticulture Development Board (AHDB), says: “I am a great believer in what Charles De Gaulle said; ‘The graveyards (of France) are full of indispensable people’. None of us will survive for ever so the sooner one gets to grip with a succession plan for all key positions in the organisation, the better. We have to be honest and look in a mirror. What our organisations need is someone in the CEO role that can lead and deliver results in the prevailing business climate, whatever that may be. It means we need different skills for the CEO at different times of an organisation’s development. CEOs need to be honest about that. Additionally, if one is looking to replace from within, is it really healthy to have a CEO and his/her clone in the current management team?”

One of the best recipes for failure is when a company is taken by surprise, yet the idea of replacing a CEO should never come as a surprise, as the one certainty is that the tenure of the CEO will end at some point and a replacement will be needed.

“Any good leader needs broad shoulders, and by virtue they should think about who will follow them once they leave,” says Simon Howard, Executive Chairman of Work Group plc. “It’s largely about giving yourself options from the top team and you do that by ensuring you develop the best talent around you. How a CEO goes about succession is a matter of individual style, but they must consider how they are going to nurture the process. And they must be open about it, internally at least, because if it is communicated properly, everyone knows where they stand. Instilling an air of certainty – that the CEO will go and how succession will be handled – is paramount.”

Chris adds: “Having clear succession plans for each key role is sensible risk management. For a regulated financial services business, succession planning is of interest to the FSA in assessing proper governance and management, and quite rightly so. The smaller the business, the harder it is to have a qualified successor in place for each key role. In CEO succession, logically, it’s the responsibility of the chairman to recruit the CEO, but this is not always done. And many see it as a threat to have a successor in place before having decided to go … unless he/she is at, or approaching, natural retirement age. Naturally, there is a tension between ensuring one’s own survival and protecting the business.”

John Leighton-Jones, HR Director at TT electronics plc, says: “Succession planning at the executive level is usually driven and directed by the nominations committee. Succession plans should be reviewed twice a year. This review should be used to baseline the capability requirements of the next CEO. The requirements should be shaped by examining the business strategy over the next five years against the global challenges, risks and opportunities likely to face the business in the future. Evaluating the impact of the challenges will help ensure that the next CEO has the leadership skills, capabilities and experience to respond to the changing environment.”

Retaining value on exit

While all CEOs leave behind a legacy, some endure for longer than others. Those that last have done so because the skills and value of the CEO has been absorbed by the top team and become a part of the fabric of the organisation.

Bob agrees: “Retaining the value of an exiting CEO is largely about ensuring that the core values and strategies of the organisation are understood and accepted by all stakeholders.”

Or, as Gianpiero puts it: “Rather than merchants of hope, as Napoleon called them, leaders are more like custodians of it. Iconic leaders are people whose personal trajectories mirror closely the ambitions of their communities. They lend their faces and voices to principles and aspirations that people hold dear at a point in time. They don’t tell stories; they are stories that match their times.”
One of the most likely indicators of successful CEOs is the quality of the team they create around themselves. Therefore, a key skill of a CEO is to create and develop the top team in line with the future capability requirements for the organisation.

Simon says: “The CEO must appreciate that his/her success is more a matter of team achievement rather than the result of single-handed autocracy. And he or she doesn’t have to aim for the slam dunk of one perfect successor, rather ensure that the top team is cohesive and working together so that there may well be more than one possible successor. Of course there’s always a risk of losing talented people along the way, but top talent is more likely to stay if individuals have been sufficiently developed within the top team. Some of the most talented CEOs I have met aren’t 24-hours-a-day workaholics, rather they have developed a top team around them. Key to this is that succession has been a natural part of the top team’s development plan.”

Tom adds: “The key to effective CEO succession lies in being confident enough in your own ability that you can safely develop talent below you in the knowledge that they will never be able to replace you until you are ready to move on. When one is planning to move on you should give others opportunities to tackle some of your tasks on your behalf in the knowledge that you are still there to guide them – and if needs be take corrective action – while you are still in a position to do so. It is too late once you have left!”

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

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

Are Women on Board?

The recent Lord Davies report, Women on Boards, encouraged leaders of FTSE 350 companies to include more women on their boards based on the needs and characteristics of their businesses. The report ducked imposing actual quotas and instead considered the factors that might bring about cultural change. On the one hand, there’s an increasing need for organisations to adapt their culture to be more welcoming to all-comers; on the other, perceived outsiders – women included – must demonstrate their willingness to engage with the group.

