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13 August 2014 Advice, Community

School for CEOs

The “School for CEOs” programme was launched in 2012 to fill a perceived gap in the executive training market and prepare those destined for the role of chief executive. After running four training cycles and conducting research among established FTSE 100 leaders, founder David Sole tells us what it takes to be an effective boss.

Q. Some individuals are born leaders, but most are made. So what makes a good candidate for a chief executive?

A. Often, people think the most likely candidate to step into the CEO’s shoes is the chief financial officer. They have distinct advantages – in a listed business, they already have a relationship with the City. But they still need to have had experience of running a profit-and-loss centre, and our research shows there is no single route to the top. The CEOs we talked to were from diverse backgrounds. Some had MBAs, some didn’t. It’s about experience, intellect and, above all, leadership capability.

It’s one thing to manage shareholders; but these stakeholders all want a piece of you – they will form an opinion of you and will broadcast that opinion

Q. What about personality traits?

A. To become a CEO, you’ve really got to want the job. Some of the people we’ve had on programmes – either thinking about making the move up or having been identified as potential CEO successors – have had a reality check and realised that the exposure they’d get is not for them. 

Q. Another major source of applicants for CEOs is divisional directors. Why would the step be very different for them?

A. In a listed business, the kind of external interaction that you have with the City is something you don’t have as a divisional CEO. My business partner, Patrick Macdonald, came out of running a division at GE to become CEO of John Menzies. And he said that nothing – none of his experience at GE, or the knowledge he gained with his MBA from [business school] INSEAD – could have prepared him for that particular job. The external landscape has also changed massively, in terms of interactions with government and regulators and the media. It’s one thing to manage shareholders; but these stakeholders all want a piece of you – they will form an opinion of you and will broadcast that opinion. You have to go out and manage them actively.

Q. Trust in business is obviously a massive issue at the moment. The CEO has, arguably, the most important role in terms of guiding the company culture and external relationships. How can a CEO prepare for that?

A. The CEO needs to have a clear sense of purpose. Why are they there? Who are they there to serve? What is it that they’re trying to achieve? Ultimately, the
shareholders will benefit if they get that right. The CEO’s sense of purpose needs to match that of the organisation, and it needs to be communicated throughout the company. A lack of such clarity can have a destabilising effect, leaving a rocky road for the CEO to navigate.

Q. What do you think a new CEO should expect of their first six months in the role?

A. The moment you park your car, people are going to be making a judgement on you. They’ll pick up on where you park, the sort of car that you’re driving, what you’re wearing. They will also expect some sort of change from a new leader. So the question is: how quickly do you make it? Take too much time and you’re seen as being indecisive; jump to conclusions too early and you’re seen as being too impulsive. And how consensual is your decision-making?

If you’re too collaborative, you can be seen as prevaricating; if you’re too decisive, you can be seen as being autocratic. CEOs have to exercise their judgement and it’s fraught with many potential bear pits along the way. They can also become consumed by the organisation and forget that actually, they are a mother, a father, a husband or a wife. Getting that balance, and retaining a sense of perspective, is important. And if the CEO is going to go home and bath his children and read them a bedtime story, it sends a positive message to the rest of the organisation as well.

Everybody we talked to recognised the importance of building a strong relationship with their chairman

Q. How important is it to have a mentor, to whom you can talk about some of the decisions you’re making?

A. Lots of people we talked to have had coaching or mentoring. Everybody also recognised the importance of building a strong relationship with their chairman – they should be the first port of call in a crisis, or when people are unsure about certain things. But equally, you have to appreciate that the chairman of the board can fire you, too. Building a strong relationship with the CFO is as important as building that sort of relationship with the chairman.

Q. Is there value in a CEO taking up a non-executive director position elsewhere?

A. Dealing with the board can be frustrating for CEOs. Non-executive directors get a snapshot of the organisation roughly once every six weeks or so, and on these occasions they try to ask sensible, challenging or supportive questions. Meanwhile, the executives are living and breathing it day in and day out. They think they have everything under control, so they don’t understand why the NEDs are asking those questions.

When CEOs go over to the other side of the fence as a NED, it makes them view their own boards through a completely different lens, because they appreciate how different – and, in some respects, how difficult – it is, to ask the sensible questions, when clearly you don’t know the detail. There is a huge amount to learn from being able to sit on both sides of the table, and around 75 per cent of the people that we interviewed had experience of being a NED.

Q. What do you think companies can be doing to better develop their future leadership?

A. Many organisations invest a lot in leadership development programmes – for those lower down in the organisation. When they get to a senior level – those
sitting on the board, or just below it – there isn’t as much focus on their development. The organisation assumes that they’ve made it and learnt as much as they’re going to learn. But this isn’t the case. At this stage, the individual needs to drive their development, if they have that appetite to continually
stretch themselves.

Q. How do those who want to become CEO in the future improve their chance of getting there?

A. It’s all about how you manage your career. A lot of senior people rely on the organisation operating on the basis of a meritocracy, promoting them if they do a good job. That works, up to a point. But there comes a time when you have to be more systematic about how you approach your career and the sort of jobs you want to do. You have to think about putting yourself in a different and challenging environment, so you can demonstrate you’ve got great learning agility, and can get up the performance curve quickly.

Sometimes you have to accept that it’s OK to take a sideways step before taking the next step upwards

International experience has become important – particularly in environments, that are either linguistically or culturally challenging. If you’ve learnt how business works in somewhere you’re unfamiliar with, and you can be successful in those environments, it’s a good indicator that you’re capable of taking on the top job. And sometimes you have to accept that it’s OK to take a sideways step before taking the next step upwards – and that it’s always good to think about what job might follow your immediate move.

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