An Update on C-suite Churn and What It Means for C-suite Candidates

An article by Thomas Black ("HP, GM CEO exits buck 'C-suite churn' falling to five-year low", August 16, 2010) in the Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2010/08/16/AR2010081600855.html) analyzes recent data on C-suite churn from Liberum, the executive employment data firm that I have mentioned in prior blogs. The conclusion mentioned in this article is despite the news of some recent high profile CEO departures, it is not thought that we will see a significant increase in the number of CEO's leaving companies for performance reasons. The idea is similar to what we have seen through our own research. But, Hugh Shields adds "the writer calls this drop a five year low.  In fact, it's a much longer span of time than that." Hugh reasons that the author bases his conclusions on the Liberum data, but "he does not account for the fact that the firm has only be in existence for five years and that is the extent of their data collection." He suspects that "this is the lowest churn rate in decades."
The author quotes a variety of sources reinforcing the idea that boards have become quite conservative with respect to making CEO changes. Gail Meneley is quoted "directors prefer to shake up top management in good times and stick with "the devil they know" during a recession." We see that there are a few trends that will affect CEO candidates:

1. An emphasis on companies looking strongly at internal candidates rather than being enticed by the sirens call of "the grass is greener. " Being an outsider is now a disadvantage.
2. CEOs are retiring at a lower rate or being less willing to make a change than in prior years. There are fewer open positions.
3. Boards that usually are reluctant to change a CEO for moderate performance reasons have become even more conservative because of the bad economy. Again, less opportunity to position yourself as being different.
4. Recruiters say to us that companies are taking a much longer time to determine who they want to hire, such that they may take six months to reach a decision, about twice as long as in recent years, to ensure they make the right choice. They are using a "check off the boxes" approach to making a decision. We have seen otherwise highly qualified candidates, not get hired because he did not have something that would not even have been on the list in the past.

Finally, we believe that turnover will probably stay low into 2011 as the strength of the recovery remains in question. What does mean for an unemployed C-suite candidate? It is important to recalibrate your time frame and expectations. For many, this career transition period will be longer than in times past. For others, that job you have in your sights is really a mirage. So, we recommend two ideas: First, you need to diversify your target companies and industries. Our client data shows that over our 15 years, the majority of clients who stayed in a similar industry and functional responsibility were hired by a larger company than in their previous position. But, we believe that instead of looking at a similar sized or larger company, you should now consider a smaller firm and companies in related industries. Second, think differently. We have had three clients in the last year start their own firms. In each case they came to the conclusion that this was an ideal time to go after that dream. While you will want to invest a certain percent of your time in researching and networking into the formerly "expected" job, you should consider spending at least a quarter of your time exploring these other options. You may find this to be time well spent. (by Daniel J. DeWitt, PhD)

Utilizing Social Media

In today's Think Tank discussion on utilizing social media we considered two main topics: one, how do you want to use online social media and, second, how will your new company be using it. We spent the first part of the meeting discussing LinkedIn because most people use this social media tool to look for a new position while in a transition program. We differentiated LinkedIn from Facebook and Twitter which together form the three leading social media tools. During the second half of the meeting we discussed how companies are using social media to understand their customers better and drive sales. A few links that might be helpful or interesting for you to read are listed below.

 

• LinkedIn, Facebook and Twitter (www. ____.com) for each. Check out their "help" sections or for suggestions on YouTube or Slideshare (www.slideshare.net) if you would like more information.
• A very good introduction to the topic and issues on online social media can be found at:

http://www.theatlantic.com/business/archive/2010/07/2-lessons-from-googles-216-page-social-media-manifesto/59410/

 

• "job search using social media" – do a search on Google with this phrase and you will find many articles on this subject. Slideshare has many resources of which one is listed below.

http://www.slideshare.net/mobile/mgrey/using-social-media-in-your-job-search#1
 

• For those interested in the effect search companies are having on our thinking, read the publishing industry and thinking, read "Is Google Making Us Stupid" at

http://www.theatlantic.com/magazine/archive/2008/07/is-google-making-us-stupid/6868/

• We spoke of the publishing industry, read James Fallows' article "How To Save The News"

http://www.theatlantic.com/magazine/archive/2010/06/how-to-save-the-news/8095/
 
and his blog post on Rupert Murdoch regarding what he is doing with the London Times:

http://www.theatlantic.com/science/archive/2010/07/on-rupert-murdochs-times-paywall/59878/
 

• Aggregators of information allow you to see it all in one place. FriendFeed (www.friendfeed.com) is one example of this and WSJ technology writer Walt Mossberg has two more listed in one of his columns

http://solution.allthingsd.com/20100713/seeing-all-your-social-networking-in-one-place/?mod=ATD_rss&reflink=ATD_google_gadgtH


By Daniel J. DeWitt, PhD

Rock, Paper, Scissors

Rock breaks scissors, paper covers rock and scissors cuts paper. As a senior executive you have had a career of making decisions based on your experience and available knowledge. At times, you considered the opinion of others; at other times you had to go it alone. You probably never relied on the childhood game of "Rock, Paper, Scissors" to help you make a decision. So as a time-tested executive that has won his share of business battles and hopefully learned from those that you did not win, what benefit would an executive coach be to you at this point in your career?