In the UK, the very idea of quotas is not welcome. This is backed up by discussions from within the Criticaleye Community. Indeed, the consensus is that all the fuss around the Report might end up being counter-productive: not only for women attempting to break the ‘glass ceiling’ (who may feel they are there not by merit but by default), but also for businesses striving for quality without any flexibility to make choices.

Jane Furniss, CEO of Independent Police Complaints Commission, says: “Perception seems to me to be key to all this; how women perceive themselves and whether they see being on the board as something to which they aspire crucially affects their approach. If what we see is largely a white male group we will wonder not only ‘will I fit?’ but also ‘do I want to?’. As more boards reflect the communities they serve, more women will aspire to join them and so talent not gender will be the key criteria for selection. Quotas are helpful in challenging mindsets and status quo but they create another set of problems and can be counter productive. I have always wanted the certainty that I got the job on merit – the challenge is hard enough without the concern that others are wondering – ‘did she get it to improve the gender profile?’”

The gender agenda is clearly part of a wider issue about boardroom quality – ensuring that the best people are reaching the top. But, at a time when boardroom decisions are placed under increased public scrutiny to deliver, does discussion about quotas distract us from the need to focus on quality?

Alysoun Stewart, founder and director of Oxygen8 Solutions Ltd, says: “The impact of the recession cannot be underestimated. Beleaguered companies have realised that they have to do things differently if they are to survive and find competitive edge – having boards that continue to think and act in the same old way will be a high risk strategy and this has, in many companies, put the issue of boardroom diversity and corporate governance into the spotlight.

“But the debate should not be limited to considerations of gender representation and quotas but should focus on diversity in its widest sense. Boardroom representation has been a comparatively narrow club for too long and the accelerating pace of change in the trading environment demands fresh approaches, fresh perspectives and fresh inspiration. That can only come by widening the gene pool to those who can bring new blood, whether that is as a result of gender, background or experience.”

Is there a glass ceiling?

In a survey of members of the Institute of Leadership and Management, 73 per cent of female respondents said they thought there was a glass ceiling for women seeking senior management positions, compared to 38 per cent of male respondents.

CEOs frequently report their inability to find a female candidate of quality to promote or hire, suggesting that the glass ceiling is more than mere perception. Or they might hire women as a last ditch effort to save an underperforming business in order to effect a ‘high risk’ turnaround. Certainly, women shouldn’t be pushed to the edge of a ‘glass cliff’. But, in reality, many women – like many men – flourish when put in this position.

For example, Stevie Spring, CEO of specialist publishing house Future plc, was brought on board after Future had overstretched through a series of print acquisitions to meet the ambitions of the previous chief executive, Greg Ingham, who wanted to double the size of the publishing company. Stevie has exemplified the requirements of the role and has been involved in much of the consultation for the Davies report.

She says: “There’s obviously a big difference between executives and NEDs and I believe it is the former that is the big issue – women that have reached the top and can bring P&L experience. The pipeline of women for executive positions is therefore a bigger issue because too many fall out of the workforce along the executive stream. But on the demand side too, boards still tend unintentionally to recruit in their own image – largely white, middle-aged men. It’s a NED’s job to bring different perspectives to bear on scrutiny and strategy. Diversity encourages these different perspectives. Nobody wants the furtherance of group think.”

V ‘Ram’ Ramakrishnan, Associate Faculty Member at Singapore-based business school MDP and one of Criticaleye’s Thought Leaders, says: “There needs to be a system that nurtures and encourages substantial populations of capable women executives to stay the course once they make it to the top. As with male directors I believe women have to be identified, coached and nurtured to become successful board members. It is strange that we spend twenty odd years training to be general managers but are expected to acquire directorial wisdom by god-given gifts overnight. Direction is a skill very different from general management and need to be cultivated by both men and women potentials.”

Is the talent pipeline open?

One outcome of the downturn has been to drive boards towards recruiting experience; non-executives that can bring value to the table based on the challenges they have encountered in the past. But are there enough women of quality in the pipeline to fill the quota?

