Managerial talent top people concern for CEOs

by 16 Oct 2007

FINDING QUALIFIED managerial talent and top management succession planning have become the dominant people issues for CEOS, a global study has found.

The two concerns are closely intertwined because competition for talented managers will become even fiercer as many baby boomers depart the “top of the house” to move into “third-stage careers” and retirement.

Overall, the global survey of chief executives found that execution is taking precedence over profit and top-line growth as a focus for CEOs around the world.

When asked to rate their greatest concerns from among 121 different challenges, chief executives chose excellence of execution as their top challenge and keeping consistent execution of strategy by top management as their third greatest concern.

The survey of 769 global CEOs from 40 countries found that sustained and steady top-line growth, which led the pack last year, now ranks second, with profit growth fourth and finding qualified managerial talent fifth.

“This year’s overall top challenge shows that CEOs from around the world are realising that strong execution is a critical factor in driving profits and revenues,” said Jonathan Spector, president and CEO of The Conference Board, which conducted the survey.

“These executives are also becoming increasingly aware of the crucial role that people play in growing their companies.”

The Conference Board’s findings on the importance of management talent and succession planning were underscored by another recent study, which found that two out of three executives believe they are not adequately prepared to lead their companies’ efforts to grow.

Furthermore, most growth initiatives succeed or fail at the business unit level, and that the leadership skills executives need differ depending on the growth strategy they are being asked to lead.

The study, conducted by The Forum Corporation, found that skills for leading organic growth are not the same for leading growth by merger and acquisition or growth by strategic alliance.

The global survey of 313 executives revealed that most business unit leaders (91 per cent) say their organisations have not fully prepared them to manage their growth strategies and that, above all, more training, education and coaching are needed to fill the competency gap.

Leadership skills vary depending on which growth strategy is being pursued, said Ed Boswell, Forum’s CEO. “Increasingly, executives are required to demonstrate more specialised skill in handling growth, and most don’t feel up to the task.”

The problem is compounded in organisations where more than one growth strategy is at work at any one time, Boswell said. For example, an organisation might have an organic growth strategy at the corporate level and a strategy to grow by strategic alliance at a particular business unit.

“It’s imperative that companies equip their leaders with the skills that each type of growth strategy requires and enable them to succeed regardless of the strategy they’re in charge of pursuing,”said Boswell.

The study found, for example, that leading:

· Organic growth requires managers to focus on customers and execution. For example, they must foster loyalty among customers, improve existing products, foster innovation, execute product strategies and balance short-term and long-term goals.

· Growth by M&A requires managers to focus on engaging their talent. For example, they must communicate a vision, make very focused decisions, and adapt quickly.

The study also found that business-unit leaders who succeed at helping their companies grow have a core set of capabilities. They behave in a way that generates trust and demonstrates seasoned decision-making while not being fearful of challenging the status quo, and communicate strategy and direction in a clear and compelling way.

They also understand their customers’ unmet needs, and establish a climate of commitment and ownership.


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