Leadership in Action: How CEOs and Directors Navigate Change
November 26, 2024 – Geopolitical upheaval, artificial intelligence, economic uncertainty. These external forces are only adding to the challenges CEOs and boards face, according to a recent report from Spencer Stuart. The firm knows from its work with these leaders how running an organization is only becoming more relentless and complex. But what if leaders could better understand what their peers are dealing with — and learn from their experience? Spencer Stuart discusses with global leaders about their top concerns and how they are responding — whether that’s evolving how the top team works together, better leveraging board directors’ expertise or addressing cultural impediments to change.
The firm asked more than 2,000 CEOs and directors about a range of topics, including what keeps them up at night and how they are coping. Spencer Stuart also surveyed more than 1,200 employees in the U.S. and U.K., comparing their responses and leaders’ views. What did the firm find? Through both quantitative data and thousands of unfiltered responses, Spencer Stuart learned that while the existential issues expected to consume them just a few months ago are on their minds, the world’s business leaders are most focused on issues they can more directly control: company culture, changing workforce dynamics and access to talent. Fewer than half of all leaders surveyed are prioritizing and addressing the disruptive emergence of generative AI, for example, while barely a quarter feel compelled to address geopolitical dynamics right now.
The Spencer Stuart report found that CEOs and board directors are focused on shoring up the foundation of their organizations at a time when 78 percent feel a high level of business uncertainty and 25 percent worry their organization is “sluggish” in responding to new challenges. Employees surveyed in the U.S. and the U.K. report less concern: Just 42 percent shared leaders’ sense of unease, and there remain significant gaps between the issues leaders are prioritizing and the extent to which employees feel their needs are being met.
One thing that shines through is how much leaders are eager to hear from one another, the Spencer Stuart report found. While 79 percent of employees are confident in leaders’ ability to navigate this uncertain period, the survey uncovered important questions from senior executives seeking both advice and reassurance from their peers.
What Leaders are Prioritizing Right Now
The sheer number, significance and frequency of challenges faced by senior leaders is daunting and only likely to grow. The Spencer Stuart study offers some challenges they’re prioritizing:
Culture is Critical to Organizational Agility
Both CEOs and directors rated company culture as a top priority, reflecting the link between aligning culture to the context of an organization’s strategy and the ability to perform and adapt in challenging times, according to the Spencer Stuart report. Fully 78 percent of CEOs and 73 percent of directors said culture was a priority being addressed in their organization, while a further 12 percent of all leaders rated company culture a priority not yet being addressed.
What is driving this focus? Amid so much uncertainty, Spencer Stuart explains that the ability of organizations to respond to challenges with agility is vital to business performance. Yet 77 percent of leaders see at least some room for improvement in their organization’s nimbleness in the face of uncertainty — and 25 percent called their company downright “sluggish.” Culture, along with purpose and values, is a key lever for inspiring and energizing people in the organization to achieve business outcomes in a way that is flexible and responsive to change. The desire to get culture right was reflected in many of the open-ended responses Spencer Stuart received, including this question from a CEO to their peers: “How are you preparing your organization to thrive in an era of increasing environmental, social and technological changes, and what do you see as the key factors in building a resilient and adaptable corporate culture?”
Related: Key Traits for Navigating a Crisis
Yet while more than three-quarters of leaders believe they are actively working on culture, far fewer employees — just 51 percent — see it that way. “This may be because some organizations lack a shared language about the culture; for others, culture may be viewed as more of a human resources function rather than a responsibility of top leaders,” the Spencer Stuart report said. “As a result, leaders may not be addressing what employees want or expect them to. Bridging that gap is vital: Culture must be aligned to strategy, and the employee experience should be shaped by a culture that brings strategy to life. We find the leadership teams most effective at shaping culture embrace their responsibility for it and model the behaviors they want to see in the organization. They ask themselves: How do we individually and collectively need to change the way we think, behave and act to create the culture we want?”
Securing Top Talent is Key as Commitment Falters
Given the role company culture plays in defining the workplace environment, it’s natural the next biggest priority among leaders is how organizations retain existing talent and find new workers, the Spencer Stuart report notes. Sixty-nine percent said the changing workforce and access to talent was a priority they’re addressing, with a further 17 percent saying it was a priority not yet being addressed. In their open-ended responses, CEOs and directors had questions about talent attraction and retention; the impact of generational differences on the workplace; navigating diversity, equity and inclusion; and how to increase and maintain engagement among employees, especially younger generations.
Navigating Uncertainty: How Global Business Leaders Are Adapting to Disruption and Complexity
In an era marked by disruption and economic uncertainty, global business leaders are grappling with the complexities of modern leadership. A new report from Odgers Berndtson highlights five strategies executives are adopting to navigate these challenges and enhance their organizations’ resilience in an unpredictable landscape.
One challenge the report found: employees are less committed to their organizations than leaders think; 65 percent of employees said their commitment was average or below average compared with years past. Leaders also see commitment holding steady or slipping. As one respondent asked fellow CEOs: “How do you balance supporting employees with benefits while also inviting them to hustle when needed? In today’s work culture, I have found this a hard balance to strike. I want my employees to be on fire for our work … but not burned out.”
Similar to Spencer Stuart’s findings on culture, these results suggest that leaders may not be as in touch with employee expectations as they should be. Another factor may be organizations’ slow progress on retooling processes to reflect the future of work. One major change since 2020, of course, is the rise of the “hybrid” workplace, which requires different ways of recognizing, developing and managing people. Some 72 percent of leaders said their companies had adopted a hybrid approach balancing remote working and time spent in the office, with 19 percent reporting an in-office policy and 9 percent saying their companies are fully remote. Interestingly, surveyed employees had a different take on the state of these policies, with only 21 percent saying their company had a hybrid approach, 47 percent describing their policy as in-office, and 21 percent saying their company is fully remote. Nearly one-quarter (24 percent) of leaders were still undecided about whether they planned on changing their in-office policies, indicating at least some leaders are keeping options open.
