CEOs don’t call the shots
Much of their time is spent appeasing and aligning competing forces
FOR most new chief executives, the real test of power begins in the boardroom. Running the company is the easy part. Managing a collection of overseers with diverging priorities is far trickier.
Leadership transitions at large listed companies are fraught even in stable times. That is why boards often prefer internal candidates. Yet even lifers are rarely ready for what awaits once they take the top job.
“Imagine the shape of an hourglass,” says Ty Wiggins, who coaches new CEOs. “Chief executives sit at the pinch point. It’s a real shock for so many... they don’t call the shots.”
For most of their careers, CEOs have answered to one person. At the top they must satisfy many: a chair and directors who work part-time, with competing interests and approaches.
Add activist shareholders, regulators and the relentless media cycle, and the number of factions the boss must placate looks unmanageable.
“CEOs are often surprised and disappointed that they don’t have the all-encompassing power they imagined,” says Wiggins, author of The New CEO. His data shows 63 per cent of new chiefs experience significant conflict with their boards in their first year.
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“Imagine the shape of an hourglass. Chief executives sit at the pinch point. It’s a real shock for so many... they don’t call the shots.”
Ty Wiggins, coach and author of The New CEO
The US remains an outlier in allowing one person to serve as both chair and CEO – as Citigroup confirmed last week by elevating Jane Fraser to the dual role. Elsewhere, governance codes and investor pressure have entrenched the split, creating a built-in tension between the boss and those who hold them to account.
The messy truth is that most CEOs must operate as diplomats. Much of their week is spent persuading, appeasing and aligning competing forces – including directors they may neither like nor respect, and who often lack the expertise management teams wish they had.
“Never surprise a chair”
In their previous lives, they were probably praised for their ability to act quickly. At this level, influence-building and alliance-making are what preserve a CEO’s vision. “Never surprise a chair,” one adviser tells new CEOs.
Part of the problem is that in the current volatile business environment “it’s hard to know what doing the right thing looks like”, says David Bach, president of IMD business school.
That uncertainty is fuelling friction between boards and executives. Boardroom bust-ups at Diageo, Unilever and Novo Nordisk are notable examples this year. It is why, Bach adds, it is harder than ever for CEOs to take a position that stands apart from the crowd.
Directors, once content with quarterly oversight, are now drawn into operational crises as existential risks multiply – from geopolitical shocks to cyberattacks. With greater liability and reputational hazard has come an increased appetite to intervene.
For CEOs, that means the board’s shadow stretches deep into day-to-day decision-making. A misstep in communications or an ethical lapse can trigger rapid escalation. Combined with the demand for constant disclosure, it is little wonder many CEOs feel constrained.
Headhunters and HR chiefs try to prepare rising stars at big corporations for this shift. Candidates can be drilled in investor briefings, media training and mock board sessions.
Yet such rehearsals can only go so far. One former CEO admitted he felt “so ill-prepared” for the biggest job of his life.
Strategic plans often stall not because ideas are weak, but because the groundwork for trust and alignment was never laid. Many regret not investing early in relationships with individual board members.
Fewer than one in three CEOs feels highly confident of their board’s ability to help them navigate today’s challenges, according to recruitment consultancy Spencer Stuart.
It is no coincidence that CEO tenures are shrinking, and many opt for a “one-and-done” approach rather than seeking new roles as the boss. A poor relationship with a forceful chair or influential director can mean a swift exit.
Organisations that prepare CEOs with longer handovers, mentoring by veteran leaders, stakeholder engagement and early board dialogue may enjoy greater stability at the top.
New CEOs are also learning to recalibrate to win the favour of boards – from being the operational expert to lead strategist, and building a new reputation as an agenda-setter rather than just a firefighter when issues land.
Success now depends as much on diplomacy as decisiveness. The ability to choreograph consensus is often the most important skill a CEO can have. FINANCIAL TIMES
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