We recently hosted a boardroom lunch at our London Office for Chairmen, NEDs, CEOs and Investors from the Leisure, Hospitality & Travel sector. Guests included current and previous board members from the likes of TUI, OnTheBeach, De Vere Group, Sabre Travel Network, Carlson Wagonlit Travel and TGI Friday’s as well as investors from Phoenix Equity Partners and Livingbridge. The topic for discussion today was on the advice that this group of Chairmen, NEDs, Investors and current CEOs would give to a new CEO today.
What Advice Would You Give To A New CEO Today?
Stemming from a recent discussion I’d had with a well-known, serial Chairman about how he’d recently had to change the CEO in one of the organisations he chairs, we discussed how and why it went wrong and what could have been done differently. As we talked, he mentioned both advice he had given and also received as he progressed to CEO, then NED and subsequently Chair. This formed the basis of a really interesting discussion topic for our boardroom lunch.
1. Be Honest About Your Capabilities
One high profile CEO said that he felt the best and strongest CEOs were honest about their capabilities and that while they must make the ultimate decision/s, the best do not pretend to be the best at everything. Instead, they foster an environment where the CEO can challenge and be challenged.
CEOs should not be afraid of saying “I don’t get it”, and should surround themselves with the very best team of experts they can, leaning on their expertise rather than feeling threatened by their superior knowledge in their functional or regional areas of knowledge. Focus on the team and the team dynamic, empower them to come up with the ideas for change/strategy and don’t feel compelled to drive every single decision.
2. Be Prepared To Challenge And Be Challenged
When discussing the impact of a change in ownership, one CEO presented a negative view of private equity, having seen new owners needlessly destabilise an organisation, undermining the CEO and making rash changes to some of the senior leaders. He had seen many different dynamics around various boardrooms and stressed the importance of having strong enough characters around the board table to challenge the dominant view, whether that be from the founder, the Chairman, the CEO or the Shareholders.
One of our guests had recently arrived from Scandinavia to head up a UK business, and he said that the Nordic style was to consistently challenge at all levels, to probe and ask questions. “In the UK”, he said, “everyone is terribly nice and often defers to their leader.” Being challenged is a positive thing that needs to happen at all levels of an organisation as it ultimately delivers you to a better answer.
3. Leading People Isn’t A One-Size-Fits-All
In a sizable, global organisation, you cannot succeed as a CEO without the buy-in and support of key people, no matter how talented you are. Leading and developing your people is critical, and is the only way you can truly over-achieve against targets over the long-term. Leading people is not a one-size-fits-all skill. Your style has to be flexible and situational, as differing challenges, circumstances and individuals dictate.
The most successful and accomplished leaders have learnt how to adapt their style to an employee’s skill and confidence level and leverage the key motivators and drivers for that individual. Although this level of understanding requires a significant investment of time on the part of the CEO, it is one of the most effective ways to build trust and empathy with the senior team. If you can cascade this approach down through your functional leaders to their own teams, it can deliver exceptional long-term benefits.
4. Asking For Help Is Not A Weakness
In these challenging economic times, it can be natural for CEOs to hunker down and resist the help from their board counterparts, wary that asking for support will be deemed a weakness and potentially destabilise their position. The view from around our table was that the CEO, Chairman, Board and senior leadership teams all succeed or fail together, and therefore the Chairman needed to play a pivotal role, leading by example and creating the right dynamic round the boardroom table.
For CEO’s, don’t be afraid of your Board. They should be there to support you. Much better to say “I don’t understand”. Accept help and guidance when it is offered, as you do not have to have the answers to every question at your finger-tips. The Board should not be looking to subvert you, as it’s in everyone’s interests for you to succeed.
5. Take The Time To Understand The Basics
A piece of advice for a first-time CEO was to ensure you spend your first months getting a complete understanding of the business. One Chairman had witnessed some new CEOs, keen to make an impact, rushing to take crucial decisions without having a full appreciation of the ramifications and ripple effects they subsequently caused, many of which ended up being detrimental to the long-term interests of the organisation. Unpick the business model in minute detail to understand how all the parts relate to one another, what levers there are, how the organisation makes/ loses money, who the customers and competitors are and where/ what were the greatest opportunities for risk and reward. One guest felt that although these were basic questions that you would expect any new CEO to grasp, they sometimes went ignored.
6. Be The Conductor Of The Orchestra
Another guest who had led organisations across several different continents explained that the best CEOs were those that could act as the conductor of the orchestra, rather than just being “the best violinist or most accomplished trumpet player”. When moving into your first CEO role, and therefore away from being the functional or regional expert, the trick was not to feel compelled to be the best at playing an instrument but to ensure that the orchestra came together in the most harmonious way to make the best music.
7. Transparency Is A Must
One of our private equity guest’s commented that they (as owners) didn’t mind problems, but they needed was absolute honesty from their CEOs. Within his organisation, they seek to create a transparent environment that fosters clear and transparent conversation and creates a no-surprise culture. As long as they were forewarned, they could handle difficult news. What they objection to was bad news being hidden or getting a sanitised version of the truth.
While the symbiotic relationship between owners and CEOs sometimes went awry, his firm saw themselves working in genuine partnership with their investments. They need a realistic view at any given point so that the tough decisions could be made at the appropriate point. The view from private equity was that while there are exceptions to every rule and different investors ran their investments in different ways (Terra Firma being quoted as a firm that had bought 33 business and fired 29 CEOs and 31 CFOs), yet in the large majority of cases, the PE firms were obviously keen for the CEO to succeed (and sometimes were perhaps too loyal even when it was evident things were going wrong).
8. You Need To Be The Right Person At The Right Time
Another guest contrasted two different CEOs he had worked under within the same organisation, both with very different styles and skill-sets. Both were excellent leaders and successful during their tenures, just at different times of the company’s lifecycle.
Interestingly, neither would have been suited to being CEO in the other’s tenure. Different types of leaders are required at different times of an organisation’s business cycle and in today’s fast-changing world, that’s a fact that we all need to get used to. This can be a real challenge for people whose self-worth is primarily linked with their value to an organisation. He offered the advice that even if you become surplus to requirements in one organisation, that doesn’t negate the fact that you can still make a very positive difference within another organisation. You might just be the right person at the wrong time.