CEO insights
Ismar Huskic
Improving Organisational performance and developing leaders. Member of The Harvard Business Review Advisory Council and sharing practical insights to Management and Leadership with IMPACT.
1. Measuring and Managing cultural elements that drive performance
CEO inherits the company’s revenue base, debt levels, and past investments in R&D which accounts for 30 percent of what enables a company to move from average to the top quintile of economic profit. Industry and geographic trends account for 25 percent. The remaining 45 percent that the CEO can control is what Mckinsey endeavored to illuminate in a model of CEO excellence containing 25 years’ worth of data on 7,800 CEOs from 3,500 public companies across 70 countries and 24 industries.
CEOs who insist measuring and managing all cultural elements that drive performance more than double the odds that their strategies will be executed. And over the long term, they deliver triple the total return to shareholders that other companies deliver.
It is possible to be a high-standards, results-driven leader while at the same time building an engaged, fun-to-work-with team. This is backed by examination of 360-degree assessment data from more than 60,000 leaders. in Harvard Business Review.?
The best leaders are the very ones, who manage to do both and only 13% of leaders in data set fit this profile.
2. Leadership development
Top tier organizations will characterise those as talents and invest in their development. According to Anne Mette Skippers book “The way to the top job” top talents are primarily further?developed at IMD Lausanne, London school of economics, Harvard and INSEAD business school, depending on which type of industry organisation is in: Manufacturing, Pharma, Engineering, Finance, Consulting, etc.??
So if data is applicable for the most of the organizations what do companies do with the rest of the 87% of the leaders? Concerns that most of the CEO′s shares fell into three broad categories: talent, operating in a global marketplace, and regulation and legislation. When you look at the best-performing companies, they're roughly 40% more productive than the bottom three quartiles of the companies that Bain and Company studied.
The evidence according to Jack Zenger and Joseph Folkman, a leadership development consultancy, suggests to enable leaders to simultaneously drive for results and practice good interpersonal skills with six powerful skills that allow them to perform at a much higher level than those who lack these traits.
3. VP Level Executives
The 55% of VP level executives leave the company within the 4 years. They are studying and networking for 1-2 years on one of those schools and have 1-2 years left to train and develop their reports before they leave.
Ref.: Corporate VP in the US 16,042 of which 53% are coming from Finance, Fortune 500 and Manufacturing.
A possible solution would be recruiting the best candidate for the replacement, through one of the board members of these schools or through the Executive Search companies.
But still this is only the top of the leadership pipeline. What do organization do than with the rest of the leadership pipeline leaders who are responsible for executing the strategy and who are the ones generating the most of the money for the corporate organisation.
Of the 50 most value-creating roles in any given organization, only 10 percent normally report to the CEO directly. Sixty percent are two levels below, and 20 percent sit farther down. Most surprising of all is that the remaining 10 percent are roles that don’t even exist according to Mckinsey research matching the talent to value.?
Employee engagement covers only 20% of organisational health elements that are proven to correlate with value creation.?
The Corporate Executive Board indicated that "25% of employer-identified, high-potential employees plan to leave their current companies within the year, as compared to only 10% in 2006." The study also found that 40% of the internal job moves for high potentials ended in failure. (Forbes)
In other words, your managers either avoid declaring whom the high potentials are, for fear of upsetting people that were not selected or they tend to hold on to their high-potential people instead of helping them along an intentional developmental pathway. High-potentials interpret this as a lack of company support and leave.?
In time of volatility, uncertainty, complexity and ambiguity (VUCA) company is on serious risk if the leadership teams throughout the pipeline are not trained adequately or lack above mentioned traits.?
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Signs of lacking above mentioned traits are costly for the organisation: Increased employee turnover ratio, Increased Quality issues, Decreased productivity, etc.
4. Psychological safety
According to Gallup research (2017) 27% reduction in turnover, 40% in the safety incidents and 12% in increase productivity, can be gained by moving employee ratio from 3/10 to 6/10 measured on psychological safety.
When it comes to achieving a company’s financial and operational goals,?how?a team relates to one another is just as important as?what?the team works on. According to Bain & Company conducted research on more than 1,000 companies they found that when C-suite leaders rate their teams highly across four specific traits, their companies are up to six times more likely to be business performance leaders (with leadership defined as revenue and profit growth and total shareholder returns all above those of peers).
Those four traits: Commitment, Greater good, Trust and Inclusion.
According to Amy C. Edmondson from Harvard Business School it is possible to evaluate an organisation for the Phycological safety and initiate psychological safety in the workplace for learning, innovation and growth.?
This type of investment is not necessary if your leadership team throughout the pipeline are well trained, capable and your organisation do not show any of the costly signs mentioned above. But the reality is different.?
Valuable insights and the brutal facts that exist in the workplace and dysfunctional teams are perfectly covered in Berta Aldrich book “Winning the talent shift” in which she articulates how to remove the barriers that holds back high performers and woman in the workplace and create more gender balanced modern organization. 75% of highperformers and woman experienced low performing inequities.?
Shifting company to high performing teams can yield up to 41% revenue.?
5. Corporate reputation matters too
What can we learn from the TOP 100 world leaders of corporate reputation in regard to how people feel, think, and act towards companies globally.
According to “RepTrak” data has shown that perceptions of a company’s leadership in ESG have a direct impact on purchase intent – the public’s willingness to buy from a company goes from 20% with a weak ESG score to 60% with a high score.
Intangible assets, like reputation, make up 90% of market value according to Tomo Intangible Asset Market Value Study.
In fact, historical research shows a 1-point drop in Reputation Score results in a 4-5% drop in consumer support
6. Purpose driven organisation
Organisation with the strong sense of purpose are more than twice as likely to have above average share holder returns. A BCG survey of 50 companies across three sectors.
Outperformance: Over the past 15 years, purpose driven organisation have grown 10% faster than the market.
Greater value: Over the past 12 years, brands with the strong sense of purpose have seen they value increase by 175%, on average compared to the median growth rate of 86%
Total shareholder return?(TSR): Over the next 15 years Organisation using more purposeful language are expected to earn TSR that is 9% higer and generate growth that is 10% higher than today.