Recent insights from Russell Reynolds Associates:
For several years, Russell Reynolds Associates has been collecting and examining data relating to prior experience and path taken for Fortune 500 general counsels, with a particular focus on females and their representation at the top of the legal profession.
The number of female general counsels in the F500 continues to grow, with women now holding the top legal job in 28 percent of companies, up from 26 percent last year. This is particularly poignant against the backdrop of the #MeToo movement, with workplace diversity issues taking center stage and receiving more attention than ever before. Typically, underrepresentation of women is never more apparent than at the very top. Women now hold just over a quarter of general counsel positions among the F500, but when viewed together with other C-suite roles (5 percent of CEOs and 13 percent of CFOs are female), we realize that the underrepresentation of females in the top legal position is part and parcel of a broader issue.
With that being said, the rise in female general counsel appointments is promising, and the upward trend paints an optimistic picture for the years to come. In 2013, just 28 percent of Fortune 500 companies with open general counsel positions filled them with female candidates. In 2017, that figure was 38 percent, and for 2018 to date, it looks similarly promising so far at 36 percent (9 out of 25 new hires so far this year)—a significant increase over the last five years.
In the first of two “super election years,” 89 terms of office had expired, leading to a record 42 changes on DAX 30 supervisory boards. Based on an analysis of the biographical data and work experience of predecessors and successors, we saw another improvement of the rating of the boards.
The quota of at least 30 percent female supervisory board members, mandated by the German government, was reached for the first time ever in May 2018. Nonetheless, men still hold most positions of power on supervisory boards and there continues to be a significant lack of female leaders on executive boards and at top management levels.
Digital expertise is on the rise – 20 percent of shareholder representatives have experience of IT, digital content, or digital transformation. More than half of DAX 30 supervisory boards are able to harness these crucial insights in their daily work. On the other hand, there is hardly any representation of major growth markets, such as Asia, Africa, and Latin America through nonexecutive directors.
With the quota having been achieved, we recommend DAX 30 companies now increase involvement of women in actual decision making and close the remaining crucial gaps in their board member’s collective expertise: operational and international experience.
In recent years, a lot has been said about the evolving role of the CFO in the global corporate world. Alongside their traditional mandate to provide financial insights and analysis, CFOs today have taken on a greater involvement in supporting and developing strategy as well as guiding key business initiatives. As the CFO role becomes all consuming – debating strategy with the CEO, looking at capital allocation, building control frameworks, dealing with external stakeholders – allocation of time and priority have also become paramount.
It has been observed that CFOs tend to dedicate their time to the dictates of their profession and organization, and many consider it a final career destination. However, in a world where their growing responsibilities and evolving mandate have brought them to the forefront, there has emerged a need for CFOs to look beyond – What is their contribution to different facets of the business? Can they handle a business unit independently? Do they understand their clients? What is their ability and appetite for general management and Board responsibilities? What should they be doing to gain these experiences? These are the insights and questions that David Cookson invited our CFO roundtable panelists to discuss.
“Culture eats strategy for breakfast,” the saying goes. Culture is a powerful social force that shapes and promotes certain ideas, customs and social behaviors while discouraging others. In organizations, culture is critical to the shared sense of purpose that mobilizes employees to work towards a common goal.
However, culture is often an afterthought for executives due to its intangible nature and the challenges in changing cultural norms and values. To understand how industrial companies are adapting organizational culture vis-à-vis ongoing digital transformation, we interviewed more than 20 senior digital leaders at industrial companies. We also interviewed several individuals from other industries who are facing similar organizational and cultural challenges related to digital transformation.
Our findings from the interviews, combined with our experience working with clients, confirm that evolving the company culture is central to successful transformations. Most industrial companies today have an established culture that rewards a singular, focused expertise that is developed over decades of working in the same environment. They also exhibit a high level of safety consciousness and a fairly rigid hierarchy.
These cultural elements have served industrial companies well thus far, helping guarantee precision and high quality. This culture, however, is also the driver of the industry’s long development cycles. As industrial companies face the challenge of evolving from mechanical manufacturing into the faster pace of software-based services, they will need to evolve their culture as well.
Digital success requires industrial companies to build a culture that is closely aligned with business, talent and technology strategies in order to facilitate and not impede the digital transformation.
Healthcare policy is increasingly designed to incentivize the transformation of healthcare delivery. Payment model reform requires health systems to develop the capacity to innovate so that they may successfully navigate clinical and organizational transitions to new models of care. This shift in focus has led to the rise of an “innovation agenda” in health care. One of the most visible responses to this agenda has been the rise of “chief innovation officers” in the highest ranks of executive leadership in health systems. The term chief innovation officer was described in 1998 as part of a growing recognition that innovation within organizations needed to include continuous and discontinuous, or disruptive, strategies. Individuals in the chief innovation officer roles were to identify new ideas, concepts, and business opportunities, and then to develop the capabilities to support and implement this agenda.
We sought to better understand the organizational framework, reporting structure, resource allocation, and metrics of success for chief innovation officers. Based on these findings, we can better understand how these roles are structured within health care systems. These data can also allow us use concepts from organizational innovation theory to analyze whether health systems are adequately supporting their chief innovation officers for success of the innovation agenda in health care.
The summary results are striking. Of the 40 largest healthcare systems in the United States, 32 had a senior innovation officer. Half of respondents (52 percent) characterized their role as strategic, 24 percent as operational, and 24 percent as financial. Structurally, 80 percent resided within established organizational structures, and 36 percent reported directly to the chief executive officer. Overall, 44 percent had short-term metrics of success, 68 percent medium-term, and 24 percent long-term (nonexclusive responses). The median budget for the role was $3.5 million, but some organizations invested significantly more, usually in a venture capital function. In terms of barriers to innovation, 64 percent of respondents reported that the biggest barrier is culture or organizational structure, while 16 percent of respondents reported budget, talent, and process as the largest hindrances to innovation.