CEOs have a lot to worry about, but what are their greatest concerns? What keeps them awake at night? We interviewed 24 CEOs and asked them to name the biggest challenges facing their organizations. (Please note that titles used here reflect the positions the individuals held in 2013, when we conducted the interviews for a separate article). Their concerns fell into three broad categories: talent, operating in a global marketplace, and regulation and legislation. Given that CEOs set the tone and priorities for their organizations, it is important to understand what they interpret as the major challenges and opportunities.
Talent Management
Talent-related issues were the top concern, mentioned by 16 of the CEOs. They had a range of concerns, beginning with finding the right talent. This was especially daunting during periods of change or growth in which companies needed to hire in large numbers. AT&T, for example, had to switch its focus from traditional telecom services to wireless services, and this shift required employees with different skill sets. Randall Stephenson of AT&T explained, “We had 270,000 people we employed around the globe. The lion’s share of these people were out building and installing high-tech infrastructure and doing home installs that were suddenly far more complex than they’d ever been. We’d been hiring a number of people, and finding good, technical people to fill these jobs proved to be very difficult. If we wanted to hire somebody to go install IP services in a home, we interviewed eleven people to find one qualified candidate.”
Once companies hired new talent, new challenges arose, such as how these employees represented the company. Enrique Santacana of ABB North America, a power and automation-technology firm, voiced his concern this way: “An overarching issue was the exposure we had as a company,” Santacana explained, “For example, how information was being used or may be used in a way that was not conducive to good business practices. Having 150,000 employees around the world, once in a while we got a bad apple here and there, and we got problems. The speed at which those problems happened was exponentially increased because of the ability of people to communicate through social media.”
CEOs also worried about whether their high potential employees were being properly developed. One area that proved especially challenging was mobility. Ken Powell of U.S. food processor General Mills, noting that his company was quickly expanding internationally, said, “One of our challenges was how to develop a truly globally mobile culture. That didn’t mean that everybody in the company needed to have that kind of flexibility—it just became more and more important for us that we had a cadre or a group of employees who were willing to pull up their stakes and go to lots of different places.” The challenge then was to foster global mindsets and cultural competencies.
Talent pipelines were also a concern. Woods Staton of Arcos Dorados, the largest operator of McDonald’s restaurants in Latin America, explained, “The big challenge that we had was making sure that we had the right pipeline with good people, making sure that what had made us successful so far with our group of people was being reproduced down the line.” Other talent management concerns that were mentioned once include: motivating people through hard times, retention and development, and managing diversity and cultural differences.
Operating in a Global Marketplace
Eight of the CEOs pointed to the challenges of operating in a fast-paced global marketplace. For Paul Block of Merisant, which makes artificial sweeteners, one problem was currency. “We had currency issues because the global economies had been somewhat volatile. So, you had currencies going up and down, and we crossed currencies because we sold in over 90 countries and manufactured in over five or six countries. Currency really had a big effect.”
Staton identified the challenge of managing a global brand: “We had the McDonald’s brand, and in each country our market share and the product life cycle were in different stages. You had some countries in which we were mature or very, very strong and very, very good, like Brazil. Others, like Mexico, offered more of a challenge to us. We had more competition, be it from our own direct competitors or from street vendors and food stalls. So the challenge was to have the broad marketing strategies with local adaptations.”
Some CEOs worried about setting direction and tone for the company across regions. “I would say the biggest challenge that I faced was making sure the organization stayed very focused, thinking about the trends that were shaping the world and what we were going to need to do organizationally to win in the long-term,” said Jim Turley of accounting firm Ernst & Young. “It was very much about capital shifts and demographic shifts that were taking place in the world. We wanted to keep those two things in the forefront of our thinking and driving our strategy and execution. That was something that I spent a lot of time thinking about.”
Another challenge was to establish and maintain a consistent company culture across different regions. Tim Solso, of the engine manufacturer Cummins, spoke for many when he said, “I think an issue we had was that we were a good multinational company that was headquartered in the United States. We were not a global company yet. How did we make sure that our policies and processes reflected the world we lived in, not just where our headquarters were?”
Regulation and Legislation
Finally, five CEOs cited the challenges of leading a company amid shifting regulation and legislation. For example, David Thodey at Australian telecom Telstra explained, “The telecommunications industry was heavily regulated around the world and we had been going through a series of negotiations with the Australian government. The government was going to pass $11 billion to migrate customers off the copper network to a fiber network over seven to eight years. We were seeing just enormous change in how we needed to act, and behave, and how we needed to drive cost out of the business.”
Healthcare industry chiefs were particularly vexed by changes in legislation and regulation. Ken Frazier of the pharmaceutical firm Merck, put it this way: “The biggest challenges that we faced in our organization was that healthcare in general was undergoing huge, huge pivotal change. As a pharmaceutical company, we obviously were part of that whole ecosystem. Many of the established ways of creating value in this industry were no longer as viable as they used to be. The biggest challenge we faced as an organization was change.” Angela Braly of the managed-care firm Wellpoint spoke about how healthcare reform was changing the focus of her business: “We were really working to transform ourselves as an organization and to help transform healthcare in the United States from a system that had in many respects been business to business. Most of our customers historically were employers, and there was a big transition we were anticipating partly as a result of healthcare reform, but we thought it should be our driving force in any event, to be a truly consumer-focused company.”
Change and new challenges are inevitable, so CEOs must be skilled at taking on a wide range of both internal and external challenges facing their companies, including setting priorities and setting others up for success. As David Thodey put it, “Leadership was pretty important. People observed what I did and what I spent my time on. As a CEO, how you spent your time became more and more important as you went along.”
As a leader in your organization, what keeps you awake at night?
