‘No one is the finished article; reaching the top doesn’t mean you have a divine right to be there’
Careers are often described as “ladders”. It’s an apt description in more ways than one. For instance, the view may be better at the top, but the higher up you are, the more difficult the balancing act can be.
Let’s say you find yourself starting the year as the leader of one of the 100 largest public companies based in the UK. You might feel a little proud of yourself and rightly so. However, there is, according to AJ Bell, a better than one in ten chance you will have vacated the role by the end of the year.
In the current environment, the odds of staying long appear even less favourable. In 2018, 16 FTSE 100 bosses departed from their positions. This year, it was barely October before that figure was eclipsed.
What high CEO churn can teach us
Now, it must be said that two years do not make a firm trend. Furthermore, a degree of churn at the top is necessary and can even be healthy. Some of those leaving simply wanted to go out on a high, while in other cases it was felt to be the right time to bring in fresh energy.
Nonetheless, the high level of turnover provides some important lessons for corporations and directors alike, and not just those in the FTSE.
First and foremost, leading an organisation is, to put it in plain terms, far from easy. Chief executives (CEOs) must straddle a number of dissimilar, but equally pressing, disciplines, from risk management to human resources, from financial planning to public relations. Pressure comes at CEOs from multiple angles, both internal and external. Regulators, shareholders, staff and the wider public, the list of groups demanding their pound of flesh is long.
Even the step up to director is itself a challenging one. Too often it is assumed that becoming a director is simply a natural extension of managerial status. In fact, the role comes with a whole host of legal responsibilities and duties, and requires leadership at a different level. It is crucial for all those taking this step to be prepared.
From the view of the corporation as a whole, the churn in CEOs makes all too clear how fundamental apt succession planning can be. In this, building a robust talent pipeline within the organisation is vital. Again, this pipeline has to contend with the hurdle between management and the executive. Doing so effectively can serve to maintain company culture, while also helping to ensure that diversity further down the organisation translates upward and onward.
Why the best CEOs are always learning
Indeed, it’s with a view of helping firms clear this hurdle that the Institute of Directors recently launched its Future Directors course aimed at equipping rising stars with an in-depth understanding of what directorship means in practice.
But another moral we might all take from the high recent turnover in FTSE CEOs is that no one is the finished article; reaching the top doesn’t mean you have a divine right to be there.
Without doubt, the stresses and strains of leading a large organisation make a certain degree of self-belief, self-confidence even, a must-have. The best leaders, however, temper this with a constant desire to improve. The higher the rung you reach, the more important it becomes to protect this desire and stoke it.
Lifelong learning and self-development can be achieved through many different approaches. For some, the simple act of reading can suffice, with Warren Buffett a notable poster boy for this approach. For others, a diverse network of peers can serve as a way to come across unknown unknowns. Professional development courses, meanwhile, can offer a more structured way of learning new approaches and new skills.
Whatever the method, business leaders cannot shy from casting the same critical eye over their own abilities as they would their company’s balance sheet.
Reaching the top of the business world is an achievement and merits no little celebration. But the best know not to get too comfortable.