CEOs may not admit it publicly, but many are losing faith in their direct reports.
A recent survey by Russell Reynolds found that, compared to early 2021, chief executives of public companies are not as confident that their C-suite leaders have the agility it takes to meet today’s challenges. CEO trust that their team can model leadership behavior, another metric captured by the index, is also sinking.
Out of a possible 100 points on the Russell Reynolds’ Leadership Confidence Index, CEO confidence in top teams dropped from 74.2 in early 2021 to 65.7 at the end of last year.
“We’re all coming out of this kumbaya pandemic,” Constantine Alexandrakis, president and CEO of Russell Reynolds Associates, tells Fortune. Last year, leaders felt pleased with their performance, especially in light of the extraordinary challenges. They thought: “Wow, that was a big deal, and we made it through. We built up our resilience. We can basically tackle anything,” Alexandrakis says. “There was a halo that developed over the corporate world.”
That warm glow didn’t survive 2022. How could it? In the years immediately preceding the pandemic, CEOs lost little sleep over geopolitical issues, inflation, interest rates, and faltering global markets, but those concerns and others came rushing to the forefront—at the same time—last year. “Everyone went through their budgeting and planning process and realized that it’s almost impossible to plan for the unpredictability of 2023,” says Alexandrakis. Confidence took a hit as a result. CEOs now see weaknesses in their C-level executives’ ability to tackle hot-button issues like digital transformation, DEI, and climate change.
Although the survey reached more than 1,300 CEOs, the index is too new to tell us about lasting trends. The same speed of change that’s making CEOs nervous also means this survey could turn out dramatically different results six months from now, Alexandrakis notes.
However, the figures speak volumes about the current mood in the upper corporate ranks, and leadership pressures. For example, the index shows that the C-suite is facing heightened doubts from above and below. Next-generation leaders, who sit one or two levels below the C-suite, “are growing concerned about how the leaders above them role model behaviors, operate as a team, and manage change,” the report states.
Interestingly, surveyed board members showed the greatest confidence in companies’ executive teams—which could be read as a bug or a feature. Perhaps directors are out of touch, too ready to believe the stories told to them about digital transformation or DEI progress at a company. A more optimistic take is that boards may be less vulnerable to short-term turbulence and its attendant concerns because directors consider long-term perspectives.
Either way, the index suggests that boards and CEOs need to act fast. Boards that do not deeply understand an executive team’s strengths and vulnerabilities must develop that now and build short-, mid-, and long-term succession plans. Boards must also help fill talent gaps and shore up skills in executives who are not inspiring confidence, Alexandrakis says. More importantly, CEOs must be optimistic about their teams’ abilities. “You don’t want to create a self-fulfilling prophecy,” he warns.
A Word of Advice
“The idea is not a quota for women, but gender balance.”
—Darren Rosenblum, a law professor at McGill University in Quebec, responds to a new proposal in Hawaii mandating that boards have at least one male or non-binary director and one female or non-binary director by the end of 2023
On the Agenda
👓 Read: Sometimes progress happens all at once. Between May 1, 2021, and April 30, 2022, companies in the S&P 500 named more Black women to their ranks than in any other 12-month period in the past 15 years, the Wall Street Journal reports.
🎧 Listen: Guy Raz, host of the überpopular podcast How I Built This, shares leadership insights and tales from his reporting on Harvard Business Review’s IdeaCast.
📖 Bookmark: Not all boards have prioritized building strong bonds with employees, vendors, and shareholders, even though leaders agree that stakeholder trust is essential to building a business with longevity. Look for pro tips for embedding trust management into your governance strategy in Deloitte's recent white paper.
David Tolley, former CFO of Intelsat, was named to WeWork's board of directors, replacing Kirthiga Reddy. Sun Life tapped Joseph Natale, former CEO of Rogers Communications and Telus, as an independent director. Cognizant appointed Eric Branderiz, former CFO at Enphase and former chief accounting officer at Tesla, to its board. Linnie Haynesworth, a former executive at Northrop Grumman Corporation, joins Eastman Chemical's board.
- Disney announced layoffs and restructuring plans that apparently satisfied activist investor Nelson Peltz. He says his battle for a board seat is over.
- The environmental law firm and Shell shareholder ClientEarth is suing 11 members of Shell’s board for breaking company rules that say the oil and gas company's strategy must align with Paris Agreement targets.
- Google got ahead of its skis in launching the A.I.-powered chatbot Bard, its response to ChatGPT. During a demonstration, Bard answered a sample question incorrectly, spooking investors and sparking a drop in Google’s share price.
- Women should feel more secure and empowered as they gain decades of career experience. Instead, between menopause and workplace ageism, they often face a crisis of confidence.
I love a deep dive into a weird niche topic, so I fell head over heels for writer Kim Severson’s recent feature about candy hearts—specifically the messages on these Valentine’s Day sweets—as a reflection of changing times.
The business of making tiny sugar hearts engraved with phrases like “Be Mine," “Hep Cat,” and, more recently, “Bae” began in the early 1900s, Severson reports in the New York Times. Modern Board readers might feel inspired, or at least charmed, by how the confections have not only survived but kept up with trends.
Here’s a snippet:
“Last year, as the nation was still recovering, the [Sprangler Candy] company introduced 16 supportive slogans like ‘Youda Best,’ ‘Fear Less’ and ‘Good Job.’ The idea, the company said, was to give people a lift.
Fans of more passionate slogans may not have been pleased, but Helen Fisher, a senior research fellow at the Kinsey Institute and the author of six books on love, sex and the brain, said the less amorous messages marked a cultural turning point.
‘These candy hearts are yet another expression of this huge societal change since the pandemic,’ she said. ‘It’s this theme of attachment. Much of the world is going to settle down, and along with that they’re looking not only for romantic love but also for deep, long-term attachment.’”
Read the rest here, and have some bonbons this weekend.
Correction: A previous version of this newsletter incorrectly stated that David Tolley is the CFO of Intelsat. He is that company's former CFO.
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