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COMMUNITY UPDATE

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As we face a potential upturn in the economy, CEOs must surely be looking at their boards and asking whether they have the right mix of skills and expertise. Now is the time for leaders to be shaping an executive team which is geared up to maximise opportunities for growth and rapid recovery. Questions around what skills the board lacks need to be addressed, as well as what can be done to motivate existing c-suite members.  

Clearly the focus of the board will need to shift as we enter a more positive environment. As Ian Harley, Non-executive Director, John Menzies plc, Chairman, Rentokil Initial Trustee Ltd and Associate, Criticaleye explains: "The challenges, and skills required, are very different in the upswing as opposed to the downswing. There will, therefore, need to be a degree of intellectual re-tooling as we emerge from the current crisis. This is an opportunity to take a chance on a new generation of leaders who have experienced the downturn, but are not scarred by it. Given enough rope, these people either hang themselves or skip, in my experience. So now is the time to give them the opportunity."

Old or new, c-suite executives will need particular characteristics to be successful. What the recession has highlighted very clearly, is that in the new economic and commercial reality, there is no place for senior executives who can't take hard and fast decisions. Michael Jackson, Executive Chairman, Elderstreet Investments Ltd explains: "The downturn has demonstrated to heads of organisations that they need c-suite executives who are realists, individuals who are prepared to take tough decisions and cut costs if necessary. I believe this will be front of mind for all CEOs thinking about the skills on their board. Leaders need a management team that will take hard harsh decisions for the greater good of driving the business forward." 

CEOs will also need executives with an acute understanding of the nature and implications of risk. As before, old and new executives on the c-suite will need the ability to manage risk carefully as Professor Sir Andrew Likierman, Dean, London Business School explains: "Moving out of the worst of the recession, boards will need to ensure that the lessons learned in risk management are not forgotten. Risk analysis should form part of planning, budgeting and board reporting in good times as well as bad. This doesn't just mean the obvious areas, such as currencies and major projects. It means managing the risk portfolio with the implications of not taking action also clearly set out. It's about risk management, not risk avoidance."

In larger companies with multiple boards and senior management teams, we are likely to see greater movement of executives within the organisation. This will be especially true if companies need to utilise talent in areas of the business where there is most opportunity. Martyn Fisher, Managing Director, ELGA Process Water, Veolia Water Solutions and Technologies explains: "The recession has certainly given boards a better appreciation of how individuals in the c-suite perform in difficult times. In larger, multinational organisations, I believe we will see greater internal movement of senior executives to other, more opportunistic locations as companies recognise current limitations in traditional markets and seek to match proven performers to regions with the highest global business return. Individuals themselves are likely to be looking for moves to new roles or locations where they can have the most impact." 

We have a range of insights designed to help CEOs and leaders address the challenges outlined in today's update. There are two dedicated pages on the subject including our CEO page and Leadership and Board Issues page. Both cover topics including corporate governance, shareholder and investor relations and issues for Non-executives. I would direct you towards Rethinking the Basics of Corporate Governancea Criticaleye article by one of our Associate's Bob Garrett which asks some fundamental questions about how corporate governance will develop. Also see the Write-up of our latest CEO Breakfast - September 2009, to bring you up to speed on the topics impacting leaders in the current climate.

Our CEO breakfasts and events for Non-executive Directors also provide a platform for those of you in leadership roles to ask questions about your boards, how they should be made up and what skills will be needed in the post-recession environment.

I look forward to seeing you all soon, 

Matthew