Each year, the Conference Board's CEO Challenge Survey asks hundreds of senior executives from around the world to identify and rate their most pressing concerns. Finding qualified managers, managing talent and planning for succession have been placed on the back burner according to a new CEO survey. Borrowing from the Alan Greenspan's now infamous description of "irrational exuberance," this current state of affairs might be defined by "irrational incompetence" when it comes to managing what these same CEOs used to refer as their companies' most important assets.
Following are some key results of the Conference Board’s CEO Challenge Survey:
(Note: Numbers in parentheses show July/August 2008 rankings compared to those in the fall 2008).
Global Top 10: CEO Challenges Due to Financial Crisis
1. Excellence in execution (1)
2. Consistent execution of strategy by top management (3)
3. Speed, flexibility, adaptability to change (7)
4. Global economic performance (16)
5. Global risk, including liquidity, volatility, and credit risk (11)
6. Sustained and stead top-line growth (2)
7. Customer loyalty/retention (5)
8. Improving productivity (9)
9. Business confidence (34)
10. Profit growth (4)
The list reveals several key findings – several indicating a serious case of short-sightedness and contradictions:
1. With no control over a turbulent global economy, CEOs are focused on leading their companies’ reaction to it. That's a good thing. They see their most important job as effectively executing strategy in the context of today’s global marketplace chaos. But what boils to the top is this: does that management team that got them into this mean have the capability to get them out? Weren't these same people executing the strategy before? Or were they so focused on execution that they neglected to keep their eyes and ears open to what was going on around them and ahead of them. And that leads me to my second finding.
2. The crisis has led CEOs to focus on “bread and butter” survival issues, while longer-term challenges, especially in talent management, are deemphasized. Talent management can't take a back-seat. It's the engine that will drive the strategy. To execute effectively, these CEOs see speed, flexibility, and adaptability to change as more important than ever; it ascends to 3rd place from 7th. The number who rate speed, flexibility, adaptability to change as being one of their greatest concerns almost doubles.
But unless execution is completely automated, doesn't its effectiveness depend upon the ability of its talent to deal with the complexity, adapt quickly to changes, and recognize and anticipate accurately the outcomes of subtle trends. So how can a business back-burner talent management when its very future is predicated upon having the only the best and brightest find a way out of this mess?
It's apparently easy.
Finding qualified managerial talent, which placed among the Top 10 challenges two years running (2007 and 2008 July/August), fell eight places and out of the Top 10 altogether in the October survey. Only two of 20 people-related challenges rise in ranking: employee efficiency and the cost of employee healthcare benefits—both of which are direct bottom-line contributors. But employee efficiency is related to something I've been harping on for years. When the complexity deepens, the pace quickens, and the future is uncertain, the talent that got a business to where it is may not be the right talent to get it where it wants to go.
The crisis is amplifying a de-emphasis on people issues, potentially worsening what economic conditions had already put into play. In today’s even looser labor market, CEOs appear assured that talent will be there when, how, and if they need it. That's a mistake of apocalyptic proportions.
The crisis has already demonstrated without a doubt that the talent supply to understand, no less lead us out of this mess, is scarce. Current talent loaded with strategies and skills for the past are no match for the current and future needs.
When this crisis is finally defused, the talent pool will be older and still unprepared. The aging workforce is still getting older. The skill gaps will have become wider as funding for training and development has been slashed. Technology will be more advanced requiring different skills. You just can't bookmark talent management and expect in a year or two to go back and pick up where you left off. The quantity of job seekers may be larger but the quality of the talent won’t be.
It just goes to show that all the rhetoric about getting the right people on the bus was just that – rhetoric. The route has been diverted but the same team is driving. While the destination may still be realistic, the path to get there isn't. While hiring and succession planning initiatives may be become secondary to keeping the lights on, the organization will soon run out of gas if current talent isn't up and ready for the journey.
Assessing the capability, potential, and resiliency of the current workforce – and especially senior management – to both weather the storm and anticipate a successful recovery is absolutely necessary.
It is apparent from my daily interactions with managers and employees and the implosion of so many businesses that this short-sightedness is epidemic. This means that many organizations are missing opportunities to better position themselves talent-wise both immediately and when the economy turns around.