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About Spencer Stuart

Spencer Stuart is one of the world’s leading execu-

tive search consulting firms. Privately held since

1956, Spencer Stuart applies its extensive knowl-

edge of industries, functions and talent to advise

select clients — ranging from major multinationals

to emerging companies to nonprofit organizations

— and address their leadership requirements.

Through 53 offices in 29 countries and a broad

range of practice groups, Spencer Stuart consult-

ants focus on senior-level executive search, board

director appointments, succession planning and in-

depth senior executive management assessments.

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in the boardroomWhat boards must get right

Time is a scarce resource for boards. Amid growing

business complexity and growing demands on directors,

what must a board do well?

organization & cultureThe rise of social media: Is yourorganization ready for the newtransparency?

The growing adoption of social media globally has pro-

found implications for business. Is your management

team prepared?

global viewExpat 2.0: The global executive

The traditional expatriate model is out of date, but

what should take its place? A framework for thinking

about the profile of the new global executive.

The international leader

Why are some companies more open to a non-national

leader than others?

point of view

letter from the ceo

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leading voicesLessons from an international assignment

Six experienced global executives answer questions about

what surprised them and what they learned through

international assignments.

point/counterpointHave we placed too much faith incorporate governance reform?

Boards can be more or less effective, irrespective of their

governance model. What are the basic principles of effective

governance?

the executive guideImproving board effectiveness: Five principles for getting the mostout of a board assessment

A board assessment can be a valuable tool for improving

board effectiveness. How can boards ensure that they get

the most out of this exercise?

ideasYou need a leader — Now what?

How can companies improve their ability to make smart

leadership decisions? A new book by Spencer Stuart

consultants looks at the myths that surround leadership

selection and offers a new model.

point of view

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3

This observation, shared by an experienced director of two global in-dustrial companies, rings true for most of us — and has all sorts ofimplications for businesses, senior executives and boards of direc-tors. From our many conversations with clients around the world, itis clear that this era of constant change has business leaders every-where grappling with many of the same questions:

• Is our strategy adequately responding to the business threats and op-portunities arising from the economic shift toward the East?

• How prepared is the organization for the changes being wrought bythe rapid advancements in digital technologies and social media?

• As our global footprint continues to shift, the old way of groomingleaders with international experience no longer works, but what shouldtake its place? How do we tap into the rich knowledge of leaders inlocal markets and make room for them in regional or global roles?

• What does it mean to be an effective board today? How can we makesure that our board is contributing meaningfully where it really mattersto improve company performance and advance the interests of theshareholders?

• When choosing leaders, how can we get better at diagnosing the capa-bilities that are essential for success in specific roles?

In this issue of Point of View, we tackle these questions and othersthat get at the heart of the challenge facing board directors, CEOsand other senior executives: successfully navigating the dynamism,uncertainty and volatility that characterize today’s “new normal”business environment.

On behalf of all of us at Spencer Stuart, I hope you enjoy this issue ofPoint of View and welcome your comments.

David S. DanielChief Executive OfficerSpencer Stuart

“The world is just changingfaster than it used to.”

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what boards must get right

As the past several years have demonstrated, when a business today

faces a crisis or erosion in performance, the board’s action — or in-

action — is in the spotlight as never before. Stakeholders and out-

side observers are looking for answers, or parties to blame, and

often assume a deep level of board involvement in the company

and knowledge of its inner workings that may be well beyond the

board’s actual capacity.

But it’s not just outsiders who can lack a clear view about the pre-

cise role of the board. As the board’s agenda has expanded and ex-

pectations on boards have grown, directors themselves have some

fundamental questions about the board’s role in far-reaching, com-

plex areas like strategy, succession planning and risk, as well as

emerging areas such as the environment and corporate social re-

sponsibility. Yet rarely do boards and management teams have a

frank discussion about how expectations have changed and how

the board’s responsibilities should evolve.

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In the Boardroom

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Boards clearly can’t do everything; but whatmust a board do and do well? What must aboard get right? In this time of growingcomplexity for business — when compa-nies are expanding globally, facing moreregulation and scrutiny from investors, andadapting to evolving customer expecta-tions and technological change — boardsneed to spend time on the right things,carefully defining their role in several criti-cal areas of responsibility:

• Strategy • Building and sustaining strong

company leadership • Risk

We asked experienced directors from com-panies in Europe and the U.S. to discusshow expectations have changed, howboards are defining their role in these criti-cal areas, and what boards can do to makesure they are being effective in practice.

New expectations and familiar constraints High-profile business failures and the crisisin the global financial system have height-ened the attention on the role of boards,both in a company’s response to a crisisand in the decisions leading up to it. “Whenthings go wrong in a company, it’s only nat-ural for the media, shareholders or othersto look to place blame somewhere, and thatmay include a board in certain instances,”said Linda Cook, who serves on the boardsof directors of The Boeing Company andCargill.

While it is natural and to some degree ap-propriate to look to the board for answers,these expectations can be at odds with real-ity when stakeholders or the public overesti-mate a board’s decision-making authorityand knowledge of the day-to-day operations

of the company. Supervisory boards haveparticular limits, said Klaus Peter Müller,supervisory board chair at Commerzbankand chairman of the Government Commis-sion of the German Corporate GovernanceCode. “What these criticisms tend to over-look is that, for instance, a major project isprepared by the executive board membersover months, sometimes with a hundred ormore people involved, while the nonexecu-tive board members receive informationpackages just two or three weeks prior tothe meeting,” he said. “Therefore the super-visory board can but question and chal-lenge, can only comprehend premises, yet itis supposed to be fully responsible for suchdecisions.”

Boards also are limited by practical con-straints. Typically with just a half dozen orso in-person meetings a year, directorshave limited exposure to the company’soperations and management team and,given the complexity of any large, globalbusiness, not nearly enough time to delveinto the raft of issues they might like tocover. Boards in many countries alreadyhave a long and growing list of responsibil-ities that they are required to address, notthe least of which is oversight of effectivefinancial reporting.

“Time is a very scarce resource for aboard,” said Robert Lumpkins, chairman ofthe Mosaic Company board. “It’s impor-tant that boards do those things that mat-ter well, and not try to do everythingbecause there isn’t time to do everything.”

Strategy developmentOversight of the business strategy alwayshas been a core responsibility of the board,but, for many companies, strategic discus-sions have become more urgent in the past

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few years as threats and opportunities havebecome increasingly dynamic. “The world isjust changing faster than it used to,” saidCook. “The emergence of new competitorsin a globalizing world, the economic and po-litical shift from West to East, the competi-tive and business threats and opportunitiesarising from advancements in informationtechnology, all of these things are coming atcompanies faster and more frequently thanin the past. Therefore, boards need to en-sure that management teams are adequatelyresponding to these developments in astrategic manner.”

The CEO and his or her team take the leadin developing the strategy, but the boardmust be fully involved. “Strategy is an areawhere the board can be a great help, but theinitiative really must come from the execu-tives,” said Jan du Plessis, chairman of theboard of Rio Tinto and a nonexecutive direc-tor for Marks and Spencer Group. The exec-utive team should initiate the strategyprocess, present strategic scenarios andtheir pros and cons to the board, and drawon the experience and judgment of thenonexecutive directors for their views aboutthe strategy. “But the nonexecutives cannotand should not drive the process. The exec-utives must drive the process, but at the

same time be open-minded enough to re-spond to directional guidance from thenonexecutive directors,” he said.

While the board does not propose the strat-egy, it does have the right to challenge theassumptions on which management is bas-ing its strategic plan and evaluate thesoundness of the strategy. “The role of theboard is to review and discuss the strategyproposed by the management and to checkits validity and its strengths and then to ei-ther approve it, amend it or reject it. It is notthe board’s role to propose the strategy, butit should be strong and competent enoughto conduct a robust discussion on it and in-dependently make its own judgment,” saidPatricia Barbizet, vice chairman of PPR,chairman of Christie’s International andboard member of Air France-KLM, Total andBouygues.

Furthermore, while management should betaking the lead on strategy development,there may be times when a board needs tobe more assertive. “When an organization isfunctioning well and is forward thinking,then it is the role of the board to approvemanagement’s strategies, which manage-ment develops through a collaborativeprocess with the board,” said Scott Carson,professor of strategy, Queen’s School ofBusiness, and chair of the corporate gover-nance and conduct review committee of TheEconomical Insurance Group. “However,not all companies are strategic and perform-ing well. In some situations, the board mustforce management to do the planning. In acircumstance like that, the board becomesfar more active in the strategic planning.”

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“When an organization is functioning well and is forwardthinking, then it is the role of the board to approve management’s strategies,which management developsthrough a collaborative process with the board.”

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CEO succession and talent managementCEO succession planning and selecting anew CEO are unquestionably board re-sponsibilities, but how hands-on do direc-tors need to be to make sure that thecompany is developing capable leaderswith the skill-sets that will be needed in afuture CEO? Beyond the CEO, what shouldthe board be doing more broadly to ensurethat the company is developing strongleaders?

The board should be deeply involved insuccession planning for the CEO role. CEOselection is arguably the most fundamentalboard decision, and it is a responsibilitythat cannot be delegated. Directors arguedin favor of a multi-tiered approach enablingthe board to identify the skills that will berequired in the next CEO, get to know po-tential candidates and evaluate their devel-opmental needs and the plans to addressthem.

Boards like to see potential CEO candi-dates in action, both in formal settings,such as presenting to the board, and inmore casual environments. “It’s importantthat we get to see them outside of theboardroom with their teams or with cus-tomers, to see how they interact and howother people react to them. Also, it is help-ful to get to know them a bit personally byhaving dinner with them to begin to under-stand what’s driving them, what their pas-sions are, and what their aspirations are,”said Cook.