The CEOs Spencer Stuart works with who have been most successful at cultivating a committed workforce recognize three things. “First, employee engagement is an outcome of the overall employee experience, which is shaped by culture and strategy,” the firm said. “Second, they and their executive team recognize that top leaders have the largest influence on engagement — HR and managers can only do so much if a company’s rewards system is broken or if leadership isn’t visible in driving a learning environment. And finally, that there’s no magic bullet to being a great workplace: The best leaders zero in on what matters to most of their people and are relentlessly consistent in building those into the employee experience.”
Greater Rigor is Being Applied to Environmental and Regulatory Efforts
Spencer Stuart’s survey appears to reflect waning general urgency for organizations to aggressively address environmental issues, though here there’s a disconnect among senior leaders. While 63 percent of board directors regard the environment as a priority being addressed, that is nine percentage points higher than it is among CEOs — and 28 percent of CEOs said environmental and regulatory pressures were not a priority. Leaders in North America are also far less likely to prioritize these issues compared with those in Europe and Asia.
This gap may exist because CEOs are often under pressure to focus on short- to medium-term results, leaving board directors to assume oversight of issues that play out over a longer time horizon, such as environmental impact and the journey to net zero, the Spencer Stuart report notes. Yet the need to act remains, and CEOs see it. “How much more time do we have before serious climate change issues begin to affect productivity, profitability and the sustaining of our business models?” one CEO asked.
Generative AI is Transformative, but Not Immediately
For all the headlines about generative AI changing everything, leaders are proceeding deliberately. Only 40 percent of leaders call generative AI a priority they are already addressing, although another 27 percent have plans to address it. About three in 10 — 29 percent — say it’s not a priority, and 4 percent label it a distraction.
Spencer Stuart says that’s not to suggest that leaders aren’t exploring the potential of generative AI, both personally and for their business. Some 51 percent of CEOs report staying up to date with AI developments, and 50 percent are actively assessing how their organizations can use it. Forty percent of all leaders said their leadership team is prioritizing AI literacy, and 35 percent are buying technology platforms or tools. A third are clarifying how AI can affect strategic priorities, and 27 percent are upskilling AI literacy among employees.
How Leaders can Succeed in the Face of Uncertainty
There is no shortage of issues confronting CEOs and directors, and the list of challenges seems only likely to grow to the point where few individuals can alone cope with its demands; even the most capable CEOs require new levels of sophistication from their top leadership team and board, according to the Spencer Stuart report. The good news is 87 percent of board directors have faith in the readiness of their CEO to respond to these challenges, including a slender majority (51 percent) who are very confident. The bad news? While most CEOs have at least some confidence in directors’ ability to help guide them through the issues confronting their organizations, the percentage expressing a lot of confidence is only 32 percent.
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“The relationship between CEOs and board, especially board chairs, is critical — even more so when market conditions are volatile and change is on the agenda,” the Spencer Stuart report said. “The board, CEO and management team must work together in ways they haven’t before, creating a leadership system that must be aligned to truly accelerate performance.” The firm’s survey found CEOs recognize the need for a strong leadership ecosystem and are leaning on the experience and counsel of directors and the broader C-suite: 63 percent of CEOs are increasing communication with their boards, 33 percent are increasing the frequency of private meetings with their board chairs, and 30 percent are more often pulling C-suite members into meetings with directors.
As we look ahead to the second half of year, Spencer Stuart offers the following advice for these leaders from our experience working with some of the highest-performing companies in the world.
“CEOs and boards need to be partners in driving the organization’s performance and feel comfortable sharing their expectations and concerns with each other,” the search firm said. “Similarly, boards need to challenge themselves to rise to meet the organization’s needs — ensuring that their composition and capabilities are the right ones for the demands of the business — while retaining their overarching oversight role. Directors also should work closely with management to identify the risks and opportunities from disruption.” As one CEO advised, “Understand and engage the board in change management, leveraging their expertise to encourage questions on strategy and risk that inform the enterprise and create value.”
Spencer Stuart also says to prioritize communication to keep people across the organization focused on their role in achieving business outcomes. CEOs must be able to engage and motivate employees and other stakeholders, win over hearts and minds, and instill confidence. As one CEO wrote: “Leadership is at a premium right now, and with many changes coming at our organization, having frequent and transparent communication is a must.”
Amid so much complexity and ambiguity, CEOs need to draw on a richer, more diverse set of inputs than ever to anticipate and respond to emerging developments. This includes developing a broad external network — 53 percent of CEOs in Spencer Stuart’s survey are looking outside their organization and tapping their personal networks for greater support — in addition to a robust internal ecosystem. The most effective CEOs cultivate truth tellers who aren’t afraid to tell it like it is. As one told the firm: “My role is to support the management team and learn as much as possible from their field of expertise.”
Finally, Spencer Stuart stresses that agility and resilience demand the breaking down of siloes. CEOs and their teams must encourage real collaboration: C-suite leaders should embrace their role as enterprise leaders, not just heads of a business or function, and understand that the organization takes their cultural cues from them. “Closer, more proactive communication among the top team helps drive alignment and build trust, improving decision making and eliminating some of the process and bureaucracy that slows organizations down,” the firm said. One CEO said their most important job was to “create a culture where leadership and teams at all levels are truly committed to the collective ‘us’ and not the individual ‘me’ to be able to make quick decisions.”
Related: Leadership Traits That Matter in Times of Crisis
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
