Get ready for the postpandemic chief executive officer.
Three of Canada’s largest companies are scouting for new leaders: Canadian National Railway Co.; WestJet; and Nutrien Ltd., which has somehow managed to churn through two CEOs in the past eight months. Rogers Communications Inc. was also on this list until late Monday, when it confirmed what everyone expected by formally enshrining Tony Staffieri – the former chief financial officer – as the new boss.
This trio of companies is promising wide-open leadership races, pitting internal candidates against top global talent. Casting that wide net is wise, and essential.
The pandemic, along with shifting views of the role of a corporation, means the next generation of leaders needs a whole new tool box, according to governance experts. “We’ve experienced unparalleled change in the competitive landscape,” said Tom Long, founder of executive search firm Tom Long Consulting. “Boards, which face their own pressures for renewal, recognize that new challenges demand new skills.”
What new tools does the incoming CEO at one of North America’s largest railways, airlines or fertilizer producers need to succeed? In an interview, Mr. Long rhymed off a list that started with the ability to inspire colleagues and customers in a virtual environment – leading a hybrid business over Zoom, rather than face-to-face. Then he highlighted experience in cybersecurity and running what we now realize are vulnerable global supply chains, along with credibility on diversity and other environmental, social and governance issues.
To win one of the CEO jobs now up for grabs, candidates have to show boards they embody what a potash miner or railroader would refer to as the softer side of business. “CEOs are in the spotlight more than ever, their actions are scrutinized by a larger number of stakeholders,” said a recent study on business succession from executive search firm Heidrick & Struggles. “In this context, leadership capabilities such as agility, empathy, role modelling the organizational purpose, and fostering inclusion matter just as much as specific areas of expertise.”
In contrast, the last generation of railway CEOs seemed to win their jobs simply because they were apostles of Hunter Harrison, and shared the legendary CN Rail boss’s devotion to precision scheduling.
The recent run of CEO departures at major companies is a return to business as usual; the tenure of a chief executive remains around seven years. For the first six months of the pandemic, companies went into survival mode and CEO turnover was almost non-existent. The unexpected departures of leaders at CN Rail and Nutrien demonstrate boards are now willing to jettison the boss, even if they don’t have a clear succession plan in place.
In 2021, CEO turnover set new records, according to the Heidrick & Struggles study, which drew on data from 14 countries. The number of new CEOs appointed in the first six months of last year was up 22 per cent from the same period in 2018, when the previous record was set.
As boards plan for life after Omicron, they are tending to pick internal candidates as the next CEO. Last year, 62 per cent of new CEOs landed the job after an internal promotion, versus 53 per cent the previous year.
That trend would seem to favour the insiders who are currently running WestJet, where the interim CEO is the former chief financial officer, and at Nutrien, where the newly named boss is the former head of the company’s potash division. However, statistics show that in a postpandemic environment, there are different routes to the top job.
“More new CEOs have C-suite experience beyond the traditional CFO and COO roles, including roles such as chief risk officer, chief strategy officer, and chief technology officer,” Heidrick & Struggles said. The study added: “New CEOs are more likely to be women, to be from countries other than where the company is headquartered, to have cross-border experience, and to have advanced degrees.”
Expect to be surprised by the identity, and background, of some of the next generation of leaders at Canada’s largest companies.
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