"Superman is passé"
Von Inga Michler
Clarke Murphy, CEO of the executive search giant Russell Reynolds, about the challenges for modern executives and Germany lagging behind in the women’s advancement.
Welt am Sonntag newspaper: Mr Murphy, when they arrive for job interviews the young generation entering today’s employment market in Germany are not asking about the company car and bonuses – instead, their focus is on parental leave and sabbaticals. Has this shift in mindset also reached the top C-levels?
Clarke Murphy: In the technology sector, clearly yes. People in that field want to decide for themselves when and where they work, and they want a different kind of working environment. And in terms of the companies they work for, they want their aim to be not just about making money, but also about helping to make the world a better place. You can see that quite clearly in California. But also in Singapore. Or in China – in the private technology companies there, things are no different from in Palo Alto.
But the technology sector is, at best, a trailblazer. Someone looking to make a career with a major firm of attorneys or an investment bank still needs to be prepared to put in 80-hour weeks.
The game has changed fundamentally with the generation coming out of the universities in the past five to eight years. It is something that employers in other sectors have now noticed as well. At least for the USA, you can definitely say that there is a strong correlation between a company’s sense of social responsibility and its ability to retain good young talents.
The next generation, at least, is longing for a more relaxed pace – meanwhile the world seems to be turning ever faster, with its many political and technological upheavals. Are today’s bosses still up to the new normality?
I believe that in the period 2009-2011 in many cases we genuinely didn’t have the right CEOs. They were people whose careers had been forged in a robust global growth economy – they weren’t experienced crisis managers. The competencies needed change with the times. In past decades, what was required at times were primarily visions, then outsourcing, and later growth at any price and mergers. The thing that’s different this time is that the speed of change is massive.
What exactly does a manager need to bring to the table to keep up with this speed of change?
Three things are more important than ever today: the willingness to take calculated risks and to act with determination. And the ability to convince people. That’s where it comes down to communication. Anyone who can’t communicate ideas well to employees, customers and business partners has lost.
So we need fit-for-TV salespersons? Doesn’t that suggest a lack of substance?
Someone who is managing a company doesn’t have to be incredibly good-looking and have a charming manner. After all, we’re not looking for film stars. But he or she must be able to get messages across.
And is that something you can learn?
Strategic thinking is something you can’t teach. But you can teach good communication. And many of today’s generation of company CEOs are good communicators. Or have become good communicators over time.
Such as, for example?
Vittorio Colao, CEO of Vodafone, say, or Jamie Dimon at JP Morgan and Stuart Gulliver at HSBC.
And examples of poor communication?
A few years ago there were moments when Siemens found itself in a difficult situation. It could have done with better communications back then.
Volkswagen has become a huge conglomerate, like a number of other company groups in other countries. Is it possible for such an organisation nowadays to be controlled by a single boss?
The Superman approach is passé. In SME-sized family businesses, you might still find iconic characters at the top. But in Dax-30 or Fortune-500 companies they need a strong management team. A boss needs to understand how to put together and coordinate such a team. Then size and complexity aren’t an issue.
To many people, CEOs have become symbolic figures who embody everything that’s wrong with the capitalist global economy. As a group, they are perceived as rapacious and megalomaniac. Rightly so?
Before 2009, things had definitely slipped out of control. But over the intervening period key corrections have taken place. The returns for shareholders and employees have moved back into the centre of focus. And it does come down to that, really. In many cases, bonuses are now tied to the long-term development of the company. And that’s the right approach.
When it comes to remunerating the board, do you believe there are limits to what is acceptable?
There are limits, certainly. But I don’t think you can put a concrete figure on it, as some attempt to do: a director shouldn’t earn more than x times the average employee. If boards are realising long-term, measurable value-added, they ought to be rewarded for it.
In the USA, managers have been sentenced to long spells in prison in some cases for improper conduct such as falsifying balance sheets; Bernie Ebbers at Worldcom and Jeffrey Skilling at Enron were each sentenced to over 20 years. Did the judges go too far?
If you break the law and deceive people, you go to prison. That’s not just the case in the USA – you only have to think of Italy and the Parmalat scandal.
Do managers who act criminally in their job still get off too lightly in Germany?
I’m not in a position to judge. But the sentences in the Mannesmann trial seem very moderate. Given the strong public reaction, you might well have expected a stronger response from the judiciary.
In recent years, German companies have made greater efforts to recruit women to positions on the board. But a noticeably high number of these women have already lost their jobs after just a few years. Is it possible that people were wanting too much too quickly?
No, quite the opposite. Germany hasn’t been moving fast enough on this to date. The fact that some of the women have failed in post may simply be down to bad luck. At its peak under this wave of appointments, there were just 17 women on the board in Dax companies, so the overall numbers involved are very small. I believe that, like companies elsewhere, German companies have no option other than to get more women into senior positions. There are demographic reasons for this. And equally because diversity is a key success factor, as various studies clearly show. Other countries are already further down the line on this. The progress of the "30% Club" initiative in the UK has been enormously successful in last two years.
The USA, Brazil, South Korea, and particularly Singapore too.
And in Europe?
Sweden. Poland, too, is very progressive in this area. But even in Germany, it is not as if there is a lack of talents. There are hundreds of women in Germany who are on track to be able to take on a group CEO post in future.
Are quotas helpful?
I don’t believe in quotas, I believe in promotion through performance. In the past, the issue of women in management positions simply wasn’t so much of a focus for companies. As soon as that truly changes, we will definitely see rapid progress. You don’t need a quota for that.
Your business is under strong competition from the internet. Why do people still need executive search in the era of LinkedIn and Xing?
Our business is all about assessments, and in-depth analyses. It is nowhere near sufficient simply to pull together some facts about a person’s CV. LinkedIn is a wonderful database, and we work with it too. But there are many key things about a person you won’t find there: what motivates them, and possible limiting factors in their personality. We compare the performance capability of individuals and their teams. We put together benchmark studies. And we are also increasingly involved in long-term corporate succession planning. Our clients do always have access to public data – we deliver them strategic surplus value, say, the actual insights and valid statements on cultural fit of a candidate.
Doesn’t that put you in direct competition with the company's internal HR and staff development?
No, we are not competitors, but partners with an independent view coming from outside. If we are contacted three to four years in advance, we manage to fill 70 per cent of board positions with suitable internal candidates. We support them in their individual preparation. We make suggestions on which competencies they still need to work on. Thirty years ago, we were only concerned with finding external candidates. But those days are over.
To read the article in the original German, click here.