Opinionista Johann Redelinghuys 26 May 2013

Top CEOs are feeling the pinch

A scary pincer movement is shortening the careers of top CEOs. Chief executives in the middle of it are constantly warding off the colliding demands of personal well-being and family commitments on the one hand and shareholder impatience on the other.

The job of a listed company CEO is now so all-consuming that it inevitably means making family and personal life sacrifices. The stress of a 24/7 lifestyle accelerated by technology is relentless. At the same time, as the opposing flank of the pincer, the analysts and shareholder activists bay for blood at the earliest opportunity. The demands for sustained high-level performance are gruelling.

It may be time for a new approach to the structuring of the CEO role. Some form of shared responsibility, while not immediately appealing could change the game.

Michael Jordaan’s retirement from his impressive 10-year twittering tenure as the CEO of FNB is just one in a long line of departing CEO’s citing the need for more personal time and the debt owed to their families. Not everyone suffers like Jordaan must have done leaving his family in the Cape and commuting weekly to spend Monday to Friday at the head office in Johannesburg. But each CEO has to negotiate their own range of trade-offs and increasingly, these days, health is one of them.

Johann Rupert, chairman of Richemont, announcing reasons for taking a “grey gap year”, says he now just wants to have some time to himself. He is taking better care of his health and has given up smoking. Jacko Maree, recently departed CEO of Standard Bank, described by an analyst as “tired”, did not need to retire at 57 years old but chose to do so. Other departing CEOs like Ian Farmer from Lonmin, Neville Nicolaou from Anglo Platinum give health and unnecessary stress among the reasons for their decisions. The great survivors are people like Koos Bekker at Naspers, who is wise enough to take a proper sabbatical.

Managing personal challenges aside, CEOs also have to respond to the escalating demands of their stakeholders, particularly their boards. Conflict with the board of directors has led to high-profile departures in companies like Anglo American, Telkom, Pioneer, Murray & Roberts and Cipla Medpro.

And then there are the analysts and the demands of shareholders who have become increasingly impatient and who set the bar ever higher for the performance of their stocks. Well informed provocateurs who attend annual general meetings and who can cause havoc are also a factor with which to contend.

The tenure of a top CEO is less and less likely to be a long-distance race. It has become a sprint. Fewer these days stay in the job until they retire at 63 or thereabouts. Shortening the lifespan of CEOs means that the leadership talent pool becomes ever shallower and we have to look harder for succession. The battle-hardened long-distance CEO with the vision and the expertise who is willing to take on the challenge is now becoming an endangered species.

We only have to look around to see how boards of directors, when making CEO appointments, are having to compromise and scale down their expectations because the market is not giving them the options of making the best decisions. Is it not time that we reconsider the role of the CEO and maybe to change its structure?

While the joint-CEO German model now embraced by Standard Bank is not immediately appealing, it may suggest a way to share the leadership burden and spread the risk. In our macho society we have been conditioned to see one dominant leader-hero, a single commander who takes the troops into corporate battle. But the dual appointment has many advantages. It’s better for succession planning. It lightens the need to know everything all the time about every nook and cranny of the business. Two people working alongside each other gives a measure of comfort to the shareholders.

A published Harvard Case Study cites the Roman Republic as an example of a successful enterprise led by co-leaders and points at companies like Goldman Sachs, Citigroup, Unilever and Daimler Chrysler all employing the same joint leadership model.

An alternative, departing drastically from all that King III holds dear and sacrificing some independence, is to consider the appointment of an executive chairman who will share some of the CEO’s job. A recent Heidrick & Struggles survey conducted in the UK with 60 FTSE top 100 chairmen suggests that the role of the chairman is changing in any case. Chairmen now, stepping away from their long-established non-executive stance, are becoming more involved and working in a partnering role with the CEO on matters such as strategy and corporate communications.

Because such tough demands are made of the CEOs in South Africa’s crippled state-owned-enterprises, and because so many of them fall by the wayside we have to wonder if a shared, or split role may not help them to establish a more stable and effective corporate leadership.

By now most of the companies listed on the JSE have a non-executive chairman, a single CEO and a predictable structure of board leadership. The question is, should we be re-thinking this established model? Is there a way of reducing stressed-out early departures and adding to the talent pool of CEOs by spreading some of the responsibility and better managing the risk? DM

* The opinions expressed by Johann Redelinghuys are his personal opinions.

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