The job of the chief executive has expanded dramatically in recent years, both in scope and complexity. The companies they head often operate worldwide and in a business climate that has rarely been more turbulent. Instead of heading up simple pyramids, they now manage intricate networks of overlapping jurisdictions and relationships. And their responsibilities aren't limited to what happens inside the company. Now, they must consider how the actions of large corporations will impact global sustainability, as much as any government or non-governmental organisation—maybe more so. CEOs, today, feel the weight of the world on their shoulders.
Every chief executive confronts a series of challenges that can be ranked in the following order:
- The first priority is simply to survive in the job. Between 1999 and 2006, the average tenure of departing CEOs in the US dropped from about 10 years, to just over eight. On average, about 40 per cent of new CEOs last less than two years.
- The second priority is building the business and increasing shareholder value. It's a major challenge—only about one in 10 companies achieve sustained value creation.
- A third priority is leaving a proud legacy—a company that plays a leadership role with stakeholders, its communities, and in the world, contributing to a sustainable future, rather than detracting from it.
A job with such challenges can quickly overwhelm CEOs, contributing to their short tenure. And yet, as we learned in a series of over 25 interviews with CEOs, many chief executives are able to assert control over the job, instead of being dominated by it.
One key, our interviewees told us, is that they must be self-disciplined, even selfish, in their approach to work. They relentlessly protect their time. They focus on their own agenda, instead of simply responding to external demands. And they follow their instincts, even when it means replacing team members who aren't contributors, even if they're capable and motivated.
Six dilemmas—and six strategies for success
Apart from these broad challenges, the CEO job poses six specific dilemmas that involve time management and control of the agenda:
- What's the best way to prioritise the demands on my time?
- Should I act quickly or deliberatively to build my team?
- How do I avoid getting bogged down in my calendar of essential meetings?
- How do I get all my employees moving in the right direction?
- How do I satisfy multiple constituencies, with each asking for something different?
- How do I role model the right values while making the job sustainable?
The chief executives we interviewed were chosen because they have been unusually effective. When we posed these dilemmas to them, they responded with the insights and best practices that have enabled them to balance multiple demands and focus more on what matters—establishing their leadership and moving their companies towards full potential, while building a proud record and legacy.
Specifically, our interviewees mapped out six strategies for taking control of the CEO's job:
- Work the 60/40 rule;
- Build your team fast;
- Set the tone and business rhythm;
- Align the organisation around simplifying themes;
- Make all constituencies work for you;
- Role model both drive and sustainability.
Work the 60/40 rule
Every business is different: they operate in different markets and with a unique strategic position. The amount of time CEOs must spend on activities needed to keep their business moving also differs. But they share a common danger—a diary that's filled with corporate routine, but doesn't advance a CEO's business agenda.
Many CEOs address this issue by applying the 60/40 rule: They devote 60 per cent of their time to "must-do" tasks, like governance and investor relations, and the other 40 per cent to turbo-charging high-priority parts of their business agenda. Crises and "issues du jour" will inevitably intervene, interviewees said. But if you set the hurdle for getting directly involved high enough, these distractions will stay manageable. Many mentioned that sticking to the plan requires discipline and restraint. One CEO acknowledged it was difficult at first. "I felt my job was to solve or resolve all," he said. "That was panicky management, not leadership."
To stay on plan, interviewees constantly review the 60 per cent of tasks that are mandatory and decide what they can delegate. One pharmacy retail chain CEO, for instance, said he's not particularly good at investor relations so he entrusts "really great people" with slices of these duties.
It's important as well to recognise which parts of the business will benefit most from the CEO's time and attention. The CEO of a luxury goods company identified personal contact with his top staff as an important use of his discretionary time. Each day, he reviews pictures of his direct reports and gives them a call if they haven't spoken recently; he also checks in with his top 100 managers during downtime.
