If you could piece together the ideal chief executive, what qualities would you include? And how have these traits changed in a world marked by technological advances and a shift in stakeholder expectations? Here, five experts identify the essential attributes for today’s leader.
Brutal single-mindedness, never sweating the small stuff, movie-star charisma: what were once seen as essential characteristics of the ideal CEO are no longer enough. As corporate governance becomes increasingly complex, and with disruption and data-handling challenging the inexperienced, boards are now questioning widely held assumptions about the attributes a chief executive needs to possess – or develop.
Yes, a chief executive needs to be strategic, energising, an expert communicator and a business mastermind. And choosing the right – or wrong – person is expensive.
A 2012 Harris Interactive poll found that spending on leadership selection and development had increased over the previous 15 years to a then all-time high of about US$16 billion annually. According to a 2015 Forbes finding, companies that fire their CEO lose an average of US$1.8 billion in shareholder value.
The myth of what makes the perfect CEO has been shattered and replaced by a new concept that sees some classic leadership skills as critical and others as irrelevant. Cameron Kenna, co-founder and CEO of executive recruitment and coaching company Ampersand International, says a major trend over the past decade has been the selection of fit-for-purpose leaders.
“CEO tenures are shorter, the skills required are more specific and where the company sits in its business cycle will determine the qualities sought,” says Kenna. “This is not to say you can’t have long-tenured CEOs – but only in circumstances where they still remain the best person to guide the business into the future.”
Kenna predicts that 2019 will be the year of “innovation fatigue” and will give companies the time to reflect and return to their central purpose. He points to findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry revealing businesses that have strayed. “A decade or so ago, the banks started stepping away from their core [business] and pursued a broader offering. That risk has not played out well,” he explains. “The most important things are transparency and honesty. Once you start to dabble in what isn’t your primary area of expertise, you’re at risk of cover-ups – in many instances through lack of knowledge.”
Over the following pages, Kenna and other experts identify the qualities required in a contemporary chief executive.
It pays to be humble
“Likeable people get hired,” says Elena Lytkina Botelho, an author, CEO counsellor and partner at leadership advisory firm GhSmart. “The age of picking a CEO who’s likeable is not over and never will be.”
But, she adds, “likeability and what actually improves performance? Now that is a different set of characteristics. You could have a larger-than-life personality or you could be understated and modest – the problem is that neither of these things have anything to do with performance. What’s changing is that a bold personality can get you into trouble.”
Kenna agrees, saying it’s important to have a strong ego, rather than a big one.
“All show and no go is something to be wary of,” he says. “There have been many CEOs who have failed to show the basic qualities that provide assurance and security to their staff and customers, often in companies that should have learned from past mistakes.”
In fact, it’s a person’s blunders that business psychologist Aimee Williamson seeks out when she advises boards on CEO appointments. “When we look at competencies, vulnerability is definitely one of them,” says Williamson, a member of the Leadership and Succession Practice at executive search consultancy Russell Reynolds Associates. “In our CEO testing, you get reactions from candidates such as, ‘No, I’m not vulnerable. I’m competent. I take risks.’ They find it uncomfortable to see vulnerability as a positive trait, whereas we see an admission that they don’t have all the answers and that they seek the input of others as a strength.”
Thomas Clarke, author and professor of management at the University of Technology Sydney, says publicity-seeking “rockstar” chief executives aren’t desirable in today’s corporate governance landscape. “For these CEOs, the job is very much about ego," he says. “This can work as a marketing boost for the company for a while but often the flashiness ends in tears. The majority of CEOs strive to represent their companies with a sense of decency and authority.”
While it’s a difficult characteristic to measure, one of the two most common qualities that boards seek when assessing potential CEOs, according to data from Russell Reynolds Associates, is integrity. (The other one is resilience.) Clarke agrees that humility and integrity go further than bombast and showmanship. “Successful CEOs don’t have to big-note themselves,” he says. “Their attributes and achievements speak for themselves. To be an effective CEO, you need to be of the highest integrity. If it’s apparent you’re self-interested, conceited and flawed, no-one’s going to respect you.”
Keeping quiet speaks volumes
“Historically, the factors noted in successful CEOs, such as being ‘loud and charismatic’, having a ‘disruptive mindset’ and ‘leading from the front’, is what got you noticed,” says Williamson. “Steve Jobs was that type and that model can lead to success, change and innovation. But as the world shifts, those characteristics alone don’t drive success.”
Having specialised in hiring, succession planning and leadership development for nearly two decades, Williamson says that “loud” factors might drive change but “quiet” factors ensure change is executed in the right way. “We look for balancing characteristics, such as pragmatism,” she says. “If you’re going to come up with a disruption, we assess your vigilance to risk-taking and your perceived understanding of the impact of that disruption. A loud, heroic style of leadership is all very well but today’s CEOs need a balance of vulnerability and a willingness to take on feedback.”
