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  • MAP Asia Pacific Ltd

The C-Suite Skills That Matter Most

For a long time, whenever companies wanted to hire a CEO or another key executive, they knew what to look for: somebody with technical expertise, superior administrative skills, and a track record of successfully managing financial resources. When courting outside candidates to fill those roles, they often favored executives from companies such as GE, IBM, and P&G and from professional-services giants such as McKinsey and Deloitte, which had a reputation for cultivating those skills in their managers.

That practice now feels like ancient history. So much has changed during the past two decades that companies can no longer assume that leaders with traditional managerial pedigrees will succeed in the C-suite. Today firms need to hire executives who are able to motivate diverse, technologically savvy, and global workforces; who can play the role of corporate statesperson, dealing effectively with constituents ranging from sovereign governments to influential NGOs; and who can rapidly and effectively apply their skills in a new company, in what may be an unfamiliar industry, and often with colleagues in the C-suite whom they didn’t previously know.

These changes present a phenomenal challenge for executive recruitment, because the capabilities required of top leaders include new and often “softer” skills that are rarely explicitly recognized or fostered in the corporate world. Simply put, it’s getting harder and less prudent to rely on traditional indicators of managerial potential.

What should organizations do to face this challenge? A critical first step is to develop greater clarity about what it now takes for C-suite executives to succeed. Yes, the range of necessary skills appears to have expanded—but how exactly? For example, what does the term “soft skills” really mean? And to what extent does the need to hire executives with more-expansive skills vary across organizations?

Remarkably, even though almost every aspect of leadership has been scrutinized in recent years, rigorous evidence on these crucial points is scant. To find out more—about the capabilities that are now in demand, how those have changed over time, and what adjustments companies are making to their process for selecting candidates—we recently analyzed data from Russell Reynolds Associates, one of the world’s premier executive-search firms. Russell Reynolds and its competitors play an essential role in managerial labor markets: 80% to 90% of the Fortune 250 and FTSE 100 companies use the services of such firms when making a succession decision that involves a choice among candidates. (Disclosure: Russell Reynolds has recently conducted executive searches for Harvard Business Publishing, which publishes Harvard Business Review.)

For our research, Russell Reynolds gave us unprecedented access to nearly 5,000 job descriptions that it had developed in collaboration with its clients from 2000 to 2017. The data was sufficient to study expectations not just for the CEO but also for four other key leaders in the C-suite: the chief financial officer, the chief information officer, the head of human resources, and the chief marketing officer. To our knowledge, researchers had never before analyzed such a comprehensive collection of senior-executive job descriptions. (For more about how we worked with the data, see the sidebar “About the Research.”)

Our study yielded a variety of insights. Chief among them is this: Over the past two decades, companies have significantly redefined the roles of C-suite executives. The traditional capabilities mentioned earlier—notably the management of financial and operational resources—remain highly relevant. But when companies today search for top leaders, especially new CEOs, they attribute less importance to those capabilities than they used to and instead prioritize one qualification above all others: strong social skills.

When we refer to “social skills,” we mean certain specific capabilities, including a high level of self-awareness, the ability to listen and communicate well, a facility for working with different types of people and groups, and what psychologists call “theory of mind”—the capacity to infer how others are thinking and feeling. The magnitude of the shift in recent years toward these capabilities is most significant for CEOs but also pronounced for the four other C-suite roles we studied.

Our analysis revealed that social skills are particularly important in settings where productivity hinges on effective communication, as it invariably does in the large, complex, and skill-intensive enterprises that employ executive search firms. In such organizations, CEOs and other senior leaders can’t limit themselves to performing routine operational tasks. They also have to spend a significant amount of time interacting with others and enabling coordination—by communicating information, facilitating the exchange of ideas, building and overseeing teams, and identifying and solving problems.

Intriguingly, the evolution of skills requirements in the C-suite parallels developments in the workforce as a whole. At all employment levels today, more and more jobs require highly developed social skills. Harvard’s David Deming, among others, has demonstrated that such jobs have grown at a faster rate than the labor market as a whole—and that compensation for them is growing faster than average.

Why is this shift toward social skills taking place? And what implications does it have for executive development, CEO succession planning, and the organization of the C-suite? This article offers some preliminary thoughts.

The Chief Reasons for Change

We’ve identified two main drivers of the growing demand for social skills.

Firm size and complexity.

The focus on social skills is especially evident in large firms. Additionally, among firms of similar size, the demand for social skills is greater at publicly listed multinational enterprises and those that are involved in mergers and acquisitions. These patterns are consistent with the view that in larger and more complex organizations, top managers are increasingly expected to coordinate disparate and specialized knowledge, match the organization’s problems with people who can solve them, and effectively orchestrate internal communication. For all those tasks, it helps to be able to interact well with others.

But the importance of social skills in large companies arises from more than just the complexity of operations there. It also reflects the web of critical relationships that leaders at such firms must cultivate and maintain with outside constituencies.

Social skills are particularly important in settings where productivity hinges on effective communication, as it invariably does in large, complex, and skill-intensive enterprises.

The diversity and number of those relationships can be daunting. Executives at public companies have to worry not only about product markets but also about capital markets. They need to brief analysts, woo asset managers, and address the business press. They must respond to various kinds of regulators across multiple jurisdictions. They’re expected to communicate well with key customers and suppliers. During mergers and acquisitions, they have to attend carefully to constituents who are important to closing the transaction and supporting the post-merger integration. Highly developed social skills are critical to success in all those arenas.

Information-processing technologies.

“The more we automate information-handling,” the management guru Peter Drucker wrote several decades ago, “the more we will have to create opportunities for effective communication.” That has turned out to be prescient: Companies that rely significantly on information-processing technologies today also tend to be those that need leaders with especially strong social skills.

Here’s why. Increasingly, in every part of the organization, when companies automate routine tasks, their competitiveness hinges on capabilities that computer systems simply don’t have—things such as judgment, creativity, and perception. In technologically intensive firms, where automation is widespread, leaders have to align a heterogeneous workforce, respond to unexpected events, and manage conflict in the decision-making process, all of which are best done by managers with strong social skills.



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