2008 – A kingmaker learns to wear a crown
It must be frustrating sometimes for headhunters, working
in the background as corporate kingmakers, speaking with
chief executives almost every day, sifting through reputations,
trying to establish whether individuals have the qualities
needed to run a multinational business.
They see and hear a lot. They’re helping to pick
the team but the nature of the job means they are not going
to get the chance to run the kind of businesses that they
see among their clients.
But headhunting is a business too. Since the two biggest
headhunting firms, Heidrick & Struggles and Korn Ferry
International opted for publicly incorporated status they
have needed to adopt administrative managerial structures,
even though true headhunters remain some of the biggest
hitters in their revenue and income earning.
When Kevin Kelly, a seasoned headhunter at Heidrick &
Struggles became the company’s chief executive officer
in 2006, he took advantage of the opportunity to analyse
the role of chief executive from a personal perspective.
The result is CEO, The Low-Down on the Top Job, an illuminating
book that combines the headhunting perspective with that
of the chief executive.
The book is timely since the chief executive’s role
is coming under ever increasing scrutiny. Those who get
it right, such as Jim McNerney, first at 3M and now at Boeing,
are lauded by shareholders and analysts. Those who fumble
the job, such as Robert Nakasone who left Toys R Us in 1998
just 18 months after taking over, must wonder where they
The time allowed to get things right has shortened dramatically
in the past 15 to 20 years. A recent Cranfield School of
Management study found that the UK’s top 350 quoted
companies were changing their chief executive on average
every five years although Booz Allen Hamilton’s 2007
survey of CEO tenure suggested that turnover might have
reach a plateau with a slight decrease in the number leaving
office among the world’s 2,500 largest public companies
The number who leave because of poor performance has also
risen, quadrupling since the mid-1990s, according to the
same study. The type of individuals occupying these jobs
has changed also. Research of career paths carried out by
Professor Monika Hamaori at the Instituto Empresa Business
School found that the loyal company man or woman is becoming
increasingly rare. So is the single-industry and single
Instead, the new breed of CEO has moved around more, often
having worked internationally for more than one employer.
They’re getting younger too and when they do take
on top jobs they can expect to be held against much more
rigorous performance standards than those used to measure
the success of a previous generation.
For this kind of risk they can expect to receive increasingly
impressive rewards. Even before share options, pension and
other perks, the average salary of America’s biggest
500 companies in the Forbes magazine’s 2006 survey
of executive pay was $10.9m.
If we are tempted to believe that any of this comes easily,
a glimpse of the regime adopted by Mr Kelly to study for
his MBA - another increasingly prominent merit badge among
chief executives – gives an idea of the commitment
required for these jobs.
While holding down a headhunting job at Heidrick &
Struggles he was getting up at 5.30 am each day to cram
in two hours study and putting in another eight to 10 hours
work at weekends when working for an MBA at Duke University’s
Fuqua Business School.
In his book, Mr Kelly includes a “typical day of
a CEO” from his own experience, starting at 5.45 am
when he gets up for a run and ending after 11pm when he
has finished speaking with various members of his executive
team on the telephone.
Then there’s the relentless travelling. The book
notes that Kevin Roberts, chief executive of Saatchi &
Saatchi, the communications and advertising group, clocked
up 175 nights in hotels on business travel during one 12
Why do these people travel so much? A lot of it has to
do with relationship building. In spite of all the advancements
in video-conferencing and emails, most company heads prefer
to rely on face-to-face meetings with their teams and clients.
Internet-based social networking has yet to penetrate the
business lifestyle of chief executives.
But some things are changing. Gradually chief executives
are becoming more international in their backgrounds. Typical
of this new breed is Carlos Ghosn, president and chief executive
of both Nissan and Renault, the car manufacturers.
Brazilian-born Mr Ghosn was brought up in the Lebanon and
educated in France. Earlier in his career when working for
Michelin he was based first in France, then later in Brazil,
all the time moving across functions. This pattern of experience,
says Mr Kelly is becoming a model for those who aspire to
the top job in a leading multinational company.
But will this model change? I agree with Mr Kelly’s
argument that tomorrow’s chief executives will need
to be more entrepreneurial. Carl Schramm, head of the Kansas-based
Kauffman Foundation that develops ways of promoting entrepreneurship,
says in the book that “Seventy per cent of college
kids want to work for themselves.”
But Mr Schramm has identified a significant problem face
by entrepreneurial graduates inside many large companies.
“A lot of our CEOs grow up in cultures in large corporations
where they talk about entrepreneurship, but still hunt these
entrepreneurs down and knock them off, because they are
disturbing inside companies.”
This poses a real problem for professional recruiters such
as Mr Kelly who believes that chief executives in future
are going to be younger, more entrepreneurial and increasingly
diverse in the national backgrounds. How can they encourage
more entrepreneurial understanding among their clients?
Faced with aging populations in Europe and Japan, it would
seem logical that recruiters are going to be looking for
ever younger options. At least this seems to be the book’s
conclusion. I would like to have seen more discussion of
a few more adventurous possibilities. For example Mr Kelly
mentions, almost in passing, that in the past year or so
several older bosses have been “pressed back in to
service.” Gerry Grinstein was brought in at Delta
at the age of 71. Could not this be a future trend as demographic
change begins to bite?
In the long run I would suggest that it’s the job,
rather than the people, that will need to change. The chief
executive role has become something of a sausage machine
in recent years. On a good day, says Mr Kelly, it is the
best job in the world. It is also, he admits, “a gruelling,
stressful and often lonely existence.” Yet in future,
he predicts, the role will become even more challenging.
Is this a good thing? Maybe it is if your aim is to build
a career. But it doesn’t seem a great way to build
CEO, The Low-down on the Top Job, by Kevin Kelly, is published
by FT Prentice Hall, price £20.
See also: Choosing