Articles and Commentary
February 17, 2014 - Robinson College of Business
Who Is Looking Out for No. 1?
Stephen Miles and Nathan Bennett, Ph.D.
Serving a company as CEO is undoubtedly a unique opportunity. And with the opportunity come truly unique challenges. Some, like the pressures to produce consistent growth, are quite familiar. Others, like how to develop strategies to survive and thrive in a global recession, are still being understood. Whether the challenges are new or familiar, it requires a lot of grit to take them on day after day. From what we’ve seen, the job has become only more grueling over the past decade. To a degree much greater than ever before, CEOs are marked executives. And their isn’t much reason to expect the scrutiny with which they’re viewed will lessen.
This circumstance raises important questions: Is your current CEO – is anyone, for that matter – equipped to deal with all the woe and intrigue that comes with the job? Are things evolving in a manner that may make the job unattractive enough so that – even with an astronomical paycheck – truly authentic, capable leaders are turned off? And finally, what can boards and CEOs do to minimize the stress connected to the job as it is today?
What’s making the job tougher? Here are just a few from what’s become a familiar list:
Political forces: increasingly active government oversight and regulation
Economic forces: finding growth in a global recession
Social forces: demands for greater transparency, increased concerns for socially responsible corporate behavior, distrust of institutions, generational gaps in the workforce and their workplace value systems
Technological forces: dramatic rise of various social media platforms to track and hold companies accountable
And, granted, sometimes business has been it’s own worst enemy. Who can forget the scolding auto executives received after travelling in private jets to DC for their Congressional testimony. Not a week goes by where headlines don’t express outrage at what’s seen as outrageous compensation. And finally, stories of what is at least bad judgment from CEOs like Mark Hurd and Brian Dunn don’t help. Bad optics.
So CEOs face a tough situation – political, economic, social, and technological forces are interacting in new, often unpredictable ways. The resulting volatility, complexity, and ambiguity create a situation where the pressure CEOs face is daunting. The demands on the CEO continue to increase – and CEOs can only spread themselves so far. If you are a CEO, investors, analysts, government officials, regulators, NGO’s, customers, suppliers, partners, are among those who all want a piece of you – and they aren’t just in your town – they are all over the globe. It’s a rare person who easily and comfortably moves around the world and engages with such varied constituencies in an authentic and meaningful way. And all this is taking place in an environment where the role is faced with increased scrutiny.
How should your company be handling the increasing complexity of the CEO position? First off, boards have to be sensitive to these demands when they select and appraise CEOs. Perhaps they should recognize that CEO tenures will likely continue to shorten and as a result their succession planning and talent development processes may need to produce qualified individuals at a higher rate than in the past. CEOs themselves have to make sure they invest necessary time in staying well under the crush of these wide-ranging demands.
That said, it’s troubling that recent reports suggest workplace changes are actually aimed at increasing the load carried by the CEO. We refer here to the recently reporting findings that fewer companies are deploying a COO – a second set of hands – and relatedly, that CEOs report an increase in the number of their direct reports. Each of these trends leads to the conclusion that in an increasingly demanding time, more is being asked of already heavily burdened CEOs. With these decisions, boards and CEOs may be unintentionally exacerbating the situation.
If there was ever a time that called for a number two – a COO – this is it. The tendency in crises to want to centralize control – what we see now – is natural. But this isn’t a crises; this is how it is going to be going forward. None of the forces noted above are slowing down. Companies need to be structured to match the complexity of the business environment and a COO provides a step in that direction. It’s time to look out for number one by providing them a number two.