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Succession Planning: Key Traits for Tomorrow’s CEO

By Melissa J. Anderson

Tomorrow’s CEO will likely have international experience and an operational background, and will have risen through the ranks of the company for a number of years. That’s according to a new study by The Week and Beresford Research.

Researchers analyzed the backgrounds of over 1,000 CEOs of S&P 500 companies over the past decade and created an “industry-specific, empirically projectable model” of the demographic characteristics of CEOs. They then applied the model to over 8,000 up and coming executives to find out who was most likely to become a CEO.

The research also included a survey and interviews with executives to determine what the CEO of the future will be like.

Key Traits

According to the study, CEOs today are significantly more likely than they were in 2000 to have international work experience ( 60% versus 27%). Additionally, the report says, “Finance and operations account for the majority of functional backgrounds of new CEOs, followed by Sales/Marketing and Engineering.”

Additionally, the report revealed, about 1 in 10 CEOs have Ivy League educations – and this ratio remained relatively stable over the decade. About 40% have MBAs.

The report says that more women are joining the CEO ranks between 2000 and 2010, but not in large numbers. In 2000 there were 0 women in the S&P 500. Over the decade, that percentage rose to between 2% and 7%. Today, the percentage is about 2.5%.

As far as career paths, CEOs are coming from roles you’d traditionally expect to see. Before becoming CEO, the most common job titles held were President; CEO of another division, subsidiary, or company; COO; or CFO.

CEO Qualities

While it’s easy to track demographic traits, some critical CEO qualities are less quantifiable. At a New York City breakfast sponsored by The Week and Dell, experts met to discuss the study, as well as the intangible qualities they see as being critical for future CEOs.

One of the major factors they discussed was the importance of self discipline. Wharton senior fellow Joel Kurtzman said, “It’s very rarely talked about with regard to CEOs.”

“But the most successful ones are the ones with the most discipline.” He explained that it wasn’t just a matter of the discipline to work long hours. “It’s also the ability to restrain yourself so you can hear the ideas of other people.”

He added, “If you’re not paying attention to micro shifts… you’ll fail. And it’s very easy to fail right now.”

A related factor is judgment. While listening is important, so is being able to filter out the static that doesn’t matter. A.G. Lafley, Former Chairman, President, and CEO of Procter & Gamble, wrote, “CEOs need to be in touch with everything. But I think you need to be highly selective about what you engage with.”

Finally, the panel discussed the changing relationship that today’s CEOs have with technology, and how they expect that to play out in the future.

Larry Kramer, former chairman and CEO of MediaWatch.com, and moderator of the panel said, “When I was CEO I knew two people I needed to trust were the CFO and the CTO – two people whose jobs I didn’t know much about.

Kurtzman continued, “Today, the technology outside a company is often more advanced than the technology inside the company.” He explained that, for example, a company today has to adjust to the iPad, rather than focus solely on its proprietary technology. “It changes the whole dynamic when the technology inside the company doesn’t come from the CTO.”

CEOs are also facing new expectations about being a public persona. Kramer said, “Every company is becoming a media company. Every CEO is in the communications business.”

Rather than having the luxury of waiting a few days to respond to a crisis, CEOs need to know how to deal with the immediacy of today’s hyperconnected environment. “Everything that happens happens in real time, and it happens to every constituency you have,” he commented.

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