Magazine article New Zealand Management

The Director: The Challenge of Choosing the CEO

Magazine article New Zealand Management

The Director: The Challenge of Choosing the CEO

Article excerpt

Byline: Reg Birchfield

Boards and chief executives need to be more flexible, adaptable and to be constantly thinking and re-thinking their strategies if they want to succeed in today's increasingly complex global marketplace.

That means boards should put more effort into understanding the new leadership competencies required of effective chief executives. They should know where their organisation is headed and how they plan to get there before they recruit a new CEO.

"Boards should understand their strategy, where they are taking the enterprise, where they want to be, what their challenges are and what competencies they are looking for in a CEO before they hire him or her," says United States-based Spencer. "They should map and match the individuals' particular characteristics against what the organisation needs."

Some boards know what they are doing. Many, however, are "all over the map", according to Spencer.

It is not uncommon for Australasian boards to think their directors are strategically aligned, according to Sydney-based Conigrave. "But when asked to articulate what they mean by strategic intent, there is significant divergence in comprehension. Board thinking converges when there is good dialogue, but they don't have a common understanding as often as they think."

Companies are now dealing with greater organisational and market complexity. Boards, therefore, need to adopt more multi-faceted strategies to meet increasingly diverse stakeholder and performance demands. A return to shareholders, for example, is increasingly just one of many factors directors and CEOs must deliver on. "Shareholder return is a price for entry, not a ticket to success," says Conigrave.

"Organisations are simultaneously pushing for strong business performances and social responsibility and community-based obligations and outcomes," adds Spencer. "The trick now is to learn how to integrate these different considerations and to lead with a purpose without annoying shareholders."

Spencer has been researching the leadership qualities that boards should consider when they go to the market for a new CEO. She has, for example, co-authored a major Hay Group study on what western enterprise can learn from India's CEOs.

The study showed that outstanding Indian CEOs have a powerful set of specific competencies. The strengths lie in their socially responsible business acumen, team leadership, "inner strength" and ability to manage a complex web of external stakeholders. Spencer thinks western leaders need to look more carefully at what trends are emerging, particularly in Asia. …

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