From coaching over 300 senior executives we have found three reasons why you might consider the idea that executive coaching is not just for your junior subordinates.

1. Unbiased feedback: we have found and you probably would agree that no where in a corporation does an executive feel more alone more exercised than at the senior level. Do you wonder if people are responding to you because of their own motivations and think first about how you would respond to their comments before they state them? An executive coach who is not part of the corporation can give you unbiased feedback where you don't have to worry that the motivation is nothing more than to teach you something and improve your work performance.
   
2. Confidential conversation: every executive we have spoken with has had a negative experience of someone sharing confidential information about him at some point in his career. The unique relationship that you have your coach ensures confidentiality of your discussion.
   
3. Comparative information: advice from an executive coach who is a seasoned executive himself or herself can compare and contrast your thoughts and behaviors against other senior executives without fear of it affecting your job..
   

 
During many years of coaching senior executives we have discovered that the specific content for coaching derives from many sources. But, the predominant themes have to do with dealing with peers, communicating more effectively with younger subordinates with diverse backgrounds and working with boards.

Senior executives have been finding that different skills are required for success than a generation ago. The demands of a changing work force and more active boards are two major changes we have noticed in the past ten years. It used to be enough to just do the job, to get results. Are you used to telling people what to do, but find that people don't listen to you as they did before? Increased focus on teams to solve problems has required executives to be more participative in their management styles, rather than just be authority figures. Further, executives need to be more aware of what they say and whom they sit it to. For obvious reasons how the senior executive behaves and what he says has a ripple effect throughout an organization. The behavior may not represent a legal problem, but it could be an effectiveness issue for dealing with a diverse work force.

Sarbanes-Oxley has caused boards to be more active and this has required new skills for the senior executive. Are you spending more individual time with board members to get to know them better and for them to learn about you? Many executives are less successful managing up than down and recent changes in corporate governance have caused executives to rethink how they are dealing with boards. We have spoken with more than one executive who has lost his job, not because he didn't produce results, but because he did not manage the board problem. In a nutshell, he did not spend the time to communicate individually with board members. Executive coaching can help the executive learn effective ways of dealing with these complex and significant board relationships.

"Rock, Paper, Scissors" is a decision making game of wits, speed, dexterity and strategy between players who are unable to reach a decision using other means. While this childhood game is a way of simplifying the decision making process, there is only one winner. We have found that successful senior executives are extremely good at managing multiple demands and resolving conflict so that there is not just one winner. However, we have also found that senior executives by the very nature of their position are often alone in making decisions. Further, the demands on them are greater than ever before as they have to deal with an increasingly diverse work-force with competing interests. Whether it is dealing with subordinates, peers or board relationships, the confidential relationship with an executive coach can help you rely on sound judgment based on unbiased, comparative information where more people than one wins and there is an enhanced desire to work together tomorrow. (By Daniel J. DeWitt, PhD and Gail R. Meneley – originally published in Smart Business)

Adding Some Science to your Family Business Succession Planning

Of all the issues that can keep a founder of a privately held or family owned business awake at night is the question about who will lead the firm when he or she decides to retire or cannot function effectively in the job. Well known Small Business Administration statistics are not comforting; less than 30 percent of businesses survive a founder’s departure. Succession planning in any organization is a complicated process, but this is particularly so when there are so many competing subjective forces that affect one’s judgment. Adding executive assessment as part of your succession planning process can bring objectivity to your thinking. Given the statistics, it makes sense for family business owners to add some science to the succession planning process.

Executive assessment, typically, is a process where a psychologist interviews and has an executive complete standardized tests that measure various personal characteristics. For example, if the ability to learn from one’s experience is an important quality for your replacement, it can be measured. If honesty and integrity are important characteristics, that can be measured also. Usually assessments provide quantitative data on an executive’s personality, functional skills, problem solving skills and critical thinking, temperament, communication styles and management skills. The assessment brings rationality into an often too subjective decision making process about “what child should I choose?”

Owners do not often have a structured way to choose the next leader, so they rely on birth order or family precedent. But, an assessment allows you to compare individuals against a profile that is developed regarding what competencies are necessary to be a successful leader in your company. This information allows you to compare one child to another, or even to determine whether a child has some of the skills, but needs to develop strengths in some important, but underdeveloped, areas.