Russell Reynolds’ case studies single out Dara Khosrowshahi, CEO of Uber since 2017, as publicly – almost proudly – displaying his vulnerability. He’s impressed both Uber employees and management with his quiet, diplomatic and measured approach and has publicly apologised for the company’s past international scandals, which included sexual discrimination and harassment claims. Jessica Bryndza, a former global director of people experience and employer brand at Uber, has been quoted as saying that in his first two weeks, Khosrowshahi met with drivers, female engineers and customer support staff. “He didn’t come in guns blazing,” said Bryndza. “He came in listening.” The company saw US$2.6 billion in revenue in the first quarter of 2018, up from US$2.4 billion in the last quarter of 2017.
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In the 2017 edition of his book, International Corporate Governance, Clarke states that each attribute traditionally expected of high-performing CEOs needs to be balanced by a seemingly paradoxical trait. “Each of these qualities is important and without them you’re going to be in trouble as a CEO. But each can also lead you into trouble if it’s not in some way held in check.”
The first quality is vision. Clarke states that the capacity to decide on a good path and offer a compelling future should be a CEO’s starting point. However, the difference between vision and hallucination is small and strategies require constant refinement before they become historically obsolete.
During this time of rapid digital disruption, a chief executive must assess the potential of the next waves of technology; in 2008, the CEO of Blockbuster thought Netflix was a fad and his company went bankrupt.
Leadership, of course, is the key capability of a chief executive. Or, as Clarke puts it, it’s “the essence of a CEO’s character… the magical ingredient in transforming a company or achieving the seemingly impossible”. However, he emphasises that it’s the direction of the leadership rather than the quality of it that’s most important.
For example, Saab was famous for producing sophisticated cars but after the General Motors takeover in 2000, the Saab leadership continued to concentrate on perfecting the vehicle, making the loss-maker even more expensive.
Physical courage is a surprise addition to Clarke’s list. “A consultant once said to me that executives made most tough decisions in their stomach, not in their head,” he says. “CEOs look at a very difficult decision that makes them want to be sick but have the intestinal fortitude to see it through, where others might hesitate.” The flip side is that a CEO may be too confident in their own convictions. “A willingness to listen to others should temper decisions.”
Finally, Clarke nominates intelligence as a double-edged sword. While being CEO is an intellectually demanding task, the speed and accuracy with which decisions need to be made can potentially lead to frustration with and dismissal of the wider executive team’s knowledge. “If you can’t learn from the intelligence of others, you can’t get far,” he explains. “There are plenty of clever leaders around but brilliance alone won’t cut it.” For example, Steve Jobs’ genius was legendary but it ultimately led to his ousting by the Apple board because he refused to listen to others and pitted himself against the rest of the company. “When he returned to rescue Apple later on, Jobs retained his brilliance but respected the views of his colleagues.
Grow a thick skin
In the age of social media, CEOs are under intense scrutiny (and in the #MeToo era that extends to their personal lives and the behaviour of their reports, too). “Boards need to be aware of derailers that could cause CEOs who are under pressure to lose control,” says Williamson. “Leaders need to be effective in managing their emotions so they don’t react in a volatile way.”
So given the complex web of attributes required – some of them conflicting – is being a chief executive even desirable? “Yes, for many people it is,” says Williamson. “They have to significantly compromise [aspects of] their life, they’re constantly in the spotlight and they have huge levels of responsibility. But some CEOs are purpose-led and they enjoy the opportunity to make a difference to either an organisation or to society.”
Learn the numbers
Most leaders’ CVs are missing an important skill. “There is a huge lack of CEOs with the capability to get the best out of data,” says Ampersand International’s Cameron Kenna. Data architects and scientists can help but the CEO, as a strategic thinker, is required to take control of this valuable resource.
“The technical capability to source data has outstripped our ability to assess it,” says Kenna. “It’s an enormous challenge to filter through the noise and find what’s relevant, meaningful and actionable.”
He gives the example of Scott Russell, a president at software company SAP, who’s brought drive and focus to the public-cloud product suite. “It’s a great example of innovation through the use of customer-generated raw data.”
Aimee Williamson, of Russell Reynolds Associates, agrees that these skills are becoming more prominent in CEO searches. “In banking and finance we’re seeing a swing back to more technical experience, especially given today’s regulatory scrutiny.”
“Technology is a hugely disruptive force,” adds GhSmart’s Elena Lytkina Botelho. “So more than ever, CEOs have to try to look into the future, see uncertainties and put a stake in the ground.”
Plan to leave
An exemplary leader will have their departure in mind from day one. “They want to leave behind a great legacy,” says Elena Lytkina Botelho, a partner at GhSmart. “Today we get asked by CEOs who are performing really well, even five years before succession, to support the transition and help them prepare for the change. They want to find a good partner to leave their legacy with.”
But, she cautions, not all businesses place an emphasis on succession planning. “An average company will say, ‘I’ll know a good thing when I see it’, whereas a high-performing company will rely on an outside process with objectivity and analysis.”
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