Understanding the business and its myriad stakeholders is task number one for any new Chief Exec. The Chair can be an important ally during this period of on-boarding. However, expectations and boundaries will need to be agreed.
Here, a mix of senior executives and NEDs share their advice on what you need to do as a first-time CEO to give yourself the best chance of success.
Don’t Act too Fast
It’s critical to get to know the business as quickly and as thoroughly as possible: Where does it sit in the marketplace?; What are its key operational drivers?; What is it doing successfully and where is it weak? But, unless the business is in a crisis, there should be an initial phase of absorption, rather than action.
Jamie Pike, Chair of RPC Group and Spirax-Sarco Engineering as well as a Board Mentor at Criticaleye, says: “Don’t rush making any decisions unless it is absolutely necessary to do so. People think: ‘I’m the boss, I’ve got to show I’m in control and I need to make my mark.’”
He understands that impetus but says: “You’ve got to be careful that you don’t move before you know what’s really going on. If you jump in before you’ve had a chance to get to know a business, that can be a problem.”
Talk to Stakeholders
The reality of an organisation is best understood by getting as many different perspectives on it as possible. Vanda Murray, SID at FTSE 100 distribution and outsourcing business Bunzl and a Board Mentor at Criticaleye, says: “Whether it’s your customers, suppliers, employees, shareholders or the regulatory environment, really think through how your company impacts those different stakeholder groups and what that means for your future prospects, growth and reputation.”
She adds: “You might be supporting kids into apprenticeships or have a policy of spending 20 percent with local suppliers. Someone will be leading on the relationship with that particular stakeholder group, so it’s about keeping that under review, making sure you understand it and that the Board does too.”
There will be different priorities depending on whether you are in a private or Plc environment. Jamie notes that for a listed-company CEO, “by the time you’ve talked to investors, analysts and been on roadshows, it can easily take up a day a week, so you’ll find you’re spending a lot of time not running the business”.
He adds that, in the context of a Plc, there can be a tendency to exaggerate the importance of skills needed to manage the brokers, investment bankers and investors. “They want a CEO who is sensible, transparent and obviously knows their business – it's not rocket science. If you’re a good manager of the asset, and you can explain how you’re managing it, then that’s what they’re after,” he says.
Build a Relationship with the Board
The Chair ought to be an invaluable source of information and assistance in the early days, but the CEO must also possess the confidence to establish boundaries and expectations.
Mark Scanlon, CEO of Personal Group, says: “The relationship between the Chief Exec and the Chair is super important. You need to have alignment; if that’s not right then problems are going to be much bigger, because as a CEO and Chair you face them together.”
A Chair will naturally be evaluating a new CEO at the start of their tenure and so it’s not necessarily wise to try to forge a “buddy-buddy relationship”. Mark explains: “My approach is to set out what I want to achieve – strategy, organisational changes and such. That’s not just explaining what I will be doing, but also how I will be doing it, and what kind of support I will want.”
For Mark, agreeing what he’ll deliver and then “walking the walk” is the way to start building trust and alignment. “Afterwards you can work on the personal relationship more, but you have to earn your stripes by being purposeful and driven towards the business outcomes,” he says.
The Chair should also create early opportunities for an incoming CEO to interact with the other non-execs, although Rupert Gibb, Partner at Warren Partners, cautions that those relationships are delicate ones to navigate: “The key is getting to know each Board member on a personal level as early as possible but remaining mindful of the fact that, as CEO, you’ve got to strike the right balance between seeking guidance and providing them with direction.”
Get Your ExCo Right
A CEO needs a strong team in place to help deliver, but Mark says that support from the existing execs can’t always be taken as a given and needs to be earned. “You’re going to be surrounded by disappointed candidates from the management team who wanted the job you just got. Some people will sit there, look and measure you, before they commit to support you,” he says.
But what if the incumbent executive team just isn’t up to the job? Jamie’s advice on not leaping to conclusions still stands, however, protracted delays here can really put the brakes on progress. Jerzy Nagorski, Relationship Manager at Criticaleye says: “On coming into a business, a new CEO needs to identify any talent gaps within the top team. The people who were right to help lead the business in its previous phase may not be right for the future.”
He continues: “As they develop the strategy, a new CEO needs a leadership team who are willing to challenge but can then align behind the new vision once it’s agreed. If a new Chief Exec doesn’t think this is the case, then they need to be decisive and make changes.”
Emma Carroll, Senior Editor, Criticaleye
Next week’s Community Update will be a second visit to Criticaleye’s PE & AIM Retreat 2019.