New CEO appointments at FTSE 100 companies in the last year accelerated with 20 CEO changes since the start of pandemic; this is up 33% from the previous year where there were 15 changes in CEO*. There were 30 changes in CFO since the start of the pandemic.
The financial and operational disruption caused by the lockdown may be encouraging businesses to reassess the skills needed on the board. Rescue, recovery or repositioning after a major economic shock can require a vastly different skillset to leading a company during more benign economic conditions.
Statistics show major corporates are now quicker to change senior executives than previously. The average tenure for a CEO at FTSE 100 companies is now 5.2 years compared to 2010 where it was 8.3 years**. Boards are prepared to make changes at the top if they feel that the company’s growth is not on the right track or if the skillset does not match the current requirements.
There is a high demand for senior leaders with the skills to navigate through these volatile times. Relevant areas include:
- Restructuring – leaders who have led restructuring negotiations with banks and investors
- Cost management – managing down costs in a way that does not impede, or possibly even enhances, the business’s ability to take advantage of a post-Covid economy
- Risk management – managing unforeseen risks has been a priority for boards in the past year. These have ranged from operational risks where large workforces have been required to work remotely, to the financial and reputational risks of decision-making regarding furloughs and redundancies
- Financial planning and analysis – boards are asking finance teams for a sharper view on where earnings are heading and what is the likely return on investments. On top of that is the need to provide accurate longer-term guidance to shareholders
- Digital – understanding customer expectations in a digital world, and how to build and thrive in a truly connected digital ecosystem
- People – connecting, engaging, developing, supporting and inspiring
The boardroom has been an interesting environment in the last 12 months. Executives have faced disruption, discontinuity and extreme challenge to their operating models and assumptions. This has demanded rapid innovation founded upon intense customer focus. Strategy horizons have shortened – agile implementation has been key.
The crisis may be redefining what business leadership looks like. The courage and wisdom to make crucial decisions based upon limited or ambiguous data, to act with confidence amid complexity and in particular the ability to unite and galvanise a remote and tired workforce behind a common and authentic purpose – these are the new skills.
Colin Mercer is a board director and leads the talent strategy consulting business at NSCG. He works with executive teams and boards to enhance their effectiveness. To discuss how NSCG can help transform your leaders and talent, please get in touch.
*An analysis of CEO changes made between 20th February 2020 and up until February 19th 2021