The annual letter from our CEO, Brett Stephens, to our clients and friends.
Dear Clients and Friends,
2020 has been a year of unprecedented change and reinvention. We have been honored to work alongside so many of you, helping you navigate these tumultuous times as successfully as possible. Effective leadership in the C-Suite and at the board level has never been more important, and the discreet advisory work we perform for Boards and CEOs has surged in response. We have spent many hours engaging with you on topics such as achieving agility; the emotional intelligence and moral quotient of leaders; the importance of diversity, inclusion, and equality initiatives; deploying technology, AI, and virtual work environments; managing risk; and addressing environmental, social, and governance concerns. Some of these topics were discussed at length during the roundtables we hosted earlier this year, and we expect to tackle these topics again at our 20th Annual Directors Dinner in January 2021. In the meantime, we wanted to share with you some additional trends that have emerged during the last few months that we expect will continue to evolve in 2021:
1. CEO Succession Disruption: CEO turnover reached a record high in 2019 but slowed temporarily during the crisis. The stress and trauma of leading an organization through a crisis often accelerates a CEO’s departure. When we reach a turning point and conditions stabilize, we expect to see a shift in the C-Suite at many organizations — even at companies that survived or thrived. Not only are public companies actively thinking about CEO succession, but our private equity clients have been building their potential inventory of CEO candidates in anticipation of deal activity returning significantly in 2021. Now is the time to begin CEO succession planning if you have not already. We have been trusted by boards and CEOs with succession planning for more than 25 years, and CEO succession is our premier service because we have minimal off-limits restrictions — meaning, we have unparalleled access to top talent and leadership across all industries due to our boutique size. In addition to our reputation for discretion and for identifying ideal successors, our clients also engage us to manage leadership assessment processes, if needed (with our neutral, third-party assessment partner); to help with the on-boarding and integration of the new CEO (whether an internal or external candidate); and to advise the board, CEO, and CHRO on how to manage the transition with leadership and throughout the broader organization.
2. Board Recalculation: The dialogue around which competencies, capabilities, and perspectives a board member needs to be effective in the “new normal” has gathered momentum. Some of our clients came to the stark realization that their directors were lacking the knowledge and experience necessary to help leadership execute the new direction that was charted in response to the pandemic and economic crisis. We are advising our board clients on how to effectively remake and reshape themselves with directors who possess the skills and capabilities to guide leadership through disruption and reinvention. Transformation at the board level typically takes time given how board dynamics can affect decision making, so we expect director recruitment to remain very active and increase in 2021.
3. Diversity Recruiting: The desire for more diverse boards has gained significant momentum across the country, making it critical to work with a board recruiting firm that has access to and existing relationships with high quality candidates. We often counsel our clients on how to achieve their long-term diversity goals in addition to managing immediate needs. (94% of our elected board candidates were diverse in 2019.) Similarly, at the C-Suite level, large Fortune 500 companies have the resources and prestige to attract diverse candidates, while mid- and small- cap companies will need to seek advisors who can prioritize them in order to compete for diverse talent. We have been more successful than our large competitors at attracting diverse talent to mid- and small-cap organizations, especially under time constraints. No matter how it is done, additional diversity of thought and experience in the C-Suite and at the board level should be a positive outcome of the conversations taking place across our country about diversity, inclusion, and equality.
4. Separation of the Roles of Chairman and CEO: Similar to past economic downturns, boards have increasingly recognized the benefit of a Non-Executive Chairman who can help the CEO navigate through a crisis. Based upon the consistency of the demand for our services advising on these arrangements, we believe splitting the Chairman and CEO roles will be a more frequent occurrence in 2021. However, such a decision requires concise communication and planning and should not be made to generate press coverage. Organizations need a highly analytical and candid assessment of their strengths, shortcomings, opportunities, and risks — with a learned objective and with experienced advisors — to make the right decision for their organizations at this crucial and unpredictable time.
We continue providing services to Boards and CEOs on a broad range of governance and leadership needs. To cite a few current examples, we are:
Board Recruiting and Advisory
Leadership and Talent Consulting
In the event you have a sensitive board or leadership need in the coming year, we would be honored to share our experience and expertise regarding this critical process and help you solve for your organization’s immediate needs, and for its long-term success. Thank you for the continued trust and confidence you have placed in our firm. We look forward to working closely with you in the year ahead, and for many years beyond.
Barrett J. Stephens
Chief Executive Officer
O: +1 (203) 618-7022