Broadening the CEO selection pool – where will our future leaders come from?

Citation

Sellwood-Taylor, J. (2013), "Broadening the CEO selection pool – where will our future leaders come from?", Strategic HR Review, Vol. 12 No. 4. https://doi.org/10.1108/shr.2013.37212daa.008

Broadening the CEO selection pool – where will our future leaders come from?

Article Type: HR at work From: Strategic HR Review, Volume 12, Issue 4

Short case studies and research papers that demonstrate best practice in HR

A staggering 83 percent of HR directors never get promoted to the role of CEO, a report has found. A UK study into broadening the CEO selection pool carried out by Mullwood Partnership found that despite 63 percent of HR directors harboring ambitions to become a chief executive, only a fraction of those interviewed work for companies where a HR director has been awarded the top job.

As part of a research project into what it takes to become a CEO and what barriers exist to prevent HR directors from being promoted to the role, Mullwood Partnership interviewed over 130 chairmen, CEOs, COOs and MDs from both HR and non HR functional backgrounds. These included aspiring and incumbent global and group HR directors, academic leaders and head-hunters from across the globe including the UK, North America, Asia, Australia and Europe.

The aim of the research

We have spent the last 20 years identifying the best HR leadership talent for leading UK and international organizations. Through our work we know that the majority of HR directors want to test themselves in the role of CEO, but more and more frequently we found ourselves asking the question: why do not HR leaders typically make it to the top job in business?

In our experience dynamic HR leaders combine specialist skills with broader commercial knowledge and well-honed leadership skills. Yet few become CEOs. We know that half of the world’s CEOs come from just three key backgrounds – finance, operations and marketing. The remaining 50 percent come from 23 backgrounds, ranging from legal to IT and strategy. Only 5 percent of those CEOs are accounted for by HR directors (Adams, n.d.). We wanted to know why so few made that jump.

We set out to discover the underlying reasons for this, as well as the barriers HR directors face. We talked to leaders to explore their traditional career paths and ask them how the role has changed and adapted over the last five years. We looked at the pressures both internally and externally put on them by stakeholders and the impact changes in the economy have had on their job. One of the aims was to find out as the role evolves what skills and qualities now made the “model” CEO.

Changing dynamics at the top

We studied the role of CEO over the last five years and four clear themes in terms of how it has changed emerged. They are the nature of the role; shifts in the wider business environment; evolving standards for leadership; and a greater focus on specific external relationships with stakeholders.

Of the CEOs questioned, 45 percent say the area of their role that has encountered most change is in the environment in which they operate. They said that accelerated pace of change combined with faster and more dynamic communication as well as pressure from stakeholders to outperform the market are the biggest changes to the environment in which they work. The economic volatility demands multiple strategies and forces these CEOs to maintain a competitive edge reliant on agility, creativity and innovation. Interestingly, a quarter of those asked say it is their role that has changed the most, with a requirement for greater transparency.

The general feeling emerging from research was that the recession has led to customers having higher expectations in terms of social responsibility from big companies, particularly in the banking sector. Following scandals, exorbitant salaries, bonuses and pensions, banking has seen customers take on the role of watchdog. They have a new-found sense of ownership to which CEOs must respond. Most of those surveyed say compared to five years ago, customer expectations on standards of behavior are much higher and therefore there is a greater need for transparency.

People leadership skills are key

A fifth of those surveyed say creative people leadership is the biggest change in reshaping the role of CEO. They have to have the ability to be people focused to build diverse talent and leadership capability and to inspire and mobilize the whole organization, as well as creating a culture of innovation. These are all qualities that are native to HR practitioners and an area where they can distinguish themselves as CEOs.

With more and more people leadership skills at the route of success, we think CEOs from traditional backgrounds could be left behind. When we asked our participants, what skills and experience were essential to today’s CEO, 39 percent said people leadership. That means things like leading diverse teams and connecting and engaging with people at all levels of an organization.

