11 Jan 2023
How to become a CEO in 2023
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The pandemic placed a spotlight on organizational leadership, revealing which CEOs could lead through disruption, and who could not.
A new paradigm of what constitutes a high-performing leader has emerged, centered around an ability to manage and take advantage of disruption. With disruption mounting rather than slowing down, this profile has become cemented, forming the basis of what organizations now look for when appointing a CEO.
Below, we explore the skills and prior experience first-time CEOs need in 2023, as well as the recent evolution of the role and current market demand.
What skills and attitudes do CEOs need?
The ability to lead an organization through disruption cannot be understated. In our 2022 Leadership Confidence Index, the CEO was voted the most important in successfully managing disruption out of all the C-suite positions.
With inflation, the rising cost of living, technology innovation and the war in Ukraine, managing disruption is now a required leadership skill.
Digital acumen is another skill that was on the horizon before being made essential thanks to the pandemic. During COVID-19, many companies took the opportunity to digitally transform swathes of their organization, accelerating innovation across multiple industries. Now, CEOs need to understand their sector’s level of digital innovation, how their company is going to respond to this, and in turn disrupt competitors with their own digital transformations.
Beyond this, CEOs need to be able to interact with and influence all stakeholder groups. Changing stakeholder expectations – particularly Gen Z employees and investors – means demonstrating humility and admitting when mistakes are made. As part of this, CEOs need to possess high levels of integrity, authenticity, and emotional intelligence.
Likewise, in today’s rapidly changing business environment, CEOs need a level of entrepreneurship, as well as the agility to surround themselves with the brightest people in the room. This requires the ability to build high-performing teams and empower individuals to deliver.
What prior experience do CEOs need?
Some CEOs come from the finance function, R&D, and parts of product development.
Boards like to see early experience in general management and go-to-market, running multiple functions, and owning a P&L or revenue number.
This is ultimately about demonstrating strong commercial acumen in a leadership position. For those who don’t have this experience then it’s necessary to seek additional opportunities. This could be taking on a secondary role or covering two positions, leading a side project or company-wide initiative, or seconding to another function.
How has the CEO role changed since the pandemic?
Since the pandemic, visibility of leaders has increased, ethical standards are stricter, and expectations from stakeholders are higher. All levels of an organization have a voice, which requires a willingness to engage while maintaining a positive perspective. This comes with additional challenges; employee turnover is higher, financial backers are more likely to question decisions, and technology challenges are more frequent. The role requires higher levels of energy, dexterity, and resilience to move from one issue to another.
This is exacerbated by ongoing disruption. Boards expect CEOs to lead acquisitions, generate new product lines, and innovate digitally, all while client-proofing the business during a potential economic downturn.
Despite these expectations, the role is also no longer simply about making a profit.
Building employee engagement and a company culture that inspires people are as important as the plan for revenue generation.
CEOs need a clear view on all aspects of ESG, from climate change to Black Lives Matter, and should be able to articulate why these are important to them personally.
Increasing segments of employees, investors, and customers expect companies to simultaneously generate profit and make the world a better place. For younger employees, this is a non-negotiable when choosing a job, and CEOs therefore now need to embed purpose into the fabric of the organization.
How much competition is there for CEO roles?
There was an exodus of CEOs and other C-suite leaders following the pandemic. A combination of burnout, early retirement, and leaders seeking alternate careers like board director roles, led to high rates of departure.
Shortly after this period, boards began reconsidering leadership teams and whether their CEO was the right person for the job in this new environment. This led to even higher CEO turnover and more opportunities for those who wanted the role. There are therefore a significant number of current CEO job openings.
However, this may be tempered by the economic climate. If inflation and the cost of living persist, then some PE firms may decide some companies cannot survive and conduct roll-ups. They’ll take advantage of poor performing companies and acquire them at good buy rates. This would lead to fewer CEO roles in the first half of the year, and then pick up in the second half as PE firms looked for leaders to run the newly acquired companies.
Tellingly, while the market remains strong, CEO exits show early signs of dipping. The number of CEO changes at US companies fell 4% from September to October last year. According to the report from Challenger, Gray & Christmas, October’s total CEO exits is down 50% from October 2021.
If the trend continues, PE firms are likely to look for experienced CEOs. They’ll want those who wouldn’t need to go through a steep learning curve and could deliver from day one, making it more difficult for candidates to attain a first time CEO position. However, this shouldn’t deter first-time candidates from throwing their hat in the ring – there will be opportunities for those who possess the right skills and behaviors and understand how the role has evolved.
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