CEOs worried by new generation of managers

2007

Many American chief executives are looking over their shoulders at the generation of managers coming up below them and not liking what they see.

A shortage of good quality, talented managers is becoming a growing concern for American CEOs, with many particularly worried about who is going to take over from them when it comes to passing on the reins, a new report has suggested.

A study of 769 global CEOs from 40 countries by the Conference Board found that finding qualified managerial talent and management succession had become the dominant people issues for American CEOs, replacing the cost of healthcare.

The two concerns are closely intertwined because competition for talented managers will become even fiercer as many baby boomers depart the "top of the house" to move into "third-stage careers" and retirement, argued the Conference Board.

Overall, execution of strategy was the key concern for CEOs, even taking precedence over turning in a profit and top-line growth, the study found.

When asked to rate their greatest concerns from among 121 different challenges, the CEOs polled chose excellence of execution as their top challenge, followed by consistent execution of strategy by top management.

Sustained and steady top-line growth, which led the pack last year, now ranked second, with profit growth coming in fourth and finding qualified managerial talent fifth.

"This year's overall top challenge shows that CEOs from around the world are realising that strong execution is a critical factor in driving profits and revenues," said Jonathan Spector, president and chief executive of the Conference Board.

"These executives are also becoming increasingly aware of the crucial role that people play in growing their companies."

After ranking seventh last year, the challenge of employee healthcare benefit costs slipped out of the U.S. top 10 this year, the survey said.

Its lower ranking as a concern was most likely because of a slowing in the rising cost of employee premiums and successful moves by employers to contain the costs of their programmes, it suggested.

This is despite the fact that latest U.S research from consultancy Towers Perrin has calculated that on average American companies will be spending the $9,312 per employee on healthcare costs next year, up 7 per cent on this year.

Nevertheless, the cost of employee healthcare benefits still ranks much higher for U.S CEOs (16th) than it did for CEOs in Asia (where it tied for 69th place) or Europe (71st place), the Conference Board research has pointed out.

CEOs in Asia ranked finding qualified managerial talent as their top concern, perceiving this need as being particularly acute, while it was only the sixth greatest concern for CEOs in Europe and the U.S.

Chief executives in Asia were more focused on seizing opportunities for growth in China (fourth place) than their counterparts in Europe (19th place) and the U.S. (20th place).

The same was true for expanding into India, a challenge top executives from Asia ranked 10th, compared with 27th for European leaders and 30th for their U.S. colleagues.

CEOs from Europe showed a greater concern with getting new, more responsive ideas out sooner, a finding that might be based on the needs of companies operating in a more mature market, said the survey.