In boards that function well, the CEO tendsto take a back seat during succession plan-ning discussions, said Cees van Lede,chairman of the supervisory board ofHeineken, a member of the Philips Elec-tronics supervisory board and a nonexecu-

tive director for Air France-KLM, L’Air Liq-uide and Sara Lee Corporation. “If it’s re-ally done well, the CEO makes his or herpoint of view known to the nonexecutiveboard members and then sort of withdrawsand leaves it to the board, because in suc-cession you may wish as a board really to change the nature of the job and have acompletely different individual.”

While less agreement exists among direc-tors about how involved the board shouldbe in influencing talent decisions furtherdown in the executive team, directors saidthe board should be sure that the CEO hasa strong team and that the organizationhas an effective succession planningprocess in place for other key roles. “Thetop priority needs to be the CEO, althoughenough time needs to be set aside for thefour or five other key people involved in theleadership of the company,” said duPlessis. “In some ways, the nonexecutivedirectors are better equipped than any ofthe executives to judge the qualities of therest of the leadership team because theyhave a healthy degree of detachment.”

Many boards monitor the succession plan-ning for the top 10 or 12 positions in thecompany, making sure development plansare in place for these executives, that theyare given challenging assignments or newroles, and that they gain exposure to thenonexecutive directors, for example, by pre-senting during strategy meetings. So im-portant is the management team to thesuccess of the company, Müller meets witheach of the top 60 global executives in hiscapacity as supervisory board chairman,and provides for other board members tomeet them as well by arranging for six orseven members of the top executive level tohave dinner with the supervisory boardprior to the board meeting.

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“In this way, the supervisory board graduallymeets all upper management members andcan form an opinion,” Müller said.

Risk oversightRisk management is an area where expecta-tions on boards have changed dramatically,and boards’ approach has evolved to be-come more in-depth, broader in scope andinfluenced by real-life scenarios. In the past,boards, led by the audit committee, tendedto focus on financial risk. Today, risk is de-fined more broadly, encompassing not justfinancial matters, but also areas such ashealth and safety, the environment, informa-tion technology and security, industrial rela-tions and corporate reputation.

“Boards have seen really big risks material-ize all over the world during the past fewyears. As a result, the discussion covers abroader set of risks, and the scenarios weuse to test management’s assumptions aremuch wider in scope. Things have hap-pened — the credit crisis or the oil spill inthe Gulf of Mexico, for example — thatboards never thought about in the past.That’s been helpful for boards because ithas given them the credibility to ask ‘what if’questions that might have been consideredirrelevant previously,” said Cook.

Boards should determine whether they havethe optimal structure for overseeing risk, in-cluding whether there is a clear delineationof risk management responsibilities be-tween the board and the executive team andthe extent to which the board will focus onthe big themes or the processes that themanagement will execute. “At a minimum,the board has to exercise a marginal judg-ment as to whether the areas that the man-agement has identified as high risk are indeed the right ones. That’s No. 1. Sec-

ondly, you have to make sure that oncethese risks are identified, there is a systemwithin the company that follows these risksor reports on them, and that if areas needattention that attention is properly given,”said van Lede.

Boards should spend most of their limitedtime on the risks that could have a majorimpact on the company — the “bears andnot the rodents,” but also monitor a widerrange of potential risks to ensure risk-takingstays within the agreed-upon risk appetitefor the company, said Lumpkins.

Again, though, it is up to management toexecute risk management policies and pro-cedures, said du Plessis. “The job of theboard is to appraise the overall quality ofrisk management and the assumptions, setthe terms and influence the culture. It isvery much for the executives, at the end ofthe day, to monitor the actual risks. It is theexecutives who have responsibility for indi-vidual risks. The nonexecutives need to setthe framework and see that it is adhered to,”he said. “Most boards in recent years havebecome much better at risk management.However, shareholders often do not realizethat it is not appropriate for nonexecutivesto be involved in the actual execution of riskmanagement.”

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The job of the board is to appraise the overall quality of risk management and the assumptions, set the terms and influence the culture.

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Tools for a more effective board With so many demands on them, how canboards make sure that they perform well inthese three critical areas of board responsi-bility? Boards that contribute at a high levelin shaping company strategy, developingand selecting strong leaders, and appropri-ately balancing the company’s risks tend tohave the following characteristics.

Have the right people on the board.Boards can add value through the collectivejudgment of members — resulting from arobust discussion of issues — and from thedeep expertise a single director has on aspecific topic. Particularly in the areas ofstrategy and risk, this diversity of perspec-tives is valuable. No one director has all theskills and experience needed for the range ofgovernance and strategic issues the boardhandles, but a well-represented board canbe helpful in thoroughly examining therange of potential issues and obstacles.

Therefore, boards should consider whetherthey have the right representation of ex-pertise in strategically important areas, orwhether there are emerging issues whereadditional skills would be valuable to add.Boards should include directors with arange of different perspectives and skills,but also individuals with a deep under-standing of the business, including the history, the marketplace, competitive land-scape and the drivers of success. Wherethere are gaps, the board can use vacan-cies to add needed skills.

Beyond having the right expertise, boardsneed directors who are able to devote suffi-cient time to board activities, as serving ona board today takes much more time thanin the past. That may mean that directorswill have to re-evaluate their board commit-

ments to ensure that they limit their boardmemberships only to those where they canactively contribute in the key areas of boardresponsibility. In fact, the regulatory bodiesin some countries and some boards al-ready have acknowledged the risk of over-committed directors by restricting thenumber of boards on which nonexecutivedirectors may serve.

Manage the board’s time well. Boardsare most effective when they are well pre-pared and structure directors’ limited timetogether to focus as much as possible onthe most valuable board activities, includ-ing strategy, risk and succession planning.With so much on the board’s plate, boardand committee chairs must be diligentabout running meetings efficiently and fo-cusing on priorities spelled out in theircharters. Materials should be distributedwell in advance and presented in the mostuseful format so directors have ample timefor review and can use meeting time forunscripted discussion about critical issues.Board and committee chairs also shouldcontinually review whether meeting time isbeing used appropriately.

Conduct a regular board effectivenessassessment. Regular board assessmentsprovide boards with an opportunity toidentify and remove obstacles to better per-formance and to highlight what works well.They can cover a wide range of topics, in-cluding board composition and organiza-tion, board processes, roles and respon-sibilities, communication, boardroom dy-namics, the relationship between the boardand management, and the quality of board-room discussion. Importantly, board as-sessments provide a platform for ensuringthat the board and CEO are in agreementabout their respective roles and responsi-bilities.

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“A board review is extremely important. Acritical analysis of the supervisory board’sefforts enables the supervisory board chairto recognize in time where action should betaken and to align the board concerning itsactivities or its members,” said Müller.

With so many disparate views about whatboards can and should be doing, ensuring

that there is alignment between the expecta-tions of the CEO and board — and evenamong directors themselves — about therole that the board should play in strategicdecision-making, succession planning andrisk management is essential to improvingboard performance and focus.

Who we interviewed

Patricia Barbizet, vice chairman of PPR, chairman of Christie’s International andboard member of Air France-KLM, Total and Bouygues

Scott Carson, professor of strategy, Queen’s School of Business, and chair of the cor-porate governance and conduct review committee for The Economical InsuranceGroup

Linda Cook, board director for The Boeing Company and Cargill

Jan du Plessis, chairman of the board of Rio Tinto and a nonexecutive director ofMarks and Spencer Group

Robert Lumpkins, chairman of the board of the Mosaic Company

Klaus Peter Müller, supervisory board chair at Commerzbank and chairman of theGovernment Commission of the German Corporate Governance Code

Cees van Lede, chairman of the supervisory board of Heineken, a member of thePhilips Electronics supervisory board and a nonexecutive director for Air France-KLM,L’Air Liquide and Sara Lee Corporation

About the authors

Jeff M. Hauswirth, Toronto, is a member ofSpencer Stuart’s Board Services and Technology, Communications & Media practices. Han van Halder, Amsterdam,is a member of the Industrial and BoardServices practices. Patrick B. Walsh,

Minneapolis/St. Paul, leads the Industrial Practice in North America and is a memberof the Board Services Practice. Spencer Stuart consultants Will Dawkins, London,Bertrand Richard, Paris, Sharon Rudy,Toronto, and Willi Schoppen, Frankfurt, contributed to this article.

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Is your organization ready for the new transparency?

The rise of socialmedia

Regarded merely as a hub for high school and college students just a few

years ago, social media now exerts tremendous influence over the way peo-

ple around the world — of all ages — get and share information. The impli-

cations for business are profound.

To get a sense of what’s at stake for companies as social media platforms be-

come even more entrenched in individuals’ day-to-day lives, consider that

more than 60 percent of Internet-connected individuals in the U.S. now partic-

ipate in social media platforms every day, according to a report by Bain &

Company1, with Europe not far behind. Social media channels such as Face-

book, YouTube, Twitter, Renren in China, Badoo and countless others are draw-

ing millions of people a day who want to read messages from friends, find

restaurant or product recommendations, share their views on politics or social

concerns, check the latest Twitter feed for news, and comment on the quality

of a company’s products or service or even voice concerns about its environ-

mental record.

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Organization & Culture

1 Putting Social Media to Work, Bain & Company, 2011

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For businesses, social media represents bothopportunity and risk. On one hand, socialmedia provides brands with an intimate plat-form to connect with customers and shapetheir perceptions, whether through timelyand targeted promotions, responsive cus-tomer service or the creation of communitiesof interest. On the other, social media hasunquestionably shifted power to the individ-ual, who can tarnish long-established brandswith a single angry blog post or quickly coa-lesce vast numbers of people behind a cause.Organizations’ successes, failures and mis-steps are now on display as never before.

While most consumer-facing companieshave acknowledged this shift and begun toadapt their organizations in response — forexample, embracing social media as a keyplatform for advertising and corporate com-munications — no business can afford to becomplacent. Social networks will continue tochange the way people act and make deci-sions, and business leaders need to deter-mine how their companies should respond.