When we asked them to list common personality traits that make the model CEO, they identified 12 – with authenticity, strategic ability, inspiration and passion in the top four. They also said it was important to be a visible relationship builder and an effective communicator, which are both skills closely associated to the role of HR director. Jonathan Chapman, Aviva’s Audit director, Planning, Resources and Risk, defined the role of CEO simply as “the ability to take people with you on a journey,” adding: “You can have the best strategy in the world, but if people don’t want to follow you then you won’t be successful.”

Barriers to HR directors achieving top jobs

The need for strong people skills and leadership makes the lack of HR directors reaching top jobs all the more surprising. We already know that 63 percent of HR leaders want to move beyond their role. But only 40 percent have been offered the opportunity throughout their career to do it. The big question for us as HR experts is why is this? It has got to the point where businesses run the risk of losing talent. Twenty-four percent of those interviewed admitted they would have to leave in order to become a CEO – either at a smaller company or by setting up on their own.

A significant barrier to HR professionals getting the top job appears to be the way the function is viewed. The single biggest reason why HR people do not get promoted is a perceived lack of desire or confidence. The HR leaders who have made it were able to demonstrate accountability, appetite and commercial acumen together. There was also a real desire to lead combined with being fortunate enough to work in organizations that look beyond functional backgrounds and concentrate on individual ability.

We feel it is only a matter of time before talented HR individuals have the opportunity to demonstrate the positive impact they can make on the wider organization. In doing so, they will change perceptions of the HR function.

The CEO of the future

For those people with the drive to succeed, they need to share their career ambitions with others, build breadth of experience beyond HR, demonstrate strategic thinking and display strong commercial insight in order to be in the running for senior roles. If they do that at a time when people leadership and talent management are regarded as the most important success factor for a CEO, HR will bring a magnificent cocktail of capabilities to the boardroom. Let us tap into this often overlooked talent source and access a broader CEO selection pool.

Last year saw a strong shift in the requirements of the CEO role, as it came under scrutiny by shareholders and members of the general public for not being transparent enough. Various industries, including banking, media and security, saw major changes within the leadership role. The CEO role is becoming ever more externally focused and the most important behavioral aspect is authenticity. Being genuine as well as very self-aware is not only critical to the CEO role but shows the wider world that they understand the importance of the people around them. In turn, leaders become more effective as CEOs. In 2013 we need to see leaders being confident enough to give others the space and power to take appropriate risks and encourage them to take responsibility.

What companies are now looking for are leaders who want to ensure the business is forward thinking, that employees are enjoying their jobs and that shareholders and the general public have faith in the company. Businesses are in essence looking for someone they can put their trust in, as well as keeping the company prosperous not just to ensure short term performance, but balancing this with longer term competitive, organizational and social sustainability. This will be the main challenge for a CEO in 2013.

Acknowledgements

The research discussed in this paper was conducted by Jo Sellwood-Taylor and Sharon Mullen, co-founding directors of Mullwood Partnership. This was in collaboration with Dr Sukanyna Sen Gupta, associate professor at Warwick Business School and Andrea Adams, managing director of strategic leadership and organization consulting firm Triumpha and supported by Criticaleye (Network of Leaders).

Jo Sellwood-Taylor and Sharon MullenBased at Mullwood Partnership.

About the authors

Jo Sellwood-Taylor has more than 20 years’ experience in recruitment, the majority in executive search. Before co-founding Strategi Executive Search in 2000, she held board positions with recruitment solutions company TMP Hudson Global Resources, HW Group and recruitment consultancy, the Daniels Bates Partnership. She sold Strategi to Advantage Professional and retained her position as managing director post sales for three years, exiting the organization in 2011. She is a co-founder of executive search and research company, Mullwood Partnership. Jo Sellwood-Taylor is the corresponding author and can be contacted at: jst@mullwood.com

Sharon Mullen has a career of over 20 years, concentrating on HR and executive search. After graduating with an honours degree in Technology Management, specializing in Law and Economics, she worked in a regional HR management role with retailer Marks & Spencer. She has also held regional management positions with TMP Worldwide, HW Group and Daniels Bates Partnership. In 2000, she co-founded Strategi Executive Search and following the sale of the company remained as a director until 2011. She is a co-founder of executive search and research company, Mullwood Partnership.