Knowledge Center: Article
CEOs Drive Toward Purpose Amid Massive Change1/19/2017
The concept of purpose took center stage at an event dedicated to improving corporate performance and held at the World Economic Forum in Davos on January 19. Heidrick & Struggles shared findings from its multiyear research effort aimed at increasing speed and agility of companies trying to keep up with the pace of market change and disruption.
More than 110 senior executives attended the launch of a new book co-written by Colin Price, executive vice president and global managing partner of Heidrick & Struggles’ Leadership Consulting Practice, and Sharon Toye, a partner in the firm’s London office.
Accelerating Performance: How to Mobilize, Execute, and Transform with Agility is based on research carried out over seven years analyzing how certain companies in the FT 500 create value and build momentum faster than their competitors do. It identifies the drive factors of 23 “superaccelerating” companies that consistently outperform their competitors and the drag factors that hold other companies back.
A defining characteristic of the leaders of the most successful companies, Price said, is that they use purpose to engage with their people more deeply: “These leaders also have the humility to correct their own leadership behaviors to engage their teams and the broader organization.”
The event’s panel included four chief executives: Natarajan Chandrasekaran, who will assume the role of chairman of Tata Sons in February; James C. Smith, president and CEO of Thomson Reuters; Dan Schulman, CEO of PayPal; and Ilene Gordon, chairman and CEO of Ingredion.
The importance of purpose and values was echoed by several of the panelists. “I believe that it is all about getting attitude right across the whole company,” Chandrasekaran said. Fear of reprisal is not an effective motivator and does not align employees to the company’s purpose, he said. “People should fear losing customers; they should not fear losing their jobs.”
For Schulman, authentic leadership includes two approaches to transparency in communicating to the organization: defining reality and inspiring hope. Hope, he believes, comes directly from the higher purpose of the company as an agent for positive change in the communities it touches. “Businesses have a moral obligation to be a force for good in the world,” he said. “You cannot just hang values up on the wall; you need to live them every day. And you cannot back down from your values or your employees will call you on it.”
In a fast-moving world, processes that become overly complex slow down the company, acting as drag factors. “We try to manage complexity within the organization and start with what the customer is looking to us to provide,” remarked Smith.
Change is not a temporary phenomenon to be waited out, Smith noted. “The organization wants to get through change, to be done with it. We have to actively work to have our people realize that change is going to be continual. And to be good at change, you have to actively work at it.” But Smith also contended that continual structural change is not the answer: “I cannot draw org charts fast enough to keep pace with the change in the world.”
Employees of a company acquired by another company often worry that they will be forgotten within the bigger organization, said Gordon. “It is critical to let people know that they are important because they add value to the culture of the whole enterprise.”
Price noted that the relative speed and agility of the top management team is the “rate regulator” for the pace of the organization: “The organization cannot move any faster than the top team and yet we have found the most senior teams often have the worst tendency toward drag factors that hurt performance.”