Drawing on our own experience as well as theexpertise of C-level and corporate communi-cations executives in the U.S. and U.K., we ex-plore the ways organizations are approachingsocial media and the implications for leaders.

Getting smart about social media

For a business, engaging customers and consumers on social media raises a range oforganizational, leadership and cultural con-siderations, requiring leaders to delve intoquestions such as: Who should be responsi-ble for social media strategy and planning?How should senior leadership reshape itselfin that context? What skills should executives

be expected to have in this new age of trans-parency, and what cultural changes may berequired? How much time should I spend onsocial networks?

To begin answering those questions, leadersmust get a fundamental understanding ofwhat social media means for their businessand the transparency it demands.

“Social media is, in many respects, the win-dow that customers have on your business,”said Phil Rumbol, founding partner of Agency101 and former marketing director of CadburyU.K. Pulling the curtains shut over that win-dow — as some companies would have it —risks insulating the organization from impor-tant customer feedback or alienating con-sumers who crave a new kind of relationshipwith the brands they use. In fact, recent re-search has shown that customers who en-gage with companies through social mediaare more loyal, and spend up to 40 percentmore with those companies than other cus-tomers, according to Bain.

If nothing else, businesses should be lookingintently out of Rumbol’s metaphorical win-dow: They should know what their customersand employees are saying about them on so-cial media sites, and with that knowledge inhand, use trial and error to discover the bestresponse. What does that mean in practice?

Organizations’ successes, failures and missteps are now on display asnever before.

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We have identified several steps that organi-zations should be taking to get smart abouttheir audiences and formulate a successfulsocial media approach.

Understand what theorganization alreadyis communicatingthrough social channels

A comprehensive social media audit — onethat identifies how much employees are al-ready talking about the business in public fo-rums, the windows these interactions areproviding into the company and the impres-sion customers are getting as a result — is agood first step for understanding how the so-cial media phenomenon already is affectingyour business.

“Our employees are already engaging in so-cial media, whether we like it or not,” saidGary Sheffer, vice president of communica-tions and public affairs at General Electric.Even in the absence of a coordinated corpo-rate social media program, product special-ists may be responding to online customercomplaints, and public relations staff mightbe monitoring and responding to negativeTwitter campaigns. The head of HR may bewriting a wonderful blog about corporate life,while retirees are chatting on LinkedIn aboutchanges to company policies and benefits.These individual efforts are creating a publicimage for the company via social media, andmay well be contributing to a positive view ofthe company externally, yet it is important tounderstand the ways the company is inter-acting in social media already and whetherthey support the company’s desired image.

Once they have a clear outside-in perspec-tive, companies should do their homeworkon the view from the inside out. How arecustomers, employees and retirees gettinginformation about the business? What chan-nels are they using to contact the company,and which social media communities influ-ence them? How much time do they spendin those communities or on social media ingeneral?

Find out what keystakeholders are saying about thecompany

Companies also need to find out what theircustomers and employees are saying aboutthem, tracking the leading social media net-works with one of the many monitoringtools currently available. Of course, it will beimpossible to know what is being said byFacebook’s approximately 800 million users,for example, but hearing every stray com-ment about the company is not the point.Replying to every negative comment wouldbe distracting and counterproductive. In-stead, by tracking the core discussionsabout the company on the leading socialnetworks and employing reliable sentimentanalysis tools, organizations can gain a real-time view into what consumers are sayingand how they feel about the company.

The results may be eye-opening. “Socialmedia is like a big coffee shop, and every-one’s talking and you’re allowed to listen in.So, what are you going to do about it?”asked Darren Huston, former corporate vicepresident of Microsoft’s Consumer & Onlineorganization, now CEO of Booking.com.“Do you want to open up a store inside the

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coffee shop to serve these customers or justlisten and then, when those same peopleshow up at your store, have a better sense ofhow to serve them? Whatever you decide, youshould at least be listening because, in my ex-perience, they will tell you things you won’thear otherwise.”

Of course, some companies and executivesmay not be as eager to listen as others. Thereis likely to be some inertia in any organizationto continue with the status quo, allowing thevarious departments to respond to socialmedia as they see fit, along with reluctanceamong the leadership to believe that socialmedia is an important tool. “When you havehard data, though,” said Sheffer, “it’s a loteasier to convince people that they ought tobe in the game.”

Taking the first steps

Having discovered to what degree socialmedia is important to each of its target audi-ences, whether customers, employees, re-tirees or even vendors, a company can alignits resources accordingly. The approachshould be disaggregated, targeting the areasof the business and brands for which socialmedia is most important. Different sites and

activities — blogging, Twitter feeds, viralcampaigns, Facebook — will be appropriateto different target audiences and age groups.

One straightforward initial approach is to cre-ate a neutral Facebook site or corporate web-site to answer customer queries, whetherabout how a product works or where it canbe purchased. An organization can later ex-pand its use of social media monitoring serv-ices so that that it is able to respond quicklyto customer complaints. For example, cus-tomer service can follow the Twitter feedabout the company, reaching out to cus-tomers who are angry, and dealing with anissue the moment it becomes serious.

Tesco, one of the world’s leading retailers,has gone a step further, creating a specializedwebsite called Real Food (www.tescoreal-food.com/) that provides customers withrecipes, a meal planning tool, articles abouthealthy eating and information about storepromotions. It has become a virtual commu-nity, with half a million unique visitors. Thecompany also has a Real Food Twitter feed,with more than 4,000 followers subscribingto Tesco updates on a daily basis.

If these customers were not coming to theTesco site, noted Lucy Neville-Rolfe, executivedirector (Corporate and Legal Affairs) atTesco, they would be going to competitors’sites. “It’s all about conversations, and thenyou use those conversations to try to buildbetter individual relationships,” she said. Thecompany has also created blogs for its Fresh& Easy grocery store chain in the U.S. thathave brought customers into the store, oftenwithout the need for a great deal of traditionalTV and direct mail advertising.

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Social media is like abig coffee shop, andeveryone’s talking andyou’re allowed to listenin. So, what are yougoing to do about it?

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Defining responsibilities:Whose job is it?

At some point along the way, companiesmust determine who is responsible for so-cial media strategy and the execution of thatstrategy. Should it be the CEO? Corporatecommunications? A social media specialisthired for the purpose? While there is no sin-gle right answer, it is clear that CEOs andboard directors hold ultimate responsibilityfor making sure the organization is address-ing the key strategic opportunities and chal-lenges presented by social media, anddefining success for social media initiatives.

The day-to-day responsibility for socialmedia activities is often handled by a chiefcommunications officer or a social media“guru” — someone hired specifically to stayat the forefront of social media develop-ments, make sense of it all and come upwith a suitable response. The CEO may cer-tainly choose to tweet or to write a regular

blog on the company website, but will lookto the corporate guru to take the lead on so-cial media planning and policy.

Some experts argue that the bulk of socialmedia strategy and planning should remainin corporate communications because of itsinherent media expertise. Certainly, market-facing functions, notably customer serviceor support, will want to prioritize the chan-nels that best serve customers; meanwhile,product experts may answer customerqueries as they come into the website andmarketing may use social media in advertis-ing and customer communications, whileHR uses social to search for new employees,learn more about job candidates and fieldjob queries.

No matter who has ultimate responsibility,organizations will expect leaders across thebusiness, regardless of function or location,to be savvy about social media, understand-ing how to exploit the opportunities thatspecific platforms provide and to monitorthe risks related to increased transparency.

The implications forleaders

The new era of transparency and opennessbrought about by social media has broadimplications for an organization’s seniorleadership and the skills and strategies theyrequire. No one should be immune fromparticipating; therefore, it’s important thatall leaders become knowledgeable aboutthese platforms and build relevant skills. AsNiall FitzGerald, chairman of Hakluyt andthe British Museum, noted, “Everybodyneeds to be listening, and everybody needsto be aware of what’s being said, at levelswhich are relevant to their particular respon-sibility within the business.”

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ization & Culture

Everybody needs tobe listening, andeverybody needs tobe aware of what’sbeing said, at levelswhich are relevantto their particular re-sponsibility withinthe business.

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Questions executives should be asking themselves

> Are we monitoring social media on a practical level?

> Are we doing enough to listen, to analyze and to engage regarding our online reputation?

> Are we using social media tools to help us grow?

> Do we have a policy around engaging in social media?

> What security measures or rules of the road should be put into place?

> How have we structured our social media team? Is it centralized in marketing?

Decentralized in the business units?

> Who owns social media? Who responds and to what extent?

> What should the CEO know?

At the same time, the shifting social medialandscape can be confusing and intimidatingto experienced executives who are less familiarwith the new platforms, noted Ian Wright, cor-porate relations director of Diageo. This canlead senior executives “to turn off or switchout, as it were, because they just don’t under-stand it, and it’s embarrassing. They think —wrongly in my view — that it’s unacceptable tosay, ‘I don’t really know what X is.’”

Nonetheless, corporate leadership should de-velop at least a headline understanding of so-cial media, and preferably use social mediachannels, if only to gather news and informa-tion relevant to their day-to-day activities. Be-yond that, the approach may vary with the typeof company, the extent of customer activity onsocial networks, and the willingness of C-levelexecutives to become involved. “If you’re ageneral, you don’t really need to understandhow a Pershing missile works,” said Wright,“you just need to know what extra capabilitiesit gives you above the previous missile.” Inother words, senior executives can leave theworkings of social media to those who report

to them, trusting savvy practitioners to carryout the day-to-day work. Of course, “if youdon’t understand it yourself, you’ve got to findsomeone that does,” Wright said. In contrast,senior executives who choose to take on a visi-ble social media role, whether blogging on thecorporate website, tweeting or simply commu-nicating about their team and products online,will need to develop “a more visible and affir-mative, optimistic kind of leadership,” ratherthan just a set of technical or operating skills,according to Sheffer. The most important skillis that of storytelling: “the ability to succinctly,simply, compellingly talk about your productand your company.”

