Source: New Economist

Agenda Life at the top. Crisis of confidence. Do leaders matter? Women in leadership. CEO turnover. The perils of of a new face. Exceptional companies… If you must hire outside. What does it take to be a great leader? Managers in international companies. Leadership qualities. The family connection. Who is in charge? Exec’s or Board? Working for the board.

Life at the top…More demandingMany countriesComplexityMiddle mgmt gone: wider span Innovation cycle quickerProduct life cycles shorterSwamped with emailsDemands for appearancesOutside scrutiny

…Life at the top con’t

Exaggerated expectations.Expectation of double digit growth.23% of Americans thought bosses

of large corporations could be trusted.

51% trust accountants.75% trusted small business

owners.

Crisis of Confidence1. Stock market crash.2. Banking system near collapse.3. General Motors trouble.4. Bernie Madoff. Ponzi scheme:

$65 Billion = missing $ including fabricated gains. $18 Billion = Actual losses.

5. Executive pay escalation.6. Jobless recovery/future of pensions.7. EU financial troubles: Greece, Italy, Ireland

Do leaders matter?

Reputation attributable to leader: 1997 40% 2003 50%

“Capitalism depends on trust, so this is a truly important job.”

What about women in leadership positions?

7/500, women/fortune 500. 1/100, women/Britain top 100. Obvious challenge: maternity leaves. Timing: lots ‘almost’ there. 3 hurdles:

Fail to get the really stretching jobs. Lack of networks. Gender barriers Image compatible with leadership.

• Aggressive male leaders are admired; female ones are disliked.

26% of male owners want to be seen as an authority figure.

5% of females…. Men paid on average $4000 more on

graduation. 57% of men asked for more $. 7% of women asked for more.

Coming and Going: turnover 77% of American companies have a

succession-planning process. (up from 33% two years ago).

Picking a new boss #1. Sometimes bring in outsider.

Fresh face desired by institutional investors.

Search companies drive bigger fees. Usually an insider:

Fortune 100; <10 outside. Insider cheaper/well run company

will have a bank.

The perils of a new face. Most likely when a company is in a mess. First 100 days key. 22 months average. High risk for candidate.

Long term contracts desired. Lack internal network of loyalists. Takes 2.5 years to mesh and truly take charge.

2002 study: 2500 big publicly traded companies. 2/5 of all CEO successions were sackings.

CEO 1990-1996 3X more likely to be fired than < 1980. Outsiders far more likely to be fired than insiders.

Average < 3yrs. Honeymoon period for new outside hires drives up stock

7% higher than insiders. Later, they have farther to fall…. Sacked CEO of publicly traded company may never work

again!

Exceptional companies...

Appoint quiet, stoic, workmanlike insiders. Don’t hire charismatic outsiders. “Charisma” is a leadership liability.

If you must hire outside:

1. Look at companies that the candidate has run in the past.

2. Track the record of the search firm.

3. Pick someone from the same/similar industry.

If all else fails, hire someone from GE.

What does it take to be a good leader? Lower expectations. Abandon heroic ambitions. Steady, modest progress over many years.

“it takes seven years to get to the point where a company shifts from good to great”. Collins, best selling mgmt writer.

Organic growth. Attention to detail vs grandiose visions. Leading quietly. Obsession with operations, cash-generation

and people.

Managers of international companies

Led particularly hideous lives: Incessant international travel. Long periods away from home. Sleeping poorly in unappealing hotels.

Leadership qualities 1. Clear sense of direction. 2. Knack for motivating people. 3. Adaptability.

Keep the message extremely simple. Charm and empathy but also ruthlessness.

make unpleasant decisions. sack colleague (toughest job). shut a plant.

Most leaders actually are...

BORN INTO IT! Founder or one of his family. Two-thirds of Asia’s publicly

traded companies are controlled by a single shareholder.

America = 3%.

Benefits of the family business...

Security of tenure. Eccentricity allowed. Long-term view. Strong corporate culture

flourishes. Incredible sense of

accountability. Passion (eg Colonel Sanders

sold KFC, “Don’t fool with the gravy”. Threatened to go on Johnny Carson: “tell ‘em that sh!* it ain’t fit to eat.”)

Succession planning is vital.

Who is in charge? Desire to make boards more independent.

Check and balance on the company managers. CEO has much power in nominations to board. CEO’s often wish Boards would disappear. Trend to smaller boards.

Fifteen years ago : 16-17 members. Today: 10-11 members.

Canadian Diversity update Women : 14.4% of board seats at

Canada’s 500+ Seats held by visible minorities: 4.6% Persons with disabilities 2.7% Diverse companies perform better. 91% of companies said board diversity is

important. Actual written policy; 18%

Toronto Star, November 7, 2012

Working for the Board... 2001/13 hours a month. 2003/19 hours a month. 2001; $41,000. 2003; $64,000. 2011; median, $234,000. Apple $984K.

Thanks to Jack Meyer, 2012.

1993;Average CEO sat on 4 outside boards. 2003; 1.7 and sinking fast.

Too busy on main job. New trend: ‘executive session’ directors

meet minus CEO and all other exec’s.

END