Peter Waine, Partner at Hanson Green, says: “There is a general shortage of suitable NED candidates – men or women – and even that pipeline will soon dry up. I don’t believe that this is down to the perceived downside of the appointment-salary gap widening between executives and non-executives or because demands are increasing and the legal liability is being highlighted. Plc boards have become progressively smaller with the executive element, in particular, contracting. The result of this is that there will not be enough candidates who are current executive main board directors to go round. Hence, the chances for women and others to join these boards are likely to present themselves more frequently. But, how far do we need to stray from business in order to find those candidates?”

Perhaps the focus needs to shift from getting more women into the boardroom as NEDs to encouraging and empowering more women to aspire to the top? A female CEO – a leader – is inspiring for female staff: does a female NED have the same impact?

Tony Cowling, Criticaleye Associate and President of Taylor Nelson Sofres, says: “The cause of the problem lies with a serious shortage of women with upper middle and senior management experience, hence the proper solution to this problem lies with increasing the number of women who achieve middle and senior management roles and so gain experience to prepare them for board positions. The shortage of women on plc boards, both exec and non-exec, is only a symptom of the problem and not the cause. We have heard a lot about ‘equal pay’ and we know that problem is not yet solved. We have heard less about ‘equal promotion prospects’, but I am sure it is a root cause of the shortage of women in senior and upper middle management. If we want to solve the problem we have to address its root cause.”

Of course, there are cultural issues to address. As Gary Kildare, VP, Human Resources, Americas, Europe, Asia Pacific at IBM, explains: “Companies need to create an environment where employees feel they are being treated equally with access to opportunities, without the need to be treated as an exception. Success is about creating the right business environment rather than targets and quotas. I am not convinced there is an appetite for this approach.

“We absolutely need more women in senior roles: their skills, experiences and characteristics. Certainly there is a need to do more to facilitate talented women coming through organisations, to build a talent pipeline that enables quality people to compete alongside their peers for promotions, regardless of gender.”

What needs to change?

Jacqui Grey, Managing Director of Transition Ltd, a transformational change management, leadership, executive coaching and coach-training business, believes that there aren’t enough women on boards because, on the one hand, they haven’t been encouraged to get there by organisations and, on the other, they “get in their own way”, meaning a lack of confidence holds them back.

“Of course, government has a duty to encourage organisations to change and to hire and promote more women onto boards, as do organisations in taking steps to ensure the recruitment, development and promotion of women,” says Jacqui. “But women themselves must also step up to the plate. They must focus on an immediate and visible improvement in their confidence and networking skills and activities. The fear of ‘not being good enough’ must be overcome.”

Noreen Doyle, NED at Rexam plc and executive director at Newmont Mining Corp, says: “While women may be just as competent – sometimes more so – as men, they are not so good at profiling themselves among their peers. Many women are still of the mindset that networking is what you do once your day job has finished; men have long seen it as an integral part of their job. This needs to change and there’s a role to be played by senior women, like me, in mentoring emerging talent and conveying this issue to them.”

The issue of boardroom gender diversity should be embraced as a force for fresh thinking at the highest level, not as a compromise over quotas. But getting to the top table and influencing decision-making takes high-level networking – something that goes to the very heart of Criticaleye. Entry to the party doesn’t stipulate gender or race, only a willingness to engage in the debate and contribute.

Denise Jagger, Partner at Eversheds, says: “Women are recognising the need to help themselves and a number of networks are providing mutual support for their members and, at the same time, providing recruiters with a source of potential candidates. Rather than quotas, I believe informed encouragement by respected business leaders from, for example, the Members of Criticaleye is the best route to a sustainable shift in the composition of this country’s boardrooms.”

Ultimately, a diverse, balanced board will bring the right experience to bear on issues that require fresh impetus and a balanced opinion. Everyone must bring something to the table, but the route to getting there must be from a level playing field. In the end, a diverse group can only be good for decision-making and business in general.

The upcoming Criticaleye Discussion Group, Women on Boards, will examine many of the questions posed by the recommendations of the Lord Davies report and further discuss the points covered in this blog.

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

I hope to see you soon

Matthew

What will your legacy be?

When looking at the organisation you lead, what is it that you, as its leader, want to see? Do you really just want to watch ever growing market share and high profitability or is it more about seeing your own passion and values reflected back at you from every pore? With reputations increasingly under the global spotlight, modern CEOs must consider whether their leadership (and resulting legacy) is both authentic and enduring. If not, are you simply acting the part? Criticaleye asked its Community of Members what ‘Leader’s Legacy’ means to them.