Such leaders will need to understand what res-onates with their customers and employees.And they must be willing to devote time andenergy to the task. Many executives start outtweeting or blogging with a passion, only tofind they have less time, or less to say, thanthey had imagined. “You’ve got to keep water-ing it,” pointed out Neville-Rolfe, and “youneed to not be too stodgy and, of course, beable to spell,” she added with a laugh.

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?

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Be willing to dive in…

Whatever the role they ultimately wish toplay, senior executives who are not of thegeneration that grew up with social mediacan increase their understanding by becom-ing users of sites such as Facebook,LinkedIn and Twitter. “It’s no good being aLuddite,” pointed out Richard Edelman,president and CEO of Edelman. “If you’renot somehow engaging on Facebook andTwitter as a communicator, you really are outof the game.”

Executives can seek out mini-courses aboutsocial media that may be offered by theirown companies or by their company’s mar-keting partners. Another approach is to findyoung people in the organization or in thefamily who can provide training — a “re-verse mentor,” so to speak. The mentor canbegin by simply programming the execu-tive’s Blackberry, iPhone or iPad to receivethe latest company news, setting up a suit-able Facebook access and Twitter feed — ifnecessary, under a pseudonym at first —and helping to build an understanding ofcontemporary communications.

“We will be communicating in four or fiveyears’ time with a generation that only com-municates online through social media,”said FitzGerald. “The consequences of thatare something executives really need to in-vest a lot of time in understanding.”

…But exercise caution

Senior executives know to be cautious whenspeaking publicly about their companies,whether in the press, at events or in otherpublic venues. Employees and the generalpublic listen very carefully when a seniorleader — especially the CEO — speaks orwrites, often not distinguishing between theindividual and the company. But the charac-teristic speed and urgency of social mediaplatforms, and the desire for “authentic”communication, can lure executives intobeing too casual or less careful than theymight be in other channels. When commu-nicating through social media channels,leaders should apply the same disciplinethey do elsewhere, being thoughtful, pur-poseful and consistent with company strat-egy and values — understanding that socialmedia participants expect responsivenessand genuine communication.

Conclusion

Social media is driving tremendous changein the way companies interact with their cus-tomers, employees, partners and generalpublic, providing new opportunities for busi-nesses to influence and engage with keystakeholders while exposing the companyand its employees, products and service asnever before. Executives not only need to beknowledgeable about social media channels,but increasingly they will need to possess aset of skills that allows them to navigate

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If you’re not somehow engagingon Facebook andTwitter as a communicator, you really are out ofthe game.

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today’s fast-changing, communications-ori-ented environment. These include:

Agility in interacting with a wider range ofconstituencies than in the past. Leaderswho do this well are able to accu-rately identify the issues and per-spectives that are central to multipleaudiences and apply them in deci-sion making.

Communications skills. Organizationsand leaders will have to excel at lis-tening and ensure that communica-tions are relevant and responsive.

Comfort with ambiguity. Gone are thedays when organizations controlledthe information and messages aboutthemselves. The social media land-scape is dynamic and fast-changing,and leaders will have to be comfort-able operating in an environment inwhich they have little control and fre-quently don’t have all the informa-tion.

Strong business judgment in evaluatingopportunities and risks. Leaders mustbe able to frame problems accu-rately, evaluate ambiguous informa-tion, tease out areas of priority andanticipate the potential conse-quences.

Willingness to take risks and get out oftheir comfort zone. Advancements insocial media come at a dizzyingpace. Executives need to push them-selves to participate in these net-works and channels to make suretheir organizations stay relevant tokey constituencies.

About the authors

Jason Baumgarten, Silicon Valley, is a mem-ber of the firm’s Technology, Communica-tions & Media and Business & ProfessionalServices practices. Grant Duncan, London,leads Spencer Stuart’s Marketing OfficerPractice in Europe, the Middle East and Africaas well as the Technology, Communications &Media Practice in the U.K. George Jamison,Stamford, leads the firm’s corporate commu-nications and investor relations business. Heis a member of the firm’s Consumer Goods& Services and Marketing Officer practices.Spencer Stuart consultants Jonathan Harper,London, and Edward Speed, London, alsocontributed to this article.

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Expat 2.0The Global Executive

As businesses the world over expand their operations into foreign

markets, they have to be able to identify executives who can move

seamlessly between markets and cultures, compensating for

deficits in local talent and spreading best practice and corporate

values into the farthest reaches of the organization.

The longstanding caricature of the expat — typically a Western ex-

ecutive imposing the wishes of the head office on far-flung mar-

kets while enjoying a privileged lifestyle and preferential tax status

— is fast becoming outdated. Mindful of the negative connota-

tions, a number of leading global organizations have even deleted

the term “expat” from their lexicon.

In this article we offer a conceptual framework for thinking about

the evolving role and expanding mandate of what we prefer to call

“global executives” and explore the competencies, aptitudes and

experiences commonly found in the most successful of this new

breed of leaders.

Global View

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point of view

What has changed for theexpatTwo trends have affected how companiesdeploy people in overseas markets todayand how they think about the talent theysend abroad. The first significant shift isthat when a company expands into newmarkets, its center of gravity changes: itstarts to source leaders from a broader geo-graphic pool, and places its best people intothe right positions regardless of their na-tionality. In the best cases, talent becomesmobile. “Employing a wide spectrum of peo-ple from different countries can bring differ-ent experiences and fresh thinking into theorganization,” says Damien Marmion, CEOof Max Bupa Health Insurance, based inNew Delhi. Ray Gammell, chief people andperformance officer of Etihad Airways, theUnited Arab Emirates’ national airline,agrees. “The experiences of these global ex-ecutives and their contribution to our richculture are a huge competitive advantage tous — a real differentiator.”

The second clear shift is a growing prefer-ence for developing and deploying local tal-ent with the skills and market knowledge tomanage and grow businesses in local mar-kets. Since this is not always possible in theshort term, non-nationals (expats) oftenhave the twin roles of stewarding the busi-ness effectively while hiring and developinghigh potentials from within the market whocan take over leadership positions. One ofthe true tests of a global executive, then, iswhether they prioritize building a legacy forthe business above their own personal ca-reer goals.

What makes an outstandingglobal executive?Today’s expat could, theoretically, comefrom anywhere and go anywhere — a verydifferent situation from a decade ago. Thecriss-cross of talent within the organizationbecomes more complex, so there is a pre-mium on being able to assess who has theright skill-sets and personal characteristicsto handle international assignments. “To beconsidered for an international assignment,you must either bring something to thetable like a deep set of skills and expertise,or be someone identified with high poten-tial, for which this will be an accelerating development opportunity,” says AssafAlQuraishi, vice president of human re-sources — North Africa & Middle East,Unilever. “You must have a solid trackrecord of performance in your establishedrole, because once you become an expatri-ate the expectations of you are so muchhigher.”

Terry Kramer, former group human resources director and chief of staff at Vodafone, looks for people who havedemonstrated an ability to adapt and be flexible in the course of their careers. “Perhaps they have made a successful transition between two very different divi-sions, have moved successfully betweenstaff and line jobs, have led high- and low-performance teams, or maybe have movedextensively within their own country. All ofthese examples provide some evidence thata person is able to adapt to a new culturalcontext outside their home market.”

“You must have a solid track record of performance in your established role, because once you become an expatriate the

expectations of you are so much higher.”

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Global executives may be a highly eclecticgroup with incredibly diverse roles and re-sponsibilities, but they generally have astrong desire to be part of somethingthat’s successful. “They want to apply theirskills with the best and the brightest, andhave the platform to grow personally,” saysMarmion.

Motivation is clearly important, but whatsets successful global executives apart iscultural dexterity, which comprises severalqualities, including humility, sensitivity, in-tellectual curiosity and agility.

Humility. The natural desire to exert influ-ence in a new role needs to be tempered bya willingness to learn. “Management pride

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To help companies understand the candidate population, we have developed the follow-ing framework for thinking about different groups of executives with international ex-perience:

global citizens: Executives who have spent long periods of time outside theircountry of nationality and who have demonstrated their ability to lead and succeed inmultiple markets. They transcend any one nationality or culture.

returnees: Executives who return to their country of origin or birth after long pe-riods in other markets, bringing with them knowledge of how to operate across culturesand to be the bridge between multinationals and their operations in new markets. Re-turnees form an important part of the jigsaw puzzle of international talent; they are anappealing option for many companies, but successful examples are not as common assome would believe because of “tissue rejection.”

reverse expats: Executives from “emerging” markets who are sent abroad tolead expansion of emerging market-based companies into developed markets. Theybring the dynamism and momentum of their companies and cultures into developedmarkets.

in situ global executives: Executives with a history of extensive andsuccessful global experience who are based back in their home markets (often in devel-oped economies) and serve as effective bridges to international operations, drawing ontheir successful past experiences abroad.

talent developers: In certain developing markets, executives are hired to filla skills gap, but are given explicit responsibility for creating a succession pipeline insidethe company and taking firm action to coach, mentor and promote national talent.

categorizing international executives

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is dangerous,” says Jean-Luc Butel, EVP ofMedtronic, a medical technology company.Said another experienced expat: “I watch tosee whether people are smart enough to saythey don’t know something. It’s a sign of in-telligence, not a sign of stupidity. Having alittle of the “imposter syndrome” [not be-lieving you have all the answers] is uncom-fortable, but healthy. It forces you to be opento new learning and to consider the opin-ions of others on your team. In a situationof power, it’s easy to be seduced into think-ing that you know everything or that you aresupposed to.”

For Anthony Christie, chief marketing officerof Level 3 Communications, listening is cru-cial. “One of the main reasons internationalexecutives do not work out is that they try toimpose their own cultural or world view, try-ing to make everything operate the way itdoes in their own market, which is oftencompany headquarters.” Kramer agrees:“You need natural relationship-builders whodon’t make snap judgments.”

