Articles and Commentary
February 11, 2015 - CSuite
Juggling Act: Managing Relationships with the 3 Key Stakeholders CEOs Should Pay Attention to in 2015
Stephen Miles and Taylor Griffin
“Stakeholder overload” is a reality that will continue to challenge CEOs in the coming year. New chief executives can feel particularly overwhelmed by how their relationships with internal and external stakeholders change once they reach the top spot, but even veteran CEOs admit struggling with the shifting expectations of groups above, below, and outside. The sheer pace of market changes—from new product cycles to technology disruptions to global geo-political swings—has turned the CEO role into a juggling act. Having to develop the corporate strategy, and then bring all stakeholders (inside and outside the company) along on the “journey,” and then assemble the talent to execute it all requires a constant re-focus and prioritization. It is in this context that CEOs must create an intentional strategy for managing key stakeholders, and leveraging these relationships to propel the company into growth. Three groups in particular will need additional focus on the part of the CEO in the coming year to ensure that these stakeholders are vested in the success of both the CEO and the future of the company:
New Board Members
We are moving out of the era of the “CEO’s board,” where the CEO carefully orchestrated everything behind the scenes. New directors are entering, and expecting, more transparent boardrooms, and CEOs and directors have more of a blank canvas to work with as far as establishing a working relationship with each other. This demands that CEOs start fresh in determining how best to engage with a new member of the board who may come in. Meeting a new director for the first time—who may not yet be expert with the company or even the industry—presents a real opportunity for a CEO, good or bad. In striving to gain an ally in the director, some CEOs react in an overly transactional way. They answer questions too quickly, provide too much of an information dump, and respond with more speed than thought. This can happen with new CEOs in their initial interactions with the board, but we see it with veteran CEOs, too, in engaging with new directors or board chairs. On the other hand, if a CEO approaches new directors in a way that is less reactive and more strategic, the relationship can start off in a high-functioning, meaningful way. This is a case where time is a friend, not an enemy. New directors will have a lot of questions, but they are not looking at the CEO to “prove” that they know the role. These incoming directors are building their own knowledge base and forming a perception of the CEO to last for the long haul. This is the time for the CEO to talk less, not more, and be alert for where the new director is coming from in his/her questions. Then, going forward, the CEO can continue the dialogue by investing in a one-on-one relationship with the new director—an investment that must be continually maintained over time.
Your “Anchor” Talent
A key talent management tool drilled into every leader is spotting and cultivating his/her high-potential talent. There is no doubt these high-potential executives are essential to the growth of an organization: These folks are your future, and companies must allow them to stretch and prove worthy of the organizational investment. The problem is that many leaders overrate high-potential executives as contributors to success, and underrate their “anchors.” Anchor executives are high-performing and have a mastery of their role, but for certain reasons are unlikely to rise to the top of an organization (they may have different personal or career aspirations other than the top spot, or they may have a very narrow area of expertise). They are deeply valuable because of their experiences, technical knowledge, and mastery of a role. High-potential executives take from an organization, as they are in deep learning mode—they have less capacity to engage with others on their team. But anchors are already at the contributing stage: They are delivering results and are able to hit the ground running. As a CEO looks ahead, it’s tempting to focus on the emerging shining stars and future leaders of the company. But a high-performance organization is dependent on teams that are structured around both high-potential and anchor executives. The presence of these anchors allows high-potential colleagues to develop and transition more effectively into higher leadership roles, providing balance and not putting the stake of the company on riskier ground with less tested executives.
Investor Community—Especially the Buy Side
The importance of effectively managing relationships with the analyst community in the coming year cannot be overstated. As CEOs think about their role in shaping their company’s future, successfully managing investor/analyst communications can be a powerful lever to their company’s success. Like a board, the analyst community needs to be brought on a journey, and it’s the CEO’s job to engage them. This starts with doing the hard work on the strategy so it is simple and easily understood—and also connected to the decisions and actions the company is taking. It is important to move beyond the transactional, one-way information sharing and develop true engagement. The CEO who talks about all the great new products and plans for the company but never bothers to figure out what the analysts want to hear about is not protecting his/her share price. What are they measuring—and, most important, what are they measuring that your company may not be? It’s essential to bring analysts and investors on your journey as a company, to walk them through the story of the company’s vision, but it’s just as important to find out where they are coming from. * * * As CEOs consider thoughtfully how they will approach their many different constituencies in the coming year, the underlying factors to keep top of mind are value and engagement. Internal and external stakeholders crave engagement and dialogue—and CEOs must be able to cultivate this for high-functioning relationships. At the same time, the CEO job demands a ruthless prioritization, requiring a keen sense of where true value can be captured as far as executive performance and creating valuable investor relationships.
Stephen Miles is the founder and Chief Executive Officer of The Miles Group, an executive consulting firm specializing in talent strategies. Taylor Griffin is a partner and Chief Operating Officer of The Miles Group.