In privately held or family owned businesses, succession planning can be especially complicated because of the relationships and emotions involved. Bringing some science into the succession planning process, will allow the owner to change his thinking from who “should” get the job to who is best for the job. By relying on objective data, rather than emotions, when determining who will replace you it is possible to increase the odds of your company surviving your departure, while at the same time reducing your stress and family problems that can occur with a succession. (by Daniel J. DeWitt, PhD)

Evaluate the Price – Benefit Ratio when Considering Outplacement Services

In the July 7, 2009, Managing Your Career column, by Joann Lublin titled “More Jobless Execs Foot Their Outplacement Bill” she describes the characteristics of comprehensive executive outplacement firms and believes that “jobless executives need every possible leg up in a fiercely competitive job market.”

After interviewing a variety of Shields Meneley Partners’ clients she concludes “The firm’s strongest selling point? Highly personalized attention. Clients initially undergo a lengthy assessment with a staff psychologist. Assigned one of the firm’s three counselors, executives then develop a marketing plan, polish their resumes, practice interviewing, update wardrobes, enlarge professional networks and get “acclimation” coaching during their next job’s early days.”

Wall Street Journal research indicates that "typical executive-level outplacement exceeds standard fare such as office space, resume rewrites and emotional support:

• Provider specializes in serving upper management
• Full-time counselors with small caseloads and broad business experience
• Extensive psychological assessment
• Customized research about potential employers
• Introductions to a wide network of corporate leaders and directors
• Legal advice about negotiating a new pay package

Source: WSJ research

If you are a senior executive going through a career transition, carefully evaluate what resources you will need to secure the best job. At this stage it will be important to obtain feedback from a variety of people, those that are friends and those that don't know you well. Interview a few outplacement firms and consider the differentiators between the firms. Taking into consideration the cost-benefit ratio of the various options should be an important consideration. As the WSJ writer concluded, we have found that a comprehensive transition firm can be particularly helpful during a very difficult market. But, we have also seen that if you don’t know what you want to do next, want to change industries, title, or functional responsibilities the benefits will outweigh the costs of a comprehensive transition firm. (by Daniel J. DeWitt, PhD)

More Executives Considering Non-Traditional Career Paths

A recent Wall Street Journal Article (More Jobless Execs Foot Their Outplacement Bill, July 7, 2009) by Joann Lublin highlighted our career transition, assessment and coaching firm. In this article, the author describes the variety of services that our clients experience that lead them to identify their talents, interests and needs. They develop a customized plan utilizing our research expert, alumni, current clients and network to target the companies that would be best for them. The article focuses a fair amount on one aspect of outplacement programs, the finances, but this is not “the brave new world” as the author writes. In almost thirty years of working with executives in career transition, the issue of who pays for what and how much has been a consideration. What is particularly compelling in the article are the stories of the different executives that are pursuing a variety of career options.

In one case, a client has evaluated an industry and believes that the business model is wrong for today’s and our future economy. Another client is very interested in the health care model and why health programs tend not to be successful. He recently received a contract to operate on-site health clinics for businesses. What I have seen change over the last few years is the number of executives who are following through with more entrepreneurial or “non-traditional” work. Until recently, executives often would say to me that they wanted to do something else; to not continue as a “regular corporate executive.” However, by the time our assessment feedback had been finished and they had a strong dose of reality of what it would take to make the change, along with a better understanding how they had been successful in the past and what their risk tolerance was, they were back considering looking for something similar to what they had done before. But, this has changed and I believe that this is the more interesting trend.

Why are we seeing more executives consider non-traditional work? We believe that executives are not as confident that those traditional positions are currently available and may not be in the future. The “dwell-time”, the time to get the new job, has lengthened in the last year. The loss of wealth that most executives have experienced has caused them to realize that they are going to work longer than what they had thought. This has pushed up the time frame for doing something that is more relevant, more interesting and where they can be in greater control of their future.

So, if you are like the executives mentioned in the article or many of our recent clients who are evaluating their career, it would be wise to consider the current marketability of your career, along with your skills and interests. If you are working in a stagnant industry with skills that may not be as needed as what once was the case, take some time to think creatively about what you think is needed now and blend this with what you like to do. It is the right time to look at your career in a new light. (by Daniel J. DeWitt)

Responsible Value Creation

The NYT’s “A Promise to Be Ethical in an Era of Immorality” by Leslie Wayne (May29, 2009) is an article that stimulates thought about how to develop ethics one MBA grad after another. You can read it at http://www.nytimes.com/2009/05/30/business/30oath.html?_r=2&emc=eta1

The MBA OATH is a voluntary, Harvard Business school student lead movement and can be found at http://mbaoath.org/. I suggest that if the leaders in your company don’t discuss these issues regularly and emphasize the ideas as part of the culture, you might want to do so. It might even be a good idea to encourage each other to read and sign the oath.

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As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.

Therefore I promise:
• I will act with utmost integrity and pursue my work in an ethical manner.
• I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
• I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
• I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
• I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
• I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
• I will strive to create sustainable economic, social, and environmental prosperity worldwide.
•I will be accountable to my peers and they will be accountable to me for living by this oath.

This oath I make freely, and upon my honor. (by Daniel J. DeWitt, PhD)