One international group president re-counted interviews with two candidates for asenior finance position in China. One spokefluent Mandarin and asserted his plans forthe new role. The other came with fivebooks on China in his briefcase. “He said, ‘Iknow little about the country, but I’vestarted to read a lot and inform myself. Youare not going to get someone more dedi-cated and excited than I am to go toChina.’” The less experienced (but highly ca-pable) candidate disclosed what he didn’tknow and was awarded the managementrole instead of an overly confident, moresenior candidate. “He took a while to getgoing, but over time became a real star.”

Sensitivity to cultural nuance is a criticalquality for any executive operating on the in-ternational stage. It cannot easily be taught,

although for Vsevolod Rozanov, CEO ofMTS India, the key is “cultural immersion.”Effective global executives immerse them-selves in the local culture to sharpen theirunderstanding and insight, says Rozanov.“In India, for example, taking a genuine in-terest in Bollywood, cricket and Indian foodwould increase a foreign executive’s chancesof gaining acceptance within the companyand the wider business community.”

Intellectual curiosity is useful at two lev-els. It deepens the understanding of whatdrives the local business and what moti-vates its employees; it also helps develop anappreciation of the broader cultural context.Global executives with a willingness andpropensity to learn become increasinglyvaluable to their organizations over time. “Ilook for people who are driven by intellec-tual curiosity,” says Christie. “Much of anexpat’s success and enjoyment comes fromhaving a genuine interest in how people andcultures operate. You want the executivewho will be energized by the differences, notfrustrated by them or seeking to changethem.”

Agility is a quality that every global execu-tive must possess. It has multiple dimen-sions: intellectual, cultural, social andemotional. The most effective executives canadapt their style and approach to what theysee in front of them. Culturally agile peoplewill use their guile and influence to locatethe resources they need without trying tolearn or do everything by themselves. Theyare prepared to work with what’s availableand are interested in finding the best solu-tion, regardless of whose idea it might be.

The formation of a global executive withthese characteristics often begins well be-fore their arrival in the workplace. Upbring-ing, education and other early experiencesall play a role. Cultural fluency can result

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from being raised abroad; or it can be ac-quired from parents who encourage theirchildren to be tolerant, flexible and to have“eyes wide open to the world,” saysRozanov, who credits his openness toother nationalities, languages and culturesto being raised in Russia during an era ofsocial equality.

Whereas in the past people often becameexpats in the twilight of their careers,today’s global executives represent a com-pletely different demographic — younger,mobile, ambitious and risk-oriented. Theyalso tend to be internationally educated.Those who have not yet been exposed tooverseas environments have often bene-fited from attending educational institu-tions that deliberately foster a globaloutlook, something that Asian businessschools are increasingly good at.

Long-term commitment required One of the biggest changes to the expatri-ate experience is the length of commitmentcompanies expect from their internationalassignees. “In my view, a one-time expat isof little value to the company,” says NalinMiglani, global human resources directorfor Tata Global Beverages. “These are themost expensive ones, and they often fail. Iinsist that people who work internationallydo five years minimum. In the traditionalthree-year model, the first year is to learn,the second year is productive, and in the

third year they’re already thinking aboutwhat they’ll be doing back home. To extendthe productive period, we look for a five-year commitment. I also consider whetherpeople are there just because they want tosay ‘I’ve done it, now I can progress furtherin the corporation,’ or whether they have agenuine interest in developing a morecomprehensive international career.”

As global executives leverage their prior experience in a succession of roles, theybecome increasingly useful to their organi-zations. This gradual accumulation of di-verse experiences is what brings thegreatest value to the business, says Gam-mell. “You work in different parts of theworld, you build your portfolio of skills andlearn from each location while seeing whatis common about the corporate strategy,culture and language.”

The success of an international assignmentis measured not just by time commitmentbut by the legacy the executive leaves.AlQuraishi says of his own experience:“Identifying my successor is entirely appro-priate, and I see it as one of my objectives.I would say to any executive that if youhaven’t built a strong succession plan, thebusiness hasn’t fully benefited from you asan expat.”

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“Much of an expat’s success and enjoyment comes from having a genuine interest in how people and cultures operate.You want the executive who will be energized by the differences,not frustrated by them or seeking to change them.”

Globa

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Positioning the global leaderfor success International assignments need to be man-aged with rigor and discipline, to ensurethat both the company’s and the individual’sneeds are being met, and to prevent peoplefrom staying in roles long after they haveceased being useful. Butel recommends thatwhoever is sending the person out to be-come a representative of the businessshould work with the destination country todraw up a job specification, “so that the taskis fully understood by all parties, and tomake repatriation easier at a later stage.”Kramer believes that defining the goal of aninternational assignment is essential in se-lecting the right person. “The companyneeds to know what it is trying to get out ofthe assignment, and the individual needs toknow what success looks like.”

Employers have to make wise choices aboutwhich executives to send around the world.Mistakes are costly, so investing time and ef-fort in the careful assessment of candidateswill greatly improve the chances of success.One senior executive, for example, makes apoint of interviewing candidates in the newcountry where they would be assigned: “It isexpensive, but not nearly as expensive as abad decision.”

To be successful in an international assign-ment, you have to relish diversity and em-brace change — “be comfortable beinguncomfortable,” as one executive explained.Since international assignments involve alot of first-time learning, the technique ofunnerving candidates can be a useful way totest how well they will cope when throwninto unusual situations, according to Butel.“I make a point of taking candidates out oftheir comfort zone during the interview. I

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point of view

the expat experience as career development

It used to be the case in the Western-

dominated world of multinationals,

when overseas competition was limited

and stakes weren’t so high, that devel-

oping high potentials was one of the

main reasons for expat assignments.

Executives taking up overseas postings

usually did so because it was an oppor-

tunity for personal growth and prepara-

tion for greater things. Today, however,

underperformance in these roles has

more serious consequences, so compa-

nies can’t take the developmental risks

they might once have done. That said,

the development of international as-

signees is fundamental to any organi-

zation’s talent base; finding a balance

between offering high potentials the

opportunity for personal and career

growth and securing the best outcome

for the organization is particularly im-

portant when it comes to overseas as-

signments. “The company needs to be

clear about whether they need an

expat’s skills and experiences to ‘ex-

port’ to a new environment, or whether

the assignment is for that expat to learn

from other successful markets and be

groomed for future opportunities,” says

Terry Kramer. “These are both valid but

different objectives, but the leadership

team must be really clear about this.”

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want to see how they react to the unex-pected.”

An executive’s willingness and ability tomake a long-term commitment to workingoverseas often depends on his or her fam-ily situation. A good employer will assesscarefully what the family is prepared to putup with and how well they are likely to ad-just to the new environment. A significantpercentage of expatriate assignments fail,and one significant contributor to thosefailures is spousal or family issues. Movingsomeone to a new country is a major up-heaval, so the employer has to take careover the decision, then provide practicalsupport to ensure a smooth transition.However, leaving arrangements entirely tothe employer can be a mistake, cautionsMarmion. “I want the person to be a drivernot a passenger, to take responsibility andplan meticulously — not just for an inter-national move, but for their whole career.”

A well-developed onboarding programplays a vital role in helping executives settlein and become productive. Some compa-nies are good at this, but many are not, especially those that do not send many ex-ecutives overseas. The difference betweensuccess and failure can be as simple as ap-pointing a mentor to help navigate theearly acclimation period.

ConclusionIn today’s more nuanced and complexworld of international business, the con-cept of the expat has expanded and takenon multiple forms. The demand is growingfor globally minded, culturally sophisti-cated executives who can produce resultson the world stage, regardless of national-

ity. Finding and developing these execu-tives should be a major priority for anymultinational.

There is more work to be done in develop-ing sophisticated assessment methodolo-gies that can assess cross-cultural fluencyand help identify the executives most likelyto perform well in diverse markets. Judgingby many of our conversations with seniorexecutives responsible for making such ap-pointments, intuition still plays a big partin decision-making. Spencer Stuart is cur-rently conducting further research to pin-point the characteristics that make globalexecutives successful and to develop theassessment tools that will help companiesmake the best possible decisions.

About the authors

Anjali Bansal, Mumbai, is managing direc-tor of Spencer Stuart’s Indian business andco-leads the Board Services Practice in theAsia Pacific region. Marco Boni, Dubai, is responsible for the firm’s Middle Eastbusiness and is a member of the BoardServices Practice. Ben J. Holzemer leadsthe North American Technology, Communi-cations & Media Practice and manages theSilicon Valley office located in San Mateo.Phil D. Johnston currently managesSpencer Stuart’s Singapore office and is amember of the Board Services Practice.

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point of view

The International LeaderGlobal View

Globalization and the rise of BRIC and other developing economies have resulted in a pro-liferation of multinational companies dispersed all over the world. More and more busi-nesses are shifting their focus from national to international markets, resulting in adramatic increase in the proportion of revenues generated by overseas operations.

In our role as advisers to leading businesses across continents, we see enormous variationin the readiness of companies to hire the best talent regardless of nationality, backgroundor domicile. Recent research by Spencer Stuart into the nationality of CEOs and chairmenof many of the world’s leading companies shows that when it comes to appointing non-na-tionals into the top roles, there are astonishing differences between countries, as the chartbelow shows:

More companies are casting a wide net for top executives

France Germany Italy Spain Switzerland U.K. U.S.

45

40

35

30

25

20

15

10

5

0

% Non-national Chairmen % Non-national CEOs

We believe that the companies best placed to take advantage of opportunities in interna-tional markets are those most open to hiring talent from anywhere in the world. This isparticularly true at the board and senior executive levels. Yet many companies that need totake a more expansive, global approach are still a long way from even considering non-na-tionals in the top roles. These companies are in danger of losing out to their global com-petitors by limiting the pool of candidates they are prepared to consider. The point is notthat every company with global ambitions should be led by a non-national, but that mostorganizations should be open to the possibility.

