What Keeps C-Suite Operations & Supply Chain Leaders Up at Night

The unprecedented change of the past few years have placed C-suite operations & supply chain leaders on the frontlines of disruption, asking them to navigate through challenges while delivering on customer expectations. With prolonged challenges, the roles of those leaders are far from “business as usual.” For these reasons, we engaged a number of C-suite operations & supply chain executives to understand what most concerns these leaders in today’s environment.

Via Russell Reynolds Associates’ Q4 2022 Global Leadership Monitor, we identified the top risks leaders are perceiving, as well as how prepared executives feel to address these threats to organizational health. Interestingly—despite the probability of recession and continued uncertainty—investing in retaining critical talent surfaced as a clear priority among operations & supply chain leaders, outranking traditional levers such as cost-cutting and business optimization. In fact, the lowest ranking recession measure is workforce reduction, which speaks to the continued importance of talent and how talent is seen as such a competitive advantage in today’s environment (Figure 1). We also identified perspective differences between operations & supply chain executives and CEOs that, when embraced, can help improve C-suite effectiveness and build a healthier risk management culture.

Figure 1:  Most important ways for operations & supply chain leaders to respond to a recession

^{Source: RRA 2022 Global Leadership Monitor Q4 2022, base n = 56 C-level Operations, Procurement and Supply Chain executives}

Uncertain economic growth is the most pressing concern for operations & supply chain leaders

Around 82% of operations & supply chain leaders rank uncertain economic growth as the most pressing concern for their organization over the next 12 to 18 months. This unseats the availability of key talent, which ranked as the top threat in our previous Monitor in Q2 2022. However, talent availability still ranks as one the top threats for operations & supply chain leaders. Surprisingly, operations & supply chain leaders do not think more talent will come available during a recession, meaning that organizations will likely try to hold on to current talent. About 95% of surveyed executives think we are already in a recession or will enter one in 2023, with 64% predicting a recession that lasts 6 to 12 month and 24% anticipating one that continues 12 months or longer.

Operations & supply chain leaders and CEOs share the same top six concerns, but operations & supply chain leaders are consistently more worried about each of these risks (Figure 2). There is a notable gap between the two groups’ concerns around uncertain economic growth (82% vs. 65%) and changes in consumer behavior (49% vs. 35%). According to our 2022 Consumer CEO Review, these consumer behavior shifts include a heightened focus on ESG, increased adoption of digital channels, continued economic and geopolitical disruptions causing rapid shifts in spending habits, and increased focus on health and wellness in consumption. Notably, these differences did not exist in our Q2 2022 Monitor, meaning that over the last six months, CEOs and operations & supply chain leaders have drifted apart with respect to their opinions on leading threats, highlighting a potential lack of alignment in the midst of continued disruption.

Figure 2:  Top external factors impacting business in 2023 – operations & supply chain leaders vs. CEOs

^{Source: RRA 2022 Global Leadership Monitor Q4 2022, base n = 86 C-level Operations, Procurement and Supply Chain executives, base n = 294 CEOs.}

Only one third of operations & supply chain leaders believe their organization is prepared to address uncertain economic growth

In addition to understanding what leaders perceive as top threats, we also wanted to understand how prepared leadership felt to respond to those threats (Figure 3). We found that only 36% of operations & supply chain leaders think their organization is well prepared to respond to uncertain economic growth—the top ranking risk. CEOs feel similarly (only 41% feel prepared), indicating that after years of uncertainty, both of these cohorts continue to experience the pressure of today’s unique business environment.

Notably, CEOs feel much more prepared than operations & supply chain leaders to address return to office / hybrid work implementations (74% vs. 52%) and changes in consumer behavior (48% vs. 31%). Virtual and flexible work arrangements can be more difficult for operations & supply chain roles to implement, making this topic a continued source of complexity and sensitivity, especially in organizations where productivity improved during the pandemic.

Figure 3: Leadership preparedness to address external risks in 2023 – operations & supply chain leaders vs. CEOs

^{Source: RRA 2022 Global Leadership Monitor Q4 2022, base n = 86 C-level Operations, Procurement and Supply Chain executives, base n = 294 CEOs.}

To address these risks, organizations must remain determined in the face of an uncertain future – this especially applies to leadership. At Russell Reynolds, we define “team resiliency” through seven factors, ranging from persistence and optimism to flexibility and adaptability (Figure 4). Resilient leaders know how to stay balanced, focused, realistic, and optimistic in the face of challenge and can flexibly address the needs of their teams and organizations.

Figure 4: RRA’s seven factors of resilience

^{Source: RRA’s 7 factors of resilience}

Looking ahead: how to achieve greater alignment amongst C-suite executives

At Russell Reynolds, we advise clients on “Top Team Effectiveness,” which outlines the four priorities high performing teams must embrace. Senior team alignment on external and internal factors affecting organizational health is crucial to success (Figure 5).

Figure 5:  Opposing priorities for high performing Top Teams

^{Source: RRA’s top team effectiveness overview}

Our research shows clear differences between operations & supply chain and CEO cohorts’ priorities. Inconsistent perspectives within the C-suite can result in leadership team members operating from different rulebooks, which introduces significant organizational risk. To address this disconnect and de-risk the C-suite, organizations can:

• Engage in honest dialogue about risks and risk preparedness to improve consistency in top-down role modeling and build healthier, effective, and aligned C-suites. By listening with intent and authenticity; challenging constructively, especially around external factors where disconnect between operations & supply chain leaders and CEOs is most notable; and, finally, putting a premium on transparency, leaders can gain a deeper understanding of their fellow leaders’ priorities, and form a better informed consensus on risk prioritization.

• To gain a full view of a prioritized list of problems, leaders can utilize more advanced behavioral diagnostics. In our experience, this method leads to powerful group level insights about people’s real beliefs and behaviors. (To learn more about culture imaging, see our paper, “Measurement Mindset: A Practical Approach for Understanding Culture.”)

• C-suite operations & supply chain roles have evolved over the years and the chief operating officer (COO) role, for example, is more strategic and transformational than ever before. In fact, in 2021, more CEOs were promoted from the COO role in Fortune 500 and S&P 500 firms than from any other internal role.¹ C-suite operations & supply chain leaders should be given equal stature to other C-suite leaders. Ensuring that operations & supply chain leaders have a seat at the table and the opportunity to voice concerns, even if other members of the C-suite are prioritizing differently, will improve overall alignment.

Concurrently, organizations need to continue to build resiliency in leadership, whether through recruitment or internal development. In a world with prolonged change and disruptions, resilient operations & supply chain leaders are best equipped for success.

References

^{1 McKinsey. October 31, 2022. Stepping up: What COOs will need to succeed in 2023 and beyond. https://www.mckinsey.com/capabilities/operations/our-insights/stepping-up-what-coos-will-need-to-succeed-in-2023-and-beyond}

Authors

Ben Shrewsbury leads Russell Reynolds Associates’ Operations & Supply Chain Officers capability globally. He is based in Dallas.

Fawad Bajwa leads Russell Reynolds Associates’ Operations & Supply Chain Officers capability in the Americas. He is based in Toronto.

Gregory Gerin leads Russell Reynolds Associates’ Operations & Supply Chain Officers capability in EMEA. He is based in Brussels.

Vijuraj Eranazhath leads Russell Reynolds Associates’ Operations & Supply Chain Officers capability in Asia Pacific. He is based in Mumbai.

Mika Nurminen leads Knowledge for Russell Reynolds Associates’ Operations & Supply Chain Officers capability. He is based in Toronto.