The Secrets of CEOs


15 October 2008 Andrew Cave


In an exclusive extract from their book The Secrets of CEOs, authors Steve Tappin and Andrew Cave examine the real lives of 150 CEOs, including the sacrifices they make and who they turn to in times of trouble.


Life at the top isn’t all it’s made out to be. That’s one of the main findings from our interviews with the leaders of top global companies. So what are their lives really like?

The chief executives leading our biggest companies are still largely 20 century leaders. About 60% of them can be more accurately classed as professional managers than leaders. They’re running organisations with tens or hundreds of thousands of employees all over the world, but have become overburdened with processes, red tape, and day-to-day minutiae.

Today’s chief executives are wrestling with their professional lives. They don’t have long to prove themselves to impatient stake-holders and this task is made all the harder by huge confusion about who they are actually running their companies for and what to focus on most.

Our chief executives are grappling with leadership. About 50% admit they find the job intensely lonely and don’t know who to turn to for advice. A common response was: "I can’t talk to the chairman because in the end he’s the one who is going to fire me. I can’t talk to my finance director because ultimately I’m going to fire him, and I can’t tell my wife because I never see her and when I do, that’s the last thing she’ll want to talk about."

Many top chief executives also find it difficult to have time for a fulfilling personal life. They spend years getting to the top and then give up virtually all their personal time to doing the job before they’re either ousted with a payoff or, with luck, retire on a generous pension.

Who are we doing this for?

One might think that it’s clear enough who chief executives run their organisations for. After all, companies are owned by shareholders, who put up the capital for them to grow, whether organically or by acquisition. It is shareholders who can vote down a CEO’s remuneration, as happened with GlaxoSmithKline chief executive Jean-Pierre Garnier. They can also, of course, liaise with the chairman and the senior independent director to force the CEO out.

However, our research found a surprising division of opinion on the issue of who the most important stakeholders of a public company really are. Some 38% of the CEOs we interviewed said that shareholders are their most important stakeholders, but 24% said that customers are more important and 13% valued their staff above all others. The remaining 25% saw all stakeholders as ranked equally.

Gareth Davis, chief executive of Imperial Tobacco, is typical of the shareholder lobby. "Everything revolves around the shareholder," he says. "We live for the shareholder." Another chief executive is even more voluble: "The most important stakeholder has to be the shareholder. Everyone says businesses have to do something in philanthropy to solve the world’s problems, but it is not our money. It belongs to the shareholders."

Mike Roney, chief executive of plastics group Bunzl, shares this view: "Certainly in the UK and the US, you have to say that the share-holder is the leading stakeholder. Without that, you are not in business." Clearly, chief executives need to take account of their shareholders. After all, not many survive for long if they ignore them.

However, some chief executives believe with equal conviction that other stakeholders are more important. In part this reflects the management style of particular CEOs, but it also depends on the industry in which they operate. Retail and banking chief executives, for example, are almost unanimous in saying that they put customers above even shareholders. Mervyn Davies, chairman and former chief Standard Chartered, explains: "You have got to keep your customers; you have got to think about them and be very customer-centric. The reason why chief executives become chairman at so many banks is because of the importance of continuity in the relationships with customers. A non-executive cannot provide those sorts of important relationships with customers, governments, and regulators."

Peter Johnson, former chairman of international motor distribution group Inchcape, adds: "Ultimately the most important people are customers because if they don’t like what you’re doing, you have nothing." James Bilefield, former CEO of internet advertising technology group OpenX and director at Skype, is another chief executive who is clear that customers have to come first. As he says, "It starts and ends with the customer, it has to be the customer. It’s the customer, stupid. Technically and legally, you have to put the share-holders first, but to deliver for them you have to put delighting customers at the core of all that you do."

"Many top chief executives also find it difficult to have time for a fulfilling personal life."

Then there are chief executives who say that they run their companies for their staff, before shareholders and customers. Such CEOs tend to be in multinational industrial or commodity-based businesses. For example, Alan Murray, former chief executive of building materials group Hanson, says: "Employees are very important. We have 1,800 sites worldwide. We cannot supervise all the people all the time, so we need people to understand the culture and what they can do and cannot do. We have to make sure that everyone understands the message and that everyone understands the message in the same way." Brad Mills, chief executive of mining group Lonmin, also selects employees as his most important stakeholder, as does Chip Hornsby, chief executive of international plumbers’ merchants Wolseley.

The most sensible approach for an aspiring chief executive, however, is probably to try to embrace all three major stakeholder groups. Sandy Crombie, chief executive of life insurance group Standard Life, believes that looking after the needs of shareholders, customers, and staff should be an "unbreakable circle" that helps reinforce each other. Eric Daniels, chief executive of banking group Lloyds TSB, agrees: "Ultimately if you neglect any of your stakeholders you will have a problem, if you are about building a long-term customer franchise, you cannot do it without your employees, your regulator, and your shareholders giving you the luxury of the time to do it in."