How do you keep from being derailed by the many issues that come flying at a CEO? Recognise that you don't have to resolve all of them. And keep potential crises in check by not panicking over every unexpected issue.
"You need to be aware of the signals you're sending to your organisation," advised the head of one agricultural company.
Build your team fast
Sixty-five per cent of CEOs say that talent and human capital is their No. 1 priority, but it's also one of the most difficult. You need to get your top team in place quickly. The temptation is to take your time to pursue the best people using the most relevant information you can find. But looking back, the CEOs we interviewed put a premium on speed over deliberation. Few regret moving too fast on the tough people decisions and many regret moving too slowly.
What are the most common obstacles to moving fast? Many new CEOs point to a lack of reliable information about the business and management team candidates to make informed decisions. This was the most common rationale for moving slowly, especially for outsiders.
One CEO called interviewing a "blunt tool." Some also acknowledged that they lacked confidence at first, making it more difficult to trust their gut. In a business anchored in metrics, many executives want to see data before making important decisions. One key is to get some help in putting the right people in the right roles. Typically, CEOs we talked to focused first on the finance director (FD) and the human resources director (HRD). Working together, a CEO can quickly make personnel changes and gain control over the business.
As they build their teams, they look at how a potential team member's skill set fills gaps and complements their own strengths. Is he or she an energy-maker or energy-sapper? "The longer I'm in the job, the more selfish I've become about choosing people that energise me," said the CEO of an integrated technology firm.
Building a leadership supply is essential. It requires identifying stars and then rewarding them. CEOs in our interviews give special attention to those who perform and weed out those who don't. "The role of CEO as chief mentor is overlooked," observed a beverage company CEO.
Set the tone and business rhythm
While CEOs need to manage their agendas, it's equally critical to manage the pulse of the entire organisation—multi-year, multi-month, monthly and weekly. As leaders, CEOs say they work to set both the tone and cadence of the enterprise to make it match their management philosophy and strategic imperatives. "You need to be the one beating the drum, not marching to the drumbeat," said the CEO of one industrial group.
Setting the tone is an exercise in role-modelling. Organisations value CEOs who are positive, have energy, know where they are going and are authentic. As "mentors in chief", their behaviour and attitude set an example for individual success. Setting a business rhythm to match the tone is just as important, interviewees said. Too slow a drumbeat in the mobile-phone industry, for example, would cause a company to fall behind quickly. Too fast a drumbeat in steel-making might risk burning out your people—and outpacing the industry's technology. The key is setting a cadence that's appropriate for your particular business, and signalling that this is an immediate priority.
Once you have established that cadence, you need to create rapid feedback loops, making adjustments in real time. Business leaders often think about mobilising the organisation as a sequence—defining a priority, determining action, then setting the timetable. But that approach misses what the organisation needs to do in order to mobilise, who needs to be involved and when they should act.
Rapid feedback loops allow CEOs to monitor performance and identify improvements as they drive change through the organisation. It also helps build in "mobilisation periods" for each initiative.
"Be aware of whether an initiative has landed in the frontline before you can launch the next one," advised the CEO of an agricultural company.
One secret to setting tone and rhythm, interviewees said, is to work through both formal and informal interactions. Not everything important can be communicated in a committee meeting or management briefing. The answer for one industrial CEO: reserve Mondays for informal sessions without an agenda.
Align the organisation around simplifying themes
Getting employees all moving in the right direction is the art of management. One best practice for communicating a strategy to a broad organisation is to first identify the relevant business priorities and simplify them into a few easily understood themes. Most organisations can effectively handle only three to five major initiatives at one time.
When one international airline launched its turnaround plan several years ago, the strategy had just four elements: The market plan (eliminate money-losing routes), the financial plan (fix the liquidity problem), the product plan (improve the customer experience) and the people plan (make this airline a great place to work). "In any company I've been in, there haven't been very many people who are capable of standing back and making the complicated things very simple," said the airline's CEO. "Yet, that's where the real value is."
