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Strong leadership sees firms through Covid
COVID-19 has changed all facets of life, and while some sectors have continued to thrive, others have struggled to adapt to these new circumstances.
It is undeniable that this black swan event has altered everything - from the way students are taught to the way businesses operate. Organisations have had to rethink operations, workforce capacities, working arrangements and on a deeper level, reassess their priorities and what they stand for.
During this uncertain and challenging period, strong leadership has been the key to ensuring companies continue to move in the right direction and that employees benefit from some semblance of stability in this uncertain environment.
Focus and foresight at the helm
In 2020, organisations needed leaders that not just prevented the ship from sinking, but also made sure the company stays on course and heads towards the right direction. CEOs had to juggle between addressing immediate needs of an organisation and keeping sight of long-term goals such as growing the company.
To do so, versatility and agility were some of the core characteristics that enabled navigation through the uncertain environment. Beyond the immediate situation, CEOs also needed to consider fostering and strengthening organisational culture as a critical factor in ensuring long-term value creation.
CEOs as not just a captain but also a comrade
Traditionally, expertise and financial knowledge are prized attributes of a good CEO; and while definitely still important, the pandemic has also emphasised the need for soft skills.
Leading through this once-in-a-decade event has required upper management to display humility - although CEOs must be confident captains and provide direction, this unprecedented situation means that nobody, including the chief executive, has all the answers.
Covid-19 has impacted employees across all levels; and the best leaders are those who have adapted leadership and communication styles accordingly to show empathy and forge closer bonds with their workforce to face challenges together.
Identifying the right captain for the ship
Amid this complex climate for organisations to navigate, Heidrick & Struggles' analysis of almost 1,000 CEOs this year, found that many appointments veered towards traditional comfort zones.
More companies appointed executives with prior CEO experience and successful track records; and organisations without suitable internal candidates looked outside their companies for experienced leadership to secure their survival through this crisis - as seen in the jump in external CEO appointments from 35 per cent to 57 per cent after the World Health Organization's pandemic announcement on March 11.
Sailing through turbulent tides
While experienced leadership is high in demand, other critical areas such as diversity and sustainability must not be forgotten and should return as key priorities for long-term growth. Recognising the winds of change as we head into calmer waters will be critical to steer companies in the right direction.
Numerous studies like McKinsey's Delivering through diversity report have found that companies with higher gender diversity scores on executive teams were more likely to enjoy above average profitability. In specific industries such as venture capital, companies that increased their proportion of female partner hires by 10 per cent saw an average 1.5 per cent spike in overall fund returns each year and 9.7 per cent more profitable exits.
In addition to gender, appointing leaders from different countries and those who have varied industry experience is also crucial. With access to unique perspectives and worldviews, organisations are likely to be able to make better business decisions. But more needs to be done to embrace diversity.
In Heidrick & Struggles' Route to the Top report, we found that as at 2020, only 5 per cent of CEOs globally are female, 21 per cent are non-nationals, and just 17 per cent have cross-industry experience.
Strong organisational purpose
In times of uncertainty, having a clear purpose helps by motivating and giving employees a common reason and goal to work towards. This serves as a valuable source of stability during uncertain times, providing direction and inspiring confidence.
Of course, it is insufficient to simply announce a purpose. CEOs must walk the talk and be responsible for driving the incorporation of this purpose into day-to-day action; and that the purpose is one that is well-understood and committed to by every member of their team to build strong organisational culture that can withstand challenges arising from external circumstances.
Sustainability on the business agenda
Environmental sustainability is increasingly becoming a strong focus for all stakeholders, from customers to communities and shareholders. Genuine commitment is key here, where organisations and CEOs need to consider how business decisions affect the environment instead of making token gestures.
Audiences now demand accountability more than ever before, and companies who fail to be environmentally responsible risk losing favour with their customers and the communities they operate in. Leadership is the impetus in ensuring sustainability initiatives are planned and executed in the right manner. Companies should adequately address any concerns and inspire buy-in from all levels.
Finding the right leader for tomorrow, today
Ongoing leadership succession planning is a fundamental responsibility of the board. While not yet a high priority for most companies, the recent pandemic has highlighted the importance of having a strong process in place to ensure a stable pipeline of suitable candidates to pick from when required.
Similar to the currents of an unpredictable ocean, the business landscape is dynamic and organisational needs are always evolving. As stakeholder expectations, values and demands change, appointing the right CEO is of utmost importance - which is why the search for the next CEO must never stop. When a new chief is appointed, boards must start thinking about the successor immediately.
Encouragingly, as prior C-suite experience is highly valued and internal appointments entail lower risks, we have also seen that companies have started to prepare their future leaders by considering potential CEOs at two positions below in order to broaden the pool of internal candidates.
To ensure continuity and a smooth transition with minimal disruptions, the board must prioritise CEO succession planning by formalising leadership discussion on regular meeting agendas. This will ensure that when the need arises, organisations are not left floundering and floating adrift without a clear vision of the next CEO profile and a strong succession planning process in place.
- The writer is CEO & board practice lead in Singapore, Heidrick & Struggles