CEO brief: just keep the company going

The conventional role of a company’s chief executive officer (CEO) in the UAE, as many have known it for long, is going through a makeover, or so it seems.

As businesses operating in the UAE are bracing for changed economic conditions than what they were a couple of years back, a CEO - the top official steering a company’s business - has donned a new avatar, recruitment experts have said.

“Today, a CEO is a different kind of official that a company is looking for. Of course, companies are looking for growth, but at the same time they are looking for stability as well. Consequently, the person who is given a CEO’s job today is more likely to have been a chief financial officer [CFO] in the same company for at least four years, who is much more involved in keeping steadiness by ensuring that overheads are kept low,” said Ian Giulianotti, Associate Director, Recruitment and Training, Nadia, UAE, the recruitment, training and HR consultancy firm.

This is mainly because market conditions have changed today, he said, where being a stable company has assumed more prominence.

“Four years back, the market was like a ship that was travelling far and fast. Now companies are looking for CEOs who know the company’s strategy well and are more financially aware,” said Giulianotti.

He said there is a tendency now to promote an official to the CEO position from within the organisation, rather than hiring a CEO from outside.

“If a company is replacing or hiring a CEO, it’s more likely that they’ll promote a CFO to the level of CEO,” he said.

According to a recent study by Booz & Co, globally the tenure of a CEO is becoming shorter and more intense, the margin for error or underperformance is narrow, and the role increasingly excludes the job of also being chairman.

The study, based on a survey, said there is a trend toward appointing insiders, as insiders tend to perform better and last longer. Four out of every five times, boards around the world choose insider candidates when selecting a CEO, the study added.

“Insider candidates are naturally more knowledgeable about the company and the challenges and opportunities it confronts,” the study noted, adding: “Of the CEOs leaving office, insiders have produced superior regionally market-adjusted shareholder returns in seven of the past 10 years, averaging 2.5 per cent; outsider-generated returns, in comparison, have averaged 1.8 per cent.”

Headhunting firms and recruitment consultants say the skills that are needed today to be a CEO are in many ways different from the skills that were sought two or three years ago. At that time, businesses were in a rapid expansion mode and were looking for new opportunities.

Now, as many businesses are looking for ‘stable’ expansion, the role of the official steering the company towards that direction has also changed.

“The prevailing focus for many CEOs has changed from growth to consolidation. For many CEOs over the past two years, there has been much greater emphasis on cost-control and efficiency within their organisations,” Cliff Single, Commercial Manager, BAC Middle East, told Emirates 24|7.

Experts also said that CEOs are now having to put more emphasis on cost cutting, they are adopting more hands-on approach, and are becoming more commercially involved now, than a few years ago.

“I believe the role of a CEO is very different now. A couple of years ago, the role of a CEO was much more entrepreneurial and was more about growth and expanding the company's businesses. However, over the past two years, a CEO's role has shifted more towards bringing his business in line with changing market conditions,” Mark Baxter, Regional Director (Middle East), FiveTen Group, a global recruitment firm.

Experts, however, argue that the massive transformation in a CEO’s role naturally has its own share of disadvantages too in terms of more pressure to perform.

“In today’s world of rapid change, the role of the CEO is under greater pressure than before. Market turbulence, new technologies, demographic shifts and globalisation have transformed organisational life. In contemporary organisations, the CEO must discern the shape of the institution, articulate and link the inputs of the various stakeholders and forge a clear mission that relates the institution to the larger society,” said Sudeshna Mukherjee, General Manager, Careertunity, a regional online recruitment portal.

However, despite the changing economic circumstances the salaries of CEOs have remained relatively stable for a couple of years, experts say.

“The greatest [salary] declines have been seen in the real estate sector due to the particular challenges in that area,” Single said.

Added Mukherjee: “This region hasn’t experienced the trend of any significant reductions in benefits or salaries to CEOs, especially when compared to other markets such as the US.”

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