As the new year unfolds,
business thought leaders are prognosticating about what lies ahead and the best
way to manage future challenges. Stephen Miles, vice chairman and head of
Heidrick & Struggles’ Leadership Advisory Services, offers directors and
officers 10 key challenges for chief executives in 2011.
The major challenges, he says,
stem from the growing global dynamic, the aftermath of the financial crisis,
emerging technology, and the changing needs and perceptions of the employee
base as well as shareholders.
1. Moving from “business
case” to “social business case.” As companies weigh decisions such as entering
a new market or embarking on a multi-jurisdictional acquisition, the business
case must now be viewed through a new lens: How will this business decision
impact the region they are going into? It is no longer enough for companies to
meet the ‘legal requirements’; they must make the case to the local
stakeholders that this move will benefit the target community.
2. Stepping into the role
of “ambassador.” On a related note, the CEO must personally act as diplomat and
actively engage with politicians and regulators around the world.
3. Repairing the
corporate image. In this environment, CEOs in all industries must work
assiduously to repair their reputations among the media, regulators, investors,
and the public at large. One way of doing this is through earnest corporate
social responsibility, which helps to diffuse the negative press and also jibes
with the priorities of today’s younger employees—another important constituency
that companies must consider.
4. Making the board an
ally. Developments such as Sarbanes-Oxley and the global financial crisis have
further distilled corporate boards into the role of scrutinizing and
interrogating management. The CEO must build a strong relationship with these
key stakeholders to work together on desired initiatives and operate with
transparency.
5. Building a global
leadership pipeline. A recent Heidrick & Struggles survey conducted with
Stanford’s Rock Center found 51% of companies could not name a CEO immediately
if needed, and 39% have no internal candidates whatsoever. Thus, it is
incumbent upon every CEO to ensure he or she has a robust and global pipeline
of senior talent throughout the organization.
6. Grappling with China.
Almost every CEO is eyeing China—either as a consumer market or supply chain
base. But partnerships there can carry much risk. Chinese companies, supported
by their government, are aggressively acquiring intellectual property and are
increasingly looking to go it alone in competing on the world stage. CEOs must
be aware that they may be creating competitors if they enter into a joint
venture in China—and manage this risk accordingly.
7. Understanding shifting
employee values. Managing the demographic changes as baby boomers move into
retirement is something no CEO should overlook or delegate to HR.
8. Operating in a world
of social media. Today’s CEO is coming to realize that potentially all of his
or her decisions and actions are broadcast in real time on company blogs or on
social networking sites online. Instead of being a ‘victim’ of this new
exposure, CEOs must embrace and become part of the new media.
9. Driving diversity.
It’s time to move from a compliance-based approach to diversity to one where we
truly build (and value) diverse companies and boards. As part of their greater
engagement with recruiting and with talent management, CEOs need to personally
drive diversity in their organizations rather than making this an HR issue.
10. Managing a global
leadership team. A corollary to the challenge of building a more diverse and
more geographically diffuse management team is the complexity of managing a
team that is physically spread out. Expatriate programs— in which companies
send executives abroad for experience—carry the risk of having those employees
scooped up by competitors. Local teams may be more likely to stay with the
company, and they may also be better able to compete with local competitors.
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