As a leader, what do you want your legacy to be? Should it be more purpose than profit? Arguably the most significant contributions leaders are required to make are not to the bottom line but to the nourishment of communities, individuals and institutions in order that they can adapt, prosper and grow. When reflecting on your leadership, you should be able to:

  • Constantly challenge what success looks like
  • Know how to balance managing by influence and managing by authority
  • Build more leaders, not followers – plan and train successors and position others to succeed
  • Price true long-term costs and ‘externality’, ie cost of capital plus carbon

In the end, a long hard look at your organisation will tell you whether your leadership style has been consistent with who you are and your own DNA. To do this you must first decide whether you ‘know yourself’ and, second, ask whether your organisation genuinely reflects ‘you’. Criticaleye asked its Community of Members what ‘Leader’s Legacy’ means to them.

“The main thing for a leader is that they can be themselves and be driven by an inner compass and guidance that is more important than anything else”, says Paul Polman, CEO, Unilever. “If your values – your personal values – are aligned with the company’s values, you’re probably going to be more successful longer term than if they are not. If they are not aligned, then you are simply acting the role, not living it. I would hate to be remembered for building market share, but rather for making a difference in society.”

Darryl Eales, CEO, Lloyds Development Capital, says: “The critical thing about being a CEO is to know yourself; you must also know in your heart that you want to lead and be sure that your interests are absolutely in line with those of your company. If that is the case, then people will generally follow you; if they doubt your motives, then they generally won’t. You can only lead people if they choose to follow, so I don’t think you can be told that you are the leader – you either are or you aren’t. The thing that occupies me more than anything else is how to build a sustainable business – one with a clear succession. In every business, a key role of the CEO should be to consider the long-term strategic objectives for the business and, within this, how to develop a team that can maintain the growth of the business when the incumbent moves on.”

Helen Alexander, the President of the CBI, agrees: “A leader’s legacy lies in the change they have effected – change that keeps the organisation vibrant and healthy. It should be change that is in tune with the environment inside and outside, so that the firm is well-positioned for the long-term. But it’s also necessary to have the talented people who can take the firm on to the next stage; that means finding the best people, developing them, and being clear about the succession after you.”

How you shape your organisation internally, and whether you have the respect of its people, goes a long way towards preserving its condition for your successors. The organisation that you steward should also be sufficiently robust to weather recessionary storms or any other external influences.

“Markets can be benign, booming or collapsing, and leaders have the task of finding the right path through whatever the external environment brings,” agrees John Whybrow, Chairman of Wolseley plc. “It may be the maintenance of an internal culture of finding solutions locally through to giving strong direction in identifying and exploiting opportunities corporately – even though significant costs may need be removed. In good times, they need to ensure confidence does not turn to arrogance. Leaders should leave an organisation feeling proud of what is being achieved, no matter what the external environment.”

Alan Parker, CEO, Whitbread plc, says that “a CEO’s role is to create the environment in which his or her team can deliver high performance and the foundations for long-term success. In the end, everything comes down to one thing: people. It’s about listening to customers, building relationships with stakeholders, understanding motivation and creating the right culture for employees to flourish. No one prepares you for when you become a CEO and, at Whitbread, I had to take some tough decisions, particularly in the early days. As I retire, I am most proud of how the team has created the well positioned company it is today, with customer focus at its heart and exciting opportunities for future growth.”

When evaluating your legacy, consider that people tend to follow brands and leaders based on whether or not they relate to and respect their values. Ultimately, you should ask yourself: Are my values aligned with the values of the organisation? Am I respected? Am I proud of the people, brand and motivations that I have strived to create? If you cannot answer those questions to your satisfaction, perhaps you need to reassess the legacy you have (consciously or subconsciously) begun to build.

In his upcoming article ‘A Leader’s Legacy – Are You Fit for Purpose’, Charlie Wagstaff, MD and Co-Founder of Criticaleye, challenges leaders to answer those questions by testing whether they are genuinely transparent, energised and confident in their conviction. He says: “Your leadership style must be consistent with who you are, which means being authentic. You should act in a manner consistent with a strong personal values system and ensure that this is understood and evident across the entire organisation. So understand what it is that you are passionate about because when you look at your organisation, you are really looking at a reflection of yourself.”

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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