Many finance executives are well used to taking calls from executive recruiters and working with them to land that next job. But they may not have much experience with another service that most of the big search firms offer: leadership-assessment consulting. Unless, that is, the CEO or board of directors singled them out to be assessed.
While much of their work involves evaluating CEOs, leadership consultants can offer insightful perspective to anyone in the C-suite. On March 9 at its annual meeting, the Association of Executive Search Consultants (AESC) invited top consultants from the four largest firms in the field to explain how the concept of leadership is evolving during turbulent economic times. An edited transcript follows.
Peter Felix, president, AESC: Do companies today have a changing view of what they are looking for in business leaders?
Cathy Anterasian, head of executive-assessment services for the Americas, Spencer Stuart: It’s much more complex now. Leaders have to deal with greater ambiguity, uncertainty, and incomplete information. Being able to frame novel problems in meaningful ways, to look at them from different angles and not be too wedded to one point of view, is crucial.
Also, the goal for a leader now is to be tough but still beloved. It is important to be able to hold people accountable to goals and aspirations. That tough love can make a leader endearing.
A final point has to do with humility — that it’s not about “my way or the highway,” but rather empowering people to feel that their ideas are welcomed, listened to, and incorporated into the leader’s thinking. With all the corporate scandals out there, you can’t be a holier-than-thou kind of leader anymore. You have to be humble to earn respect. And the next generation of talent coming up the ranks expects leaders to be more personal, personable, and real. The days of the command-and-control leader are over.
Ana Dutra, CEO, leadership and talent consulting, Korn/Ferry: I would add to that list the ability to communicate key messages and expectations very clearly. The old leadership style of saying what people wanted to hear no longer applies. Second, even for companies whose business is not global, a global perspective is extremely important, because whatever is happening with global competitors is going to affect you as well.
Rick Greene, Americas regional managing partner for leadership consulting, Heidrick & Struggles: I do a good amount of work in industries that are distressed right now, like banking and home building. Particularly in those hard-hit sectors, there’s a greater need for adaptability. For example, we just helped a client exit a longtime executive who, if you looked at his track record and shareholder value created, you’d think there would be no way he’d ever leave the company. But with the challenges its industry is facing, he was not presenting the needed level of adaptive thinking.
Felix: Are there generational issues that contribute to that? In other words, could it be related to how long someone has been doing things a certain way?
Dean Stamoulis, managing director, global executive-assessment practice, Russell Reynolds: No, the key is the degree of volatility, which is unprecedented. Organizations need leaders who savor the ambiguity and really have a thirst for working through it.
Felix: Are you finding that boards are recognizing the changing leadership profile, or is it difficult for them to get their head around the issues?
Dutra: Not only are they recognizing it, but it’s becoming a critical retention issue. The top 10% of the talent is being pursued by multiple companies. You have to understand who your agile executives and high-potential people are and how to retain and motivate them.
A few years ago, I was doing work for a global transportation company, and the C-level people had all grown within the organization. They were both loyal and engaged. When new, younger executives were brought in, they were also engaged but not loyal — they could leave at any moment. With today’s executives, you should renew their contracts every year, with an understanding of what’s going to keep them engaged, productive, and motivated.
Felix: With everything not going back to the way it was before the recession, is this a time of fear and uncertainty about how to assess and establish the criteria for leadership?
Anterasian: I wouldn’t use those terms, but boards increasingly recognize that part of their risk-management responsibility is to maintain a consistent talent pipeline to the top. It’s actually one of their most important roles. Increasingly, new CEOs are coming from inside companies, and that trend is likely to continue. That puts pressure on boards, CEOs, and human-resources leaders to develop that internal pipeline.
Audience member Jason Johnson, managing partner of Johnson Executive, an Australian search firm: I’m a great believer in leadership consulting and its ability to align with executive search. But how do you manage the inherent conflicts? In Australia, we’ve had some significant incidents where executive-search practices were searching in organizations that were also clients of those firms’ leadership-assessment arms.
Greene: We keep the search and leadership-assessment databases separate. The search database is completely hands-off to anyone in leadership assessment. Secondly, while clients are asking us to make executives off-limits to our recruiters for two years after we assess them, we would not take out someone even five years after an assessment.
That presents a challenge: within any given sector there are only so many clients you can put off-limits before that whole sector starts to be off-limits to search.
Dutra: The conflicts are not too different from those that come with doing search only, because you have to pick the clients you’re going to be loyal to in each sector. The saving grace is for us is that the more we grow and the more we work with global companies, the more separate and even siloed the buyers are within the same client. We may work with a global organization that we mostly consult for in one part of the world and mostly do search for in another region.