Armed with these simple themes, CEOs said, you have to hammer them home at every opportunity. "You need to role-model in words and deeds," said the CEO of a major travel company. It requires a communications strategy that makes the company's strategic themes become second nature. Delegating control and accountability forces the organisation's leaders at all levels to absorb and live those priorities as well.
Also important: creating a performance culture based on these metrics and priorities. It ensures that all employees know that delivering on the themes is the path to success. The end result is an organisation that the CEO leads, instead of manages. And it is self-reinforcing. By empowering managers to make their own decisions, you encourage them to think like owners and behave aspirationally. These are key elements of a high-performance culture.
Make all constituencies work for you
Simplifying and clarifying your strategy has another benefit: CEOs say it helps them manage the multiple constituencies they must please. This is crucial. Even the most effective CEOs spend as much as 20 per cent of the time on corporate governance—activities like board meetings or analyst calls.
The answer, many suggested, is to turn the problem on its head. Use your themes to win over stakeholders and they will become part of the solution, not part of the problem. If you involve board members in your strategic priorities, they will develop a sense of ownership, helping them to understand the numbers, embrace the metrics that help advance your agenda and support "pay for performance" relative to those criteria.
A feeling of ownership also makes it easier for board members to accept risks and provide support when things go wrong. "Communicating with, and involving, the board is very important to build trust," said the CEO of a hand and power tool company. Many CEOs struggle to establish a strong relationship with the board, especially with the chairman because of the natural tension inherent in the two roles. That's one reason why CEOs often need other outside advisers.
Clear, simple themes also help CEOs win over investors and analysts. "I've spent a lot of time educating investors," said the CEO of a consumer products company. "I've been able to essentially define the terms by which this industry is reviewed in a way which really demonstrates the value of our strategy and the weaknesses of our competitors."
But many interviewees found that working with the City or Wall Street is among a new CEO's biggest challenges. Nevertheless, a well-defined, easily communicated set of strategic themes allows you set clear expectations with investors and encourages them to see the business as you do, even if they don't always agree.
When it comes to other stakeholders such as regulators and politicians, CEOs recommend prioritising your time with them based on what they can contribute to your agenda.
Role-model energy and sustainability
Moderation is not generally viewed as an asset in a 24/7 economy that punishes companies unable to keep up. But, for all the energy and drive a CEO must project, he or she must also set the standard for job sustainability. "Performance rests with you and it can easily become 24/7," said the CEO of an industrial company. "The CEO must take care of themselves, through physical or mental hobbies."
Striking the right balance involves putting boundaries between your personal and professional lives and respecting the importance of both. "I have strong rules about social engagements and travel schedules," said the CEO of a food company. Others agree that taking off Saturday or Sunday, spending time with family and getting exercise is crucial.
Interviewees also stressed the need to send the right signals to employees that it's okay, even required, to live a life that makes the job sustainable. That means respecting their time when things get tough. The CEO of a food retail company said that he's demanding when it comes to work hours, but restrains from interrupting time off.
Part of role-modelling sustainability is acknowledging that the CEO's role can be emotionally isolating. CEOs in our interviews suggested seeking advisers or coaches to bounce ideas off and for advice. They turn to mentors, current and former colleagues, family, friends—even the board chairman. One consumer goods company CEO noted, "If his job is not to help the CEO, then you've got the wrong chairman."
Veteran CEOs know their effectiveness depends on maintaining a high level of energy. But CEOs emphasised that sustaining energy isn't something you can do on your own. The real masters often rethink their team choices based on who helps create energy and who drains it away. "A CEO must recruit and develop excellent people," said a luxury goods chief executive. "It allows the CEO to rise above, and work with a clean desk and clear mind."
James Allen, a partner in London, is co-leader of the firm's Global Strategy practice. Julian Critchlow is a partner in the London office.
The authors would like to thank Bain senior advisor Crawford Gillies, who assisted in developing these insights.