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Bridging the Divide: does your company need to close the gap in leadership capability?

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Many CEOs and CHROs I speak to are concerned about the gap in leadership capability between the executive committee and the wider senior leadership population in their organisation. The uncertainty and volatility of recent years has undoubtedly had an impact as many executives have been forced to make difficult decisions quickly, often with limited information and in a rapidly changing environment. Whilst many companies are now benefiting from more transparent and agile ways of working it seems that the need to deliver short-term results has lead to ExCos taking greater ownership of execution as well as having tighter control over strategy rather than empowering the broader senior leadership population. I’m also regularly hearing that greater time pressures, geographically dispersed teams and the tendency towards remote or hybrid meetings is leading to many senior leadership populations having less exposure to the executive committee and the strategic debates at the top of an organisation. These issues are exacerbated for larger and complex global organisations where executives who are two levels below the ExCo but who are responsible for thousands of employees and major budgets have even less engagement with the ExCo and Board.

Merryck Mentor and former FTSE100 CHRO Simon Linares has observed similar trends, he recently explained to me that “senior leaders today are having to make decisions and lead in a context that is changing faster than ever and impossible to accurately predict. Past experience is still helpful, but accessing others thinking, and learning to work as a team unleashes the best value from any leadership group and is likely to lead to better decisions and develops the future senior leadership pipeline you need.”

If a company has been reluctant to invest in leadership development for the CEOs of the future and has a board and stakeholders more focused on the short-term; then they’re clearly not mitigating the risks associated with weak succession planning. We know that talented executives want to work for companies with purposeful leadership and a sense of progression. If they feel that career opportunities are limited, they’re more likely to move on and explore other options. What we’re also seeing is that high-potential successors are looking at ExCo colleagues with the associated pressure and breadth of the roles and deciding not to take the opportunities when offered. Reputation and investor confidence will undoubtedly weaken as external stakeholders begin to question whether a company has the leadership capability to execute over the medium-term.

From Simon’s perspective, getting the right support in place is vital. His view is that “the Executive and the next leadership level of the organisation set the strategy and culture of any company. They are also where decisions are made or get stuck. Working effectively, beyond hierarchy and process, to respond to ever more fluid and ambiguous challenges is now recognised as a key competitive advantage, and something teams of executives can learn to do if supported in the right way.”

There have already been 12 new FTSE100 Group CEOs and CFOs start in role during 2023, this is a 50% increase compared to 2022 and we’re expecting to see many more appointments across FTSE350 firms this year. We’ll see more companies facing into the prospect of significant change at the top of their organisation, along with continued business model disruption and transformation, but many boards will be faced with a senior leadership population that is either under-prepared or unwilling to step up into ExCo positions.

Some questions for Boards and CHROs to consider:

– How much consideration have you given to developing the wider senior leadership population?

-What can you do to ensure senior executives have learning experiences that prepare them for ExCo roles?

-Do your senior executives understand the complexities and pressures of ExCo roles?

-Will your future CEO candidates be comfortable engaging with a wider set of stakeholders and taking greater ownership of strategy and performance?

-How can you encourage greater collaboration and peer learning across the senior leadership population?

At Merryck we continue to elevate leadership for the future by partnering with Chairs, CEOs and CHROs on succession planning, accelerating high potential leaders and executive team development. More information is available online and please contact me if you’re interested in learning more about our individual and team mentoring programmes.

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Helen Jennings