Under Pressure

Brian Sullivan has been chairman and CEO of executive search firm Christian & Timbers since September 2004. He has worked in the recruitment sector for over 20 years. In 1988 he founded Sullivan & Company, a financial services search firm, eventually selling it to Heidrick & Struggles International in 1999, where he served as vice chairman and built the global financial services practice into the largest of its kind in the search industry.

1. What kinds of issues are troubling CEOs today?

The biggest concern from the CEO perspective is: "Am I going to get done what is necessary in order for this organisation to perform?" Do you have the right people around you, and can you rely on them?

2. Is talent management the key competitive battlefield?

The things that Jack Welch preached, such as quality, Six Sigma and inventory turnaround, are all pretty much ingrained in corporations now.

Today, the separation of winners and losers is about recruiting the brightest people and motivating and developing them. If not, those people will leave, possibly taking others with them. Once you lose talented individuals, you lose intellectual capital. So the whole issue of talent management and talent acquisition is right up there on the CEO's list.

3. CEOs appear to be under increasing scrutiny and pressure?

The visibility and exposure is way beyond anything we have seen before. It has gone beyond the CEO's relationship with the board, and the board's confidence in the CEO; it is now being driven by City analysts and institutional investors, who are all fearful of an uprising involving the small shareholders or the unions.

As a result, institutions are putting incredible pressure on boards to anticipate events that are just not possible for boards to anticipate.

4. Does this increased scrutiny affect the ability of CEOs to address the day-to-day business of the company?

Once, CEOs had a relationship with the chairman of the board, and de facto, with other board members. Now, as the amount of scrutiny that the individual board members are under reaches an all-time high, CEOs must spend more time working the board to build a strong relationship with each board member.

We have almost reached the situation where the CEO has to work the board members at the expense of focusing on the company's operations.

5. What's your view of performance-related compensation?

When it comes to relating performance to compensation, we are now shooting arrows at each other. Everyone agrees that pay for performance makes terrific sense. But how do you know that the company has performed?

Some people are saying that just because the stock goes up, it doesn't mean that the performance of the organisation is good. They relate performance to increases in free cash flow. It is beginning to get ludicrous.

6. How should you measure the company's performance?

When it comes to performance, there is only one reason a CEO should get fired – setting aside misconduct, obviously – and that is if the stock underperforms. If the stock performs well, pay the CEO accordingly. That's what the CEO is there to achieve.

It is unfair for CEOs not to benefit from the performance of the company just because the overall market is up. If the market goes south they get the downside. Even in an up market there are plenty of companies that go sideways or down.

7. The challenges that CEOs face and the complexity of their task appear enormous.

Absolutely, and a lot of it is not market driven; a lot of it is this shift in governance, for example. The pendulum has swung too far, and I am waiting for it to return, with a focus on operations.

8. Do we expect too much from CEOs?

Yes. We are prioritising the wrong things. We have taken away a lot of their independence and their ability to make decisions. We expect them to move quickly, while at the same time burdening them with all this process, and what I consider to be misaligned responsibilities.

9. What about the recent stock options problems?

I bet very few CEOs went into stock options backdating, knowing that it was illegal.

If CEOs made decisions, with full disclosure – having spoken to their compensation consultants, to HR, to their CFOs – and took the best advice at the time, and it now turns out that those decisions are wrong, and that they are going to be held responsible, to the point where they are thrown out, how can they be comfortable taking any decisions?

10. How does this affect CEOs' ability to perform?

CEOs go to bed at night now worrying about what will be next. They worry that someone will decide that something they are doing is unacceptable after the fact, and that they will get thrown out as a result.

It has absolutely nothing to do with competition, or the marketplace, and it comes out of nowhere. It is this kind of thing that drives CEOs crazy.

11. What other types of known unknowns bother the CEO?

There is the business interruption issue. You run a manufacturing business in Central or Western Europe and suddenly Russia decides not to pump oil through Belarus. How do you control that risk? How you do even anticipate it? This kind of interruption can be so severe your business never recovers from it.

Or a company brings out a radically new product. You have just invested a lot of money manufacturing buggy whips, and Ford produces the first automobile. Your market share doesn't dip from 40% to 25%, but from 40% to zero.

12. How do CEOs prepare for these types of discontinuities?

They recruit people, spend a lot of time with industry experts, with the intermediaries who deal with their competitors – management consultants, accountants, investment bankers, stock market analysts, headhunters. They try to get a sense of what is going on out there.

13. So the World Economic Forum at Davos isn't just a good opportunity to go skiing?

Believe me, CEOs can ski anywhere they want, anytime they want. But how often can they get five of their competitors in the same city, and hope that someone lets something slip?

14. As the CEO role becomes more complex and challenging, there must come a time when talented executives don't want the job?

That's what is fuelling many of the private equity initiatives. If the CEO tells the private equity board members that results for the next two quarters are going to be lousy, but then they will take off like a rocket, they understand. Much more so than the stock market analysts and the institutional or individual investors, where the judgement is made on a quarter-to-quarter basis.

15. Isn't there an irony there though?

The irony is that often the goal of the private equity firm is to buy a public company, turn it around, get it going, and then take it public again.

16. Tell me about your own job as CEO. How do you describe your role?

I need to be with my partners, I need to help them with my clients, I need to recruit other people who are similarly skilled so that we can continue to build this business and make it easier for all the partners to serve our clients and make money.

17. Where do you tend to work from?

The way I would describe it is that my PA is in New York, and I live on a plane with a BlackBerry.

18. How much travelling do you do?

I travel 90% of the time. I have to spend a lot of time with clients and partners. There's only one way to do that: face to face.

In the professional services business especially, you have to touch people. You have to spend time with them, look them in the eye; they have to know you care about them; it is a very personalised business.

19. With all that travelling, the work-life balance must be a challenge?

During June and July, when my children are not in school, my family will relocate to London. It will help me run the global business more effectively because of time differences, and it will allow me to spend time with the partners that I don't get to see as much, and maybe even see my family.

20. Won't the time differences just enable you to work a 24-hour day?

Possibly, but I'll be trying not to.