Certain factors influence whether or not a company will turn to a non-national as its leader.Where the majority of a company’s revenues come from outside the “home country,” there

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is every reason why the CEO should be a non-national. The location of some stock exchangelistings carries a greater likelihood that boards and senior executives will be internationally di-verse. Foreign companies attracted by the status and access afforded by a London listing, forexample, have no particular affiliation to the U.K. and are just as likely to be led by a foreigneras a British citizen (although where this is the case, they tend to recruit a British chairman forreasons of governance credibility and to win the respect of the local establishment).

In some sectors, such as defense, nuclear power and utilities, it can be mandatory for com-panies to be led by nationals. And in some countries, such as France, the level of political in-fluence over top corporate appointments can be very strong, resulting in top leadershippositions invariably going to nationals.

Despite these factors, there are still plenty of businesses operating on a global scale that couldbe casting their nets far wider in order to benefit from fresh ideas and new ways of thinking.There are multiple ways of introducing international experience and perspectives into an or-ganization, such as appointing a non-national to the role of CEO; creating a more internation-ally representative executive committee; and nominating foreign directors to the board. Forsome companies, this is a necessary, low-key first step towards introducing a more interna-tionally diverse executive team. Another option is to assemble an advisory board, which can bea useful means of tapping into local expertise when building presence in a specific region ormarket.

Although today’s market for leadership talent is truly global, some companies face signifi-cant cultural, social, political and linguistic barriers that prevent them from accessing thistalent. To succeed on the global stage they will need to take positive steps to overcome suchbarriers if their leadership teams are to reflect the international footprint of their businesses.

About the authors

Angeles Garcia-Poveda, Paris, manages the firm’s Paris office and is a member of the Business & Professional Services, Private Equity and Marketing Officer practices.Salvador Palmada, Barcelona, leads the Financial Services Practice in Europe, The MiddleEast and Africa. Hugh M.S. Thorneycroft, London, is a member of the Industrial Practice. J. Maurice Zufferey, Zurich, manages Spencer Stuart’s Switzerland offices and is a memberof the Board Services and Financial Services practices. He also co-leads the Private WealthManagement Practice.

More open to non-national leaderSignificant revenues generated from outside the“home” country

Stock exchange listings outside of home country, especially for nonexecutive chairman role

Presence of international directors on the board or an advisory board with local expertise in key markets

More likely to have a national leaderRevenues outside the home country are not significant

High degree of political influence over senior corporate appointments

Nationally important strategic sectors, such as defense, nuclear power and utilities

Factors influencing leadership nationality

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Lessons from an international assignment

An international assignment has long been seen as pro-

viding executives with an opportunity for personal

growth and professional development, while enabling

companies to place executives in markets where specific

capabilities are needed or to spread corporate values

and best practices throughout the organization. With

business footprints expanding and international markets

becoming increasingly important drivers of revenue and

profit growth, companies need executives who are

global thinkers with broad-based business perspectives

and the agility to master an array of markets, cultures,

competitors and workforce differences.

As these capabilities become even more important, hav-

ing a meaningful assignment outside one’s own market

has become a critical element of executive experience

and is likely to become a prerequisite for career advance-

ment at a growing number of multinational companies.

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We asked several senior executives to

think back to their first or most mem-

orable international assignment and

share how those experiences helped to

shape or influence their leadership

styles. What surprised them the most?

What did they learn and how have they

continued to apply those lessons in

their current leadership roles? Finally,

what advice would they give to other

executives about succeeding in an in-

ternational assignment?

Philippe Bourguignon

Vice Chairman, Revolution Places,and CEO, Club Med

Early in his career, Bour-guignon, a native ofFrance, led develop-ment in the Middle Eastfor Accor, based out of

Beirut. He has held leadership roles in Franceand the U.S., including president of Disney Eu-rope, and served as co-CEO of the Davos-based World Economic Forum.

What surprised you?

Someone who was born and raised in hiscountry and, when he is 25, 28, 30, is postedabroad, obviously, learns so much during hisfirst assignment. I was raised in Morocco.My father worked for a U.S. company, and Icame to the U.S. almost every year when Iwas a young boy. Therefore, I’ve been ex-posed and living international from basicallyalmost the time I was born. It is more a wayof life, and, by the way, this has been a huge

gift. My two children were born in New Yorkand raised in the U.S., and today they are to-tally bicultural.

What have you learned?

I like to say that I’ve learned patience inAsia, and I’ve learned what competitionmeans in the U.S., because I’m from a coun-try where there is no patience and limitedcompetition.

What I also learned by working internation-ally is that if you keep good sense — remaingrounded in basic business judgment andrules — you can work in any foreign environ-ment. Good sense is key. Some people trytoo hard to be too local, understand every-thing, but you will never understand a for-eign country as well as you understand yournative country, even if you speak the lan-guage. But good sense is the same every-where.

What advice would you give to others based on your experience?

To an executive, my advice would be to listenand be humble. Listening is very important.Be humble and respectful. The tendency,particularly if you go into emerging coun-tries, is to consider that everything else isnot as well done. But being humble and re-spectful of people buys you tremendousmileage no matter where you go. You needto be more humble abroad than you are athome and more respectful.

When you are abroad, things are over-ampli-fied. Being abroad over-amplifies your bodylanguage, your words and your decisions.Whatever you say is listened to twice as

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carefully as when you say it at home. You arewatched much more closely than you are athome — for both good and bad.

John Doumani

Managing Director,Australasia for FonterraCooperative Group

A native Australian, heheld various senior rolesat Johnson & Johnson inItaly, Australia and theUnited States, before

leading the Asia Pacific business and, later, all ofinternational, for the Campbell Soup Company.

What did you learn?

The business issues were not that hard todiscover, but the bigger issues for me wereactually more cultural. The culture in the U.K.was similar to here, and there was a relativelyinformal work environment where you canjoke around a bit. This is my style and ittranslated really well. However in Italy and theU.S., the work environment is more formal,and I had to adjust my style to be consciousof this. Had I not done so, I would not havebeen able to be effective working for the or-ganization. You have to be very careful not tooffend people. If you want people to followyour leadership, you have to engage them ina way that works for them.


Seventy percent of what you know about busi-ness will translate, but the other 30 percent —

the difference between success and failurequite often — comes down to truly under-standing the business dynamics that might bedifferent. Market dynamics vary greatly interms of regulations, trade and competitivestructures. You’ve got to make sure you getyour head around this because it will affectyour ability to implement what you want todo, and you have to modify whatever you doto fit in.

The bigger issue is to be really sensitive tocultural differences. There’s no shortcut inbeing able to do this other than to have anopen mind and be willing to accept any differ-ences. You can’t go with the attitude of, “I’mjust going to do what I do and if they don’tlike it, stuff it!” The first thing is to accept thatthe cultural issues are really important. Ac-cept the fact that it may be different and bereally open-minded. The sooner you identifyand are open to any differences, the better.

Philip Earl

Executive Vice President and GeneralManager, Publishing for Activision Blizzard

Earl began his careerwith Procter & Gamble inthe U.K. and was later re-located to Saudi Arabia.

He worked for Glendenning Management Con-sultants in the U.K., before joining Nestle,where he worked in both the U.K. and Australia.At the U.S.-based Activision Blizzard, Philip hasworked in Australia and U.S. West Coast.

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What most surprised you?

Having worked in Saudi Arabia, havingworked in Australia, having worked in LosAngeles, what surprised me the most is thatthere are more similarities than differencesin the people across countries.

What have you learned?

I learned the importance of understandingthe pace of change: how much to do andhow quickly. You have to be very astute in un-derstanding the capabilities of the organiza-tion in the marketplace. It can be too fast,but can also be too slow. There is no right orwrong answer. You have got to accept thatyou can have a very strong strategy and youcan have a very good vision, but unless youbring the team with you, it is just discon-nected. Your people capability platform willdetermine whether to go faster or slower.

What people leadership insights have you gained?

Something interesting I have learned is thefact that people are motivated by differentthings, and understanding what most drivesa specific individual lies at the heart of lead-ership. Often you assume people are con-cerned about money. It almost always isn’tthe case. There has to be a base level of re-muneration, but in three years working withvideo games people, I have Harvard gradu-ates who just want to work in that industry; itmotivates them to be part of somethingamazing. It is a passion for them. Some peo-ple are motivated by a very strong sense offamily and a sense of community. If you arenot careful and gloss over individual motiva-tions, you never get the most out of people.You have got to understand people. There

can be 10 nuances of what motivates them,and if you get that right, despite cultural dif-ferences, you can usually do quite well.


My advice is to “be in.” When you go to anew market, don’t hang around on the side;just get in there. Absorb the culture, lan-guage, food, sport, everything. You get a re-action from your work colleagues that isreally incredible and makes you feel that youreally want to be here, and as a conse-quence, they see you as an expat wanting tobe here.

Conrado Engel

Chief Executive Officer, HSBC Bank Brazil

After several human re-sources and generalmanagement roles forbanks in Brazil, hejoined HSBC in Brazil,

later relocating to the company’s headquartersin Hong Kong to lead the retail banking andwealth management area for the Asia Pacificregion.

What did you learn?

The most important thing was how carefulyou have to be about managing cultural dif-ferences. People react differently to situa-tions, and this is very challenging. Forexample, the way you interact with a Chinese

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company is completely different from an In-dian one. Individuals can interpret situationsvery differently. Early during my assignment inHong Kong, after a meeting where we wereassigned tasks for a particular project, I askedan executive for a status update prior to thedue date. I realized later that this made the ex-ecutive feel very uncomfortable, because, ashe said, he would fulfill his commitments; itwas part of his responsibility. Again, it demon-strates the importance of understanding cul-tural differences.

What personal or professionallessons from your interna-tional experience have remained with you?

Managing any business is about managingpeople. Dealing with different cultures and re-actions is crucial. I learned to listen more andreflect more before taking immediate action. Ialso learned that people can significantly ben-efit from each other’s experience. For exam-ple, I believe that my experience in dealingwith crisis management as a Brazilian execu-tive was very beneficial to the HSBC Groupwhen I was in Hong Kong.