Andy Harrison, chief executive of budget airline easyJet, is perhaps the most succinct at summing this up. "If you’re not focused on your customers, nothing works," he says. "If you’re not focused on your people it becomes very tough, and if you don’t look after your shareholders that’s very tough as well. You have to strike a balance. Choosing one is unsustainable."

Being the boss is tough

To be the final decision maker in a multibillion-dollar business with hundreds of thousands of employees and pensioners relying on you is an awesome responsibility. The stresses placed on CEOs almost require them to be superhuman and they are not always that well prepared for the role. As Graham Wallace, the former Cable & Wireless chief executive, says: "Often CEOs have excelled in a very different job and the skills that have made them successful are not necessarily the ones that will make them successful as a major company chief executive."

Many CEOs have particular weaknesses that they need help to address. Some find it difficult suddenly to be in charge of people who were previously their peers. Others consider that their position prevents them from forming close relationships with their teams and some feel forced to resort to rather unlikely sources of support.

One FTSE100 financial services boss brings an actress into head office every month to train him how to act out the CEO role. He justifies this by explaining that he is an introvert and has to learn to perform for staff, the media, shareholders, and analysts. "I am a very shy individual," he reveals. "I would not naturally engage with people. It’s just a management style I have developed over the years. We all put on a show. We are all actors and I have learnt to act. The actress comes in and coaches me in body language, presentation style, and public speaking. I am an introvert and introverts get drawn in. I don’t need to have a high regard for friendships or closeness. I can retain my intellectual distance with people who work for me."

Similarly, the boss of a FTSE100 ser vices company chooses to bring a singer into group headquarters for much the same reason. "It’s very difficult for someone like me who’s quite reserved because I have to talk to a lot of people outside the business and to stakeholders so it is very challenging," he says. "I work with a voice coach who is an actress. She says, for example, ‘What emotion do you want to convey?’ and I say that maybe I want to convey more emotion in a presentation. She teaches me to do it."

A widespread problem for CEOs is a difficulty in engaging with their emotions. Leaders are meant to be dispassionate about difficult decisions, but Alan Watkins, who runs executive coaching consultancy Cardiac Coherence, believes that some take this to extremes. "Their tendency not to be attached to the emotional side of things gets to be exaggerated," he says, "and this blindness to human needs really reduces their leadership effectiveness. Unfortunately, many chief executives are managing rather than leading."

Watkins considers that chief executives are overworked and focused on driving out results while struggling with processes, so that they often achieve by perspiration, sheer willpower, and by shutting down their emotions. "Chief executives need to be motivated and more passionate," he says. "And to do that, they need to understand themselves better."

"CEOs have to learn to be tough, resilient, and self-sufficient."

Another business coach recalls the case of a chief executive client who was particularly devoid of emotion. He recalls: "I asked him to think of a time in his life when he had felt really passionate about something and he sat in silence before eventually saying: ‘No, I have never felt that.’" The coach asked him whether he had felt emotional when he scored a goal as a 9-year-old and again an unflinching "No" was the response. Then the coach asked the CEO to decide the emotion that would most describe him. "All he could think of was being even-tempered," says the coach. "He worked so hard to keep his emotions in check that the strongest one he felt was being controlled."

While these examples are extreme, many CEOs do find they need support to cope with the huge pressures of the role. They get this support from a range of sources. Tony Froggatt, the former chief executive of brewer Scottish & Newcastle, leans heavily on his wife, who is a former human resources director at Whitbread and Australian services group Brambles. "I’m fortunate she is so understanding of the pressures," he says.

Other CEOs draw strength from the advice of their chairmen, and many turn to professional coaches: 39% of the FTSE100 chief executives we interviewed said they have used one. Andy Harrison articulates the reason: "It‘s very hard if your team become friends because you may have to fire them," he says. "You should get close enough to your team to talk about business issues but not get too close to them and risk losing a degree of objectivity." However, coaches are not universally praised. "If you look at coaches and mentors, they are generally people who have not actually run big businesses themselves so how can they tell you how to do it?" asks Sir Martin Sorrell, chief executive of advertising giant WPP Group. "They’re shrinks." Richard Pym, former chief executive of banking group Alliance & Leicester, agrees. "Some of these coach people are just weird," he adds.

It’s clear that, whatever support network they build, loneliness is part of the role. "If you are lonely, get a dog," says Mike Roney, somewhat unsympathetically. "But the chief executive’s job is solitary. You really don’t have a peer group in the same way that you have when you’re one of a number of executives working at a larger company. It’s not like the times when you could meet up with your peer group and listen to someone say that your boss is an idiot." Ultimately, CEOs have to learn to be tough, resilient, and self-sufficient. For some this comes naturally; for others it needs to be learnt.

©Extracted from The Secrets of CEOS: 150 Global Chief Executives Lift the Lid on Business, Life & Leadership by Steve Tappin and Andrew Cave, Nicholas Brealey Publishing, rrp £18.00 for more information and exclusive downloads go to www.thesecretsofceos.com. Available from all good bookshops.