Six Priorities for CEOs in Turbulent Times

Last week, McKinsey & Company representatives shared a briefing discussing their recently published special report, What matters most? Six priorities for CEOs in turbulent times. Liz Segel, Senior Partner, Chief Client Officer and Managing Partner, Global Industry Practices, New York and Homayoun Hatami, Senior Partner and Managing Partner, Global Client Capabilities, Paris, shared their insights.

Everyone knows the list of issues that have confronted CEOs the past few years. During these economic headwinds, the reflex may call for hunkering down and weathering the storm, but this is the time when companies can gain ground on rivals, if they play their cards right.

As McKinsey surveyed hundreds of CEOs, they found six priorities top the list of CEO agendas worldwide.  They are:

  1. Resilience
  2. Courage
  3. Grow new businesses
  4. Grow through technology
  5. Stay the course on net zero
  6. Modernize ways of work

Let’s go a little deeper on each priority.

Resilience. It’s the vital “muscle” for companies navigating a disruptive world. Resilience needs to be deployed across six areas: finance, operations, technology, organization, business model and reputation.

Courage. The best chief executives and leaders need to be ambidextrous: careful managing downside while courageously pursuing outside opportunities. These leaders are thinking not just how to make it the next two or three years, but how to reframe the game so their company thrives over the next decade.

Grow the business. More than half of top executives see growing new businesses a top three priority. It’s time to think about building a unicorn and the biggest opportunities are in green technology.

Consistent with McKinsey’s top findings, the recently released PwC 2022 Global CEO Study polled 4400 CEOs. 73% expected global economic growth to decline over the next twelve months. 40% said their companies would not be economically viable over the next decade unless they innovated and transformed at a faster pace.

Technology. It seems all companies are shifting to put software at the heart of their business. But digital transformation is just the start.  Technology is always evolving, providing new opportunities for CEOs who seek to transform their business.

Net zero. The private sector is now engaged in reducing carbon emissions. Economic competitiveness, affordability, national security and sustainability are each important and make up the mosaic for CEOs to knit these concepts together in order to reach net zero.

Modernize the way of work. The final priority is leading people by providing purposeful work with new incentives. CEOs need to carefully consider the office of the future and the implications for top talent. Do these well and you’ll create a competitive advantage.

The CEO is the company’s top strategist and integrator. The McKinsey report provides in-depth readings to give CEOs what they need during this tumultuous time. For CEOs who seek to create an enterprise of great value, this is must reading.

Why are Executive Leadership Teams Failing to Perform?

What Can Be Done?

If you are a CEO and you have lost confidence in the performance of your executive leadership team (top team), you are not alone.  According to a recent study, CEOs, top team members, and their direct reports have all lost confidence in the top team over the last eighteen months.

Results from the Leadership Confidence Index, released last month, shows the confidence leaders have in their top teams has dropped precipitously since mid-2021, falling 7.1%.

Developed by executive search and leadership advisory firm Russell Reynolds Associates, the Leadership Confidence Index captures the views of CEOs, C-suite level leaders, board directors and next generation leaders on their top team. Reflecting on the capability, the behavior and how they respond to key issues, leaders’ confidence in their top teams has trended downward of late.

Three key messages from this study:

  1. CEOs are concerned about their top team members abilities to transform and reinvent the business.
  2. Top team members are concerned how they work collectively as a team, how they lead change, and how they role model a positive culture.
  3. The next-generation leaders (those who report into top team members) have the lowest levels of confidence about top teams, creating potential retention and succession risks.

It doesn’t have to be this way.  Great CEOs are obsessed with the psychology and performance of their top teams.  They care about the dynamics of the team and how the team works together. They know a high performing top team can be a huge value creation lever.

The dynamics of a top team can make or break a company. Investors understand this and cite the quality of the top team as the single most important non-financial factor in evaluating a new IPO. When a top team works together with a common vision and supportive behaviors, the company is twice as likely to have above median financial performance. Yet most senior executives report their team is underperforming. How about you? On a scale of 1 to 10, how is your top team performing today and how should it be performing?

During the new normal as top teams are meeting regularly and in-person again, top teams need to raise their collective games to fulfill the needs of their stakeholders. The need for the top team to perform today and transform for tomorrow is particularly acute in this environment of economic headwinds.

If you are the CEO or a business unit president, consider the following:

  • Is your top team aligned strategically?
  • Is there a healthy working climate within your top team?
  • Do your team members trust one another?
  • Does your top team have the capability to successfully lead the company?
  • Is your top team embracing and leading change effectively?
  • Are your top team members growing, developing and reinventing individually and collectively?
  • Is your top team a positive role model for others within the company?
  • Is your top team transforming your business by embracing the opportunities of digital transformation and of ESG initiatives?
  • Does your top team have the necessary skills and mindsets to capture opportunities this year? In the future?

If you answered “no” to any of these questions, you are not alone. High performing top teams don’t become high performing by accident – they are built and attended to continually. Your top team should create tremendous value and be a competitive advantage. If not, you’ve got a problem.

The good news is as CEO and leader of the team, you can dramatically lift your team’s performance by partnering with a top team coach. Your top team coach will listen to you and show you how to create clarity, increase capability and build commitment within your team.  Through a series of customized team advance sessions, conducted over several months, you can build a high-performing top team while your team works on your business.

During the team advance sessions, all team members get better – individually and collectively. In a relatively short time, with focused effort, they will perform at a higher-level running today’s business, while driving transformation and building the future to which you committed. A top team in which you and your stakeholders will be confident.

What’s the price you pay if your top team is not high performing? Is that a price you can afford? Transforming your current team into a powerfully performing top team, Optimizing Your Top Team, is key for your company to thrive in today’s complex world – a competitive advantage that cannot be duplicated.