What people leadership in-sights have you gained?

You have to visit people, go and visit thecountries and the operations, and establishstrong professional connections. Personal re-lationships may also help. Understanding thecultural environment is of vital importance.Learning how to navigate a large organizationlike HSBC — with a strong internal culture,with very strong roots in Asia — is also criti-cal for success.


It is always best to listen, comprehend andthen act.

Kirk Kinsell

President of the Americas, InterContinental Hotels Group

An American, Kinsellserved for four years aspresident of Europe,Middle East and Africa

for InterContinental Hotels Group, based out ofthe company’s headquarters in the U.K.

What surprised you?

Based in London, with responsibilities for Eu-rope and Africa, the things that surprised mewere the diversity of thinking and the distinc-tive cultures and, therefore, how people felt,how people thought, how they processed in-formation and what was important to themvaried tremendously. As a result, there wasmore dialogue, which oftentimes meant de-bate. Having to have that broader discussionon issues was intriguing, challenging and ful-filling. Initially, the discussion can feel like it’sslowing things down, but when you reset ex-pectations and build in opportunities for de-bate, what I have found is that, even thoughpeople may not agree with the ultimate deci-sion, the process allows people to align andwalk out of a meeting on the same page.

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What personal or professionallessons have remained withyou?

I made it a point to get underneath the dif-ferences between my new environment andwhat I was used to at home, and understandthe history and the stories behind the sur-face. I began to appreciate the differencesfor how they enrich the environment that Iwas in, creating a more holistic and colorfultapestry from an aesthetic standpoint.

Coming back to the United States, I find my-self wanting to go deeper with people who Iotherwise would have thought were just likeme. As a result, I think I have the potentialto build stronger relationships. I have thepotential to be a better leader. Because ourjob as leaders is to unlock the potential ofthe people we work with and the people wehave the privilege of leading and managing.And, therefore, I can get perhaps a betterperspective of who they are and their moti-vations and how they align with the com-pany’s purpose and objectives.

What advice would you give others based on your experience?

To another American, I would say dialingdown the fact that you’re American and dial-ing up being a global citizen is probably amuch more effective way of engaging peo-ple. It doesn’t mean that you change yourprinciples or your beliefs or your value sys-tem; it means being sensitized to how youcome across. Saying things like, “We do itthis way back there” — meaning that wasthe only good way — can come off as beingtoo American, too know-it-all, too celebra-tory, too cheerleading, too shallow, all thosethings that are sometimes attributed tobeing American.

Murilo Portugal

President of Febraban(Brazilian Federationof Banks)

He held several seniorroles for the govern-ment of Brazil, beforemoving to the U.S. as executive director

for the World Bank and, later, deputy managingdirector of the International Monetary Fund.

What most surprised you?

My most relevant international experiencewas to work with International MonetaryFund. It provided me a great opportunity tounderstand the reality of other countries.Since I was responsible for the fund’s rela-tions with 81 countries in all five continents— from advanced countries such as Swedento developing countries such as Bhutan — Ihad to understand different environmentsand market dynamics. In this role, I cameinto direct contact with the reality of differ-ent countries, different economic cycles andstages of development, from crisis to growthmoments. What did not surprise me, unfor-tunately, was the reaction in some places tothe economic crisis in 2008, in particular,the difficulty of entering into a discussionwith governments and the denial about thegravity of the problems.

What did you learn?

Do not postpone the inevitable. Trying to es-cape an inevitable conclusion will increasethe costs related to the decision, but it ishard to define what you should fight for, andwhat to give up.

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What personal or professionallessons from the experiencehave remained with you?

Life is the best teacher. The only problem isthat there is only one pedagogy. You learnwhen you hit a wall, and usually you have togo through this painful process to learn. Evenif you rationally know what to do, usually youonly change when you hit a wall, because ofthe limitations in the decision-makingprocess and human behavior.


Respect the level of the professionals whowork with you, and learn how to best dealwith very smart people and motivate them.Well-qualified people, of course, have theirown ambitions and personal interests. It iscritical to maintain the enthusiasm of peoplein a multicultural environment, and devotetime for that. You have to be a manager ofpeople, otherwise you will fail even if you arecapable of managing processes and tasks.Technical knowledge alone will not make yousuccessful.

About the interviewers

Fernando Carneiro, São Paulo, manages theSpencer Stuart operations in Latin Americaand heads the firm’s Financial Services andPrivate Equity practices for Brazil and LatinAmerica. Robert S. DeVries, Miami, co-leadsthe firm’s global Hospitality & Leisure Prac-tice and is a member of the Board Servicesand Consumer Goods & Services practices.Kevin A. Jurd, Sydney, is a member of theConsumer Goods & Services Practice and for-merly led the practice in the Asia Pacific re-gion.

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Have We Placed Too

Much Faith in Corporate

Governance Reform?

Point/Counterpoint

Across the globe, the trend toward corporate gover-

nance reform, increased governance legislation and

more elaborate governance codes continues in re-

sponse to the global financial crisis and to the open-

ing of markets in developing economies. Advocates

of these measures sometimes speak of them with

missionary zeal, as though increased corporate gov-

ernance is good by definition — and able to halt

risk, corporate malfeasance and negative earnings

reports by its mere implementation.

But through our work advising the boards of some

of the world’s leading companies, we encounter

both high-performing companies that exhibit poor

corporate governance and unsuccessful companies

that embody every corporate governance best prac-

tice. Clearly, governance regulation plays a valuable

role, but those who elevate its standing to that of

corporate savior are exaggerating its power.

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Embracing Basic Principles

There is no doubt that basic cor-porate governance guidelineshave great value in helping toprotect the interests of in-vestors, particularly minorityshareholders, and in aiding in-formed investment decisions. For these reasons, disclosure and trans-parency is integral when it comes to publiccompanies’ financial and operating results,company objectives, executive pay, board in-dependence, major share ownership, share-holder voting rights, and governancestructures and policies.

In a global business world where interna-tional investment becomes more widespreadby the day, the adoption of these practiceshas become increasingly critical for publiccompanies wishing to attract and reassure in-vestors, and for investors seeking a degree ofprotection as they consider investmentabroad. Therefore, the basic principles of cor-porate governance such as those proposedby the Organisation of Economic Co-Opera-tion and Development and the United Na-tions Conference on Trade and Developmentshould be a starting point for all public com-panies. Only global adoption of these princi-ples can create a basic harmony of regulationthat will allow shareholders to invest withconfidence anywhere around the world.

Board Composition andStructure

Likewise, certain guidelines addressing the composition andstructure of the board of

directors can be considered general best practices for alllisted companies around theworld. For instance, to avoid conflicts of interest, it is generally advisable that a major-ity of directors and those of certain commit-tees be independent. We would also view it asa best practice to appoint a lead, presiding orsenior independent director to check thepower of the chairman in unitary boards, par-ticularly those where the CEO and chairmanroles are combined.

But even these basic guidelines can some-times fail to account for all the nuances of thereal world. For instance, a 2009 study in theJournal of Financial Economics found thatboards that had independent directors withsocial ties with the CEO correlated withhigher executive compensation and lowerCEO turnover after poor operating perform-ance. This illuminates the fact that even es-tablished standards of independence do notaccount for all of the possible conflicts of in-terest that a board director may have, andcan never truly guarantee director objectivity.At the same time, current independence re-quirements can also have the opposite effectof disqualifying some directors who may beable to provide both an objective perspectiveand invaluable industry and company experi-ence that a true outsider may lack. This is es-pecially true for industries in which directorsneed specialized technological or financialknowledge to contribute meaningfully tostrategy discussions.

Independent directors, particularly those whocomplement the board’s existing industry orgeographical perspective, can provide freshthinking and valuable contributions to thestrategy discussions of the board. They canalso help prevent majority shareholders fromhaving undue influence. But legislation regu-lating the percentage of directors that must

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be independent often fails to account for theinherent differences in the talent challengesindividual companies face and the very realcontrasts between industries when it comesto the performance of industry outsiders asboard members.

The Quota Question

Similar considerations should be weighed in viewing the relative merits of the genderquotas that have recently be-come law in several Europeannations. There is no doubting that talented women directors add value toboards. An oft-cited 2007 study by Catalystfound that Fortune 500 companies with thehighest percentages of women board direc-tors outperformed those with the least by 53percent. This statistic is likely due, in part, tothe diverse perspectives that these directorscontribute, but also in part to the fact thatthe best companies are likely to have themost success in attracting qualified womendirectors.

Unfortunately, the current dearth of womenin the boardroom is also mirrored in thesenior executive ranks from which qualifiedboard directors are typically drawn. Even inNorway, which pioneered quota legislationin 2003 by requiring public limited compa-nies to fill 40 percent of board seats withwomen, just 10 percent of senior executivesare women. Given that the percentage ofwomen among retired executives is evenlower, and that active executives tend toserve on far fewer boards today than theyonce did, we see intense competition for topfemale board talent today — even in coun-tries with no quota legislation.

In our board recruitment work around theworld, our clients highly value the diverseperspectives and insight that qualifiedwomen directors can bring. But they are alsofaced with the reality that adding women tothe board sometimes requires the selectionof directors who are more junior in rank andless seasoned in board experience than theywould choose otherwise. In Norway, for in-stance, statistics show that the women whohave been added to boards in response tothe quota regulation are better educated, butalso younger and less likely to have CEO ex-perience, than the men they have replaced.

Though the addition of women directorscontributes to deeper discussions and newperspectives on a board, companies are alsotaking a broader view of diversity as theythoughtfully strive to assemble boards thatcan provide a competitive advantage when itcomes to company strategy. For instance,companies are eager to bolster their existingboard talent with international executiveswho have experience in emerging markets,and with experts who add specific knowl-edge in areas such as social media.

