06 | Apr | 2016

5 Key Qualities to Consider When Appointing a CEO

Author: Trevor-Roberts

There are generally two big incremental steps in the career trajectory of CEO aspirants. The first step is often a move from a divisional general management role (or functional head role) to a country head appointment. The second big step is heading up a fully autonomous listed company, accountable to a Board representing shareholders. Those making these selection decisions need to consider internal versus external candidates, and the built experience of each pool of contenders.

The “height” of each of these steps is often underestimated by contenders. The knowledge and capability required for moving up to a general management role addressing operations, people management, marketing, finance, and a full P&L is one big leap to consider. The move to a fully autonomous CEO role (with shareholders and a board) is another very large step upwards again.

Then, there are the new challenges facing CEOs in emerging commercial and non-commercial environments, which increase the complexity of the role, and which also impact on the type of leadership required for the future. These challenges include the impact of the Internet, social media, new regulatory and governance requirements, changes in our geopolitical contexts, and the nature of competition internationally.

In our work with CEOs and CEO aspirants, it is important to test experience and to create the best way to explore what prospective CEO roles really require.

A tool that Trevor-Roberts have developed for this purpose involves the articulation of nine fields of experience and capability that will assist to increase an individuals chances of being appointed as CEO. Here we have listed five of the nine involved:

1. Development of future strategy

  • The ability to build a roadmap, providing a focus for both short- and medium-term activity - albeit with continuing agility and flexibility - should change become necessary
  • A proven track record in strategy execution (often more important than strategy formulation): “An imperfect strategy well-executed is often more important in building shareholder value than a perfect strategy poorly executed.”

2. Customer Insight and sales leadership

  • Closeness to current customers and the insight to see future prospective markets

  • An ability to achieve engagement with customers; high-level relationship building

  • An ability to lead continuing service and product innovation, and leadership of appropriate and measured sales activities.

3. Financial analysis and management

  • Effective management of the balance sheet and the P&L, short- and long-term

  • An understanding in broad terms of tax, treasury, statutory reporting, governance, management accounting and key profit drivers

  • An understanding of debt and capital raising.

4. The effective deployment of information systems

  • Use of information systems and technology to provide customer insight, and to link and fully communicate operational and financial data in a timely manner across all key internal stakeholders.

5. People and reward management, recognition, capability development, talent attraction and retention

  • Enthusiasm for leadership, and management development and succession planning

  • An ability to see the capabilities needed to underpin future strategies, and to guide their development in people

  • An ability to hold key leaders accountable for people development and in building high engagement across the organisation. Identification with the building of a strong employer brand in attraction, retention and divestment practices.

Additional useful capabilities

Running across all of these broad sets of capabilities, we are increasingly seeing a need for another set of “meta-capabilities”. These include:

  • Decisiveness: in relation to people, business strategy and the direction of business investment and dis-investment.
  • Compassion and care: we have seen recent examples where inappropriate leadership behavior has led to abrupt CEO contract termination.
  • Comms management: The ability to manage communications across fast-moving information channels including social media (social media can magnify and distort popular truths and short-circuit logic and more considered responses)
  • Risk management: across multiple dimensions, including communications (as mentioned), business risks, governance, regulatory restraints, IT and IP risks, products and shareholder disclosure
  • Creativity: particularly in addressing business transformation opportunities emerging through technology.

Successful CEOs must also have that rather exceptional mix of both self-assurance and humility—an ability to generate confidence in those they lead, and the wisdom to seek advice when it is needed.

CEOs who will be successful in any given appointment are very hard to find. Both contenders and those making selection decisions need to carefully unpack exactly what an appointment really requires before charging into courtships. They will then need to successfully navigate the selection process to ensure that the resulting appointment is the best fit on both ends.

At Trevor-Roberts we provide coaching for CEOs and CEO aspirants who want to become senior leaders and prepare for their next appointment. This work involves careful appraisal and expression of capabilities in the individuals we support, and then building a clear focus on what is needed for the appointment. Needless to say, this work is a little more involved than providing interview tips.

For more information on how we can assist, contact us on 1300 876 118.

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