The Covid-19 crisis accelerates the executive waltz at the head of CAC 40 giants
Between January and July, 20% of French flagship companies replaced their CEOs. This revamping on an unprecedented scale legitimizes the advancement of a generation of not very well-known executives, often coming from the inside.
The Le Figaro article, "The Covid-19 crisis accelerates the executive waltz at the head of CAC 40 giants," quoted Russell Reynolds Associates Consultant
Paul Jaeger on how the Covid-19 crisis has fast-tracked leadership transitions. A translated excerpt of the article can be found below.
In six months, 8 out of 40 of the greatest French companies experienced changes in leadership. This unusual number of changes owes nothing to chance, even if some of the moves had been foreseen. For Engie, Unibail and Danone, they were the results of a governance crisis; for Safran, the transition did not occur smoothly. “The Covid crisis accentuated the pressure exerted by the board of directors on the CEO, and it accelerated the transition process at the head of the great companies," notes Paul Jaeger, the Director of headhunting agency Russell Reynolds. "This pressure sometimes coincides with that coming from the activist investors.”
Even if the CAC 40 giants overcame the crisis, the economic and geopolitical environment was upset and the end of the epidemic will not restore the state of affairs to the situation from early 2020. “The groups’ need for transformation in an environment which is more and more complex, competitive and unpredictable is amplified," summarizes a counselor for one of the top executives. "It’s precisely because their groups are doing well that some CEOs have decided to accelerate the transition, thinking that their deputies would be in a better position to implement the changes.”
None of the new executives holds the position of CEO, they are all unknown and most of them are coming from the inside. “The era when CEO superstars were being recruited from the outside is now bygone," underlines a CAC 40 expert. "Experience, skill and an in-depth knowledge of the company overcome all the other aspects.” Most of the time, the former CEO remains in the company as Chairman and transfers the CEO position to a veteran member of the group. Does this guarantee a smooth transition? Not necessarily.
“All transitions are risky," underlines Paul Jaeger. "The non-executive Chairman can feel tempted to act as a CEO, and the new CEO may delay getting the real feel for the position. For everything to go well, things have to be done methodically, the board of directors needs to be aligned and act with goodwill.”
Find the full article here.