This broader view of diversity — one thatencompasses diversity of skills and knowl-edge, as well as gender — is most helpful inbuilding boards that can create long-termshareholder value. For this reason, genderquotas should be viewed as a temporarymeans of addressing gender inequality inthe boardrooms of countries that choose toadopt them, not as a template for effectivelyaddressing the specific business needs andunique challenges of individual companies.

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point of view

Regulating Board Effectiveness

Another area in which well-intentioned regulations can sometimes have unintendedconsequences is in requirementsfocused on improving board op-erations. For instance, there is considerable value in the idea that board di-rectors should be trained, because there aremany things about being on a board thatfirst-time directors don’t know. And, with con-tinued enhancements to governance regula-tion, even seasoned directors are beingcharged with responsibilities in new andsometimes unfamiliar areas. As a result, re-quirements for board director training havebecome law in several jurisdictions.

But while the idea is good in principle, its im-plementation is often poor. When legislationwithout specific definition is passed requiringdirectors to get recurring training, it can spura cottage industry of mediocre training com-panies, from which corporations may then se-lect the lowest-cost provider who can helptheir directors meet the mandate mostcheaply. And sometimes the actual contentcovered is so basic that many directors endup viewing the exercise as a waste of time.

Similar issues occur with board effectivenessreviews. When done well, these reviews are atremendous asset in highlighting areas wherethere is room for improvement and greaterefficiency. But codes requiring board effective-ness reviews can produce a box-checking ap-proach, unless boards embrace the spirit ofthe assessments, rather than treat them as acompliance exercise.

A Blunt Instrument forPrecision Work

By its very nature, corporate gov-ernance is a complex topicwhich must be viewed throughmany lenses. These include the dynamics and maturity stage of a company’smarket, the governmental environment it op-erates in, the maturity of the company itself,the unique demands of the company’s indus-try, and the market for available talent at theboard and senior executive levels, amongother factors.

As a result, there is no one truth about whatmakes good corporate governance, beyondthe near-universal acceptance of the need fordisclosure and transparency. These basicsserve as a protective barrier for investors andbusiness systems against the worst corporategovernance practices, but still give compa-nies the latitude they need to make decisionsthat are in the best interest of the companyand its investors.

Beyond these basic principles, however, itmay make the most sense for individualcountries and exchanges to decide for them-selves what level of regulation is most appro-priate based on where they fall on thebusiness life cycle. For instance, ineconomies with closed markets or a prepon-derance of family-owned corporations, wejustifiably see less pressure to adopt gover-nance regulation. As economies open up,they may require greater regulation as a tem-porary measure to ensure adoption of corpo-rate governance best practices. And in moreestablished market economies, an argumentcould be made for rolling back regulationsonce governance best practices become un-derstood by companies and ingrained in theirbehavior. By its very nature, regulation is a

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blunt instrument that must be used withdiscretion.

When governance reform becomes too pre-scriptive in its specifics, it can prohibit com-panies from making the right decisions foreach unique boardroom situation when itcomes to complex questions such aswhether to split the chair and CEO roles. Forthis reason, comply or explain approachesthat give boards the latitude to make theright choices are often most helpful whenregulation goes beyond the basic measuresthat ensure disclosure and shareholder pro-tection.

The Real Key to Good Governance

Good corporate governancecannot ensure that a companyhas the right strategy to succeed — and too much focuson compliance issues can taketoo much of the board’s attention away from its primaryresponsibilities. Most importantly,the jury is still out on the effectiveness of in-creased governance legislation, a fact thatwas reinforced when the epicenter of the fi-nancial crisis developed in the world’s mostregulated markets.

While some regulation is necessary andhelpful, there is a danger in placing toomuch emphasis on it. When it comes to theboardroom, the most important considera-tions are, instead, assembling a board of ex-ecutives who combine integrity with theright mix of knowledge, experience and vi-sion to perform the board’s defined roleswith excellence.

Beyond even these considerations, qualitiessuch as judgment, engagement and strongcommunication skills are critical attributesfor every director. And, just as it is a compo-nent in any high-functioning team, interper-sonal chemistry also plays a role in everyeffective board. Wise decisions regardingboard composition are complex, multifac-eted and impossible to legislate. In the end,the true foundation for great governance can only be built by making these careful,thoughtful decisions in the service of a com-pany’s long-term needs and goals — notthrough governance reform.

About the authors

Fabrice Desmarescaux, Singapore, is amember of Spencer Stuart’s Financial Serv-ices Practice, which he led in Asia Pacific forthree years, and is global co-head of the RealEstate Practice. Katherine Moos, London, isa member of the Board Services Practice.Andrea Pecchio, Rome, leads the Italian op-erations of the firm’s Financial ServicesPractice.

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point of view

five principles for getting the most out of aboard assessment

Corporate boards today are expected to be more engaged,

more knowledgeable and more effective than in the past. One

tool that a growing number of boards are using to examine

and improve their effectiveness is the board evaluation. An-

nual assessments have become the norm for boards in many

countries, with nearly all listed companies in Canada, France,

the U.K. and the U.S. conducting some sort of assessment

each year. The practice is also widespread in Italy and Spain

and is gaining attention in many Asia Pacific markets, where

the issue of board effectiveness is moving up on the corporate

governance agenda.

The Executive Guide

improving boardeffectiveness

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The Ex

ecutive Guide

Despite their growing adoption, board as-sessments are falling short of their prom-ise of enhancing board effectiveness insome cases. Boards that take a compli-ance-oriented approach — or structure theprocess in a way that prevents a true exam-ination of the impediments to board effec-tiveness — lose the opportunity to gainvaluable shared insight into the operationof the board and ways to improve its com-position, processes and relationships.

When done effectively, board evaluationsprovide a forum for directors to review andreinforce appropriate board and manage-ment roles and ensure that issues that maylie below the surface are identified and ad-dressed promptly. In short, evaluationsgive the board an opportunity to identifyand remove obstacles to better perform-ance and to highlight best practices.

How can boards make sure that they getthe most out of the assessments, so thatthey really improve board effectiveness? Inour experience, boards derive the highestvalue from a board assessment that isshaped by five key principles:

The board has clear objectives forthe evaluation.

A board leader drives the process.

The process incorporates perspec-tives from senior managers whoregularly interact with the board.

The assessment process goes be-yond compliance issues to examineboard effectiveness across a broadrange of measures.

Directors commit to reviewing theresults of the assessment togetherand address issues that emerge.

The board agrees on clear objectives for the assessment.

One of the most common mistakes boardscan make when embarking on an assess-ment is failing to agree at the outset on thepurpose and objectives of the process.While it may seem obvious, coming to ashared agreement about what directors col-lectively want to accomplish through the

How common are annual board assessments?

An annual board effectiveness assessment is now a widespread practice in many European marketsand in North America. Interest in board assessments is growing in Asia Pacific.

Canada France Germany Italy Spain U.K. U.S.

Percentage of Major Listed Companies Conducting an Annual Board Assessment

100% 100% 44% 84% 60% 98% 99%

Source: Spencer Stuart research, company reporting

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assessment encourages board members tocommit time to the process and to providethe candid feedback that is essential to iden-tifying and addressing potential roadblocksto board effectiveness. Without the commit-ment from the board as a whole and direc-tors individually, an assessment is unlikelyto yield the desired results. Clarifying objec-tives and defining the scope of the assess-ment also helps to avoid a situation inwhich the board is using the process as away to put off dealing more directly withnon-performing directors.

For some boards, a “triggering event,” suchas the arrival of a new CEO or a change inboard leadership or composition can shapethe priorities and objectives of the assess-ment. For example, an assessment occur-ring amid a CEO transition can help forgean understanding between the CEO and theboard about expectations and accountabili-ties, clarify the respective roles of the boardand CEO and ensure that time is spent earlyin the CEO’s tenure to consider whetherchanges are needed in the way the board iscomposed, structured or operates.

Furthermore, board structures, governanceissues and cultural norms differ by companyand country, and these differences also canaffect the style and scope of the board as-sessment. To be most effective, a board as-sessment must be tailored to the company’scurrent business context and include anyrelevant issues.

Among the questions boardsshould consider at the outset:

What is the scope of the assessment?For example, should the process only in-volve assessments of the board and com-mittees, as required in many countries, or

also include individual director assess-ments? Boards with little experience con-ducting assessments may define a narrowerscope the first year, expanding the scope insubsequent years as directors become moreconfident and comfortable with the process.

What’s the most appropriate assess-ment approach for the board? Boards approach assessments in a variety ofways, ranging from a director questionnaireto a robust process in which directors are in-terviewed individually, typically by a thirdparty, to draw out candid views about theboard’s effectiveness.

Should board leaders be assessed? Our experience is that the board’s effective-ness is impacted directly by the board’s lead-ership. Even though the chair is guiding theprocess, the best situation is when that per-son is open to feedback about his or herleadership.

What areas does the board want to delveinto more deeply? These areas could include board process, be-haviors, communication issues, the effec-tiveness of executive sessions, the role of thelead independent director, the board’s rela-tionship to management and developmentof the board’s agenda. In countries whereannual assessments are required, someboards find the process more valuable wheneach year they choose a specific topic —such as the board’s committee structure orits role in the strategic planning process —to examine more closely.

What gaps exist in the current assessment process? Boards can become dissatisfied with assess-ment techniques that fail to get at issuesthat are impacting their effectiveness. It ishelpful at the start of the assessment to con-sider whether to evolve the assessment ap-

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proach or the issues that are reviewed inorder to make the process more productive.

A board leader is responsible fordriving the process.

Essential to a successful evaluation is hav-ing an independent board leader championthe assessment process. The independentboard chair, chair of the governance com-mittee or the lead independent director isin a position to drive the process — involvethe right people, ask for directors’ time,schedule time on the agenda to discuss theresults and ensure that the board followsup on the issues that emerge. And whilethe CEO should be an integral part of theprocess, he or she should not be leading it.

The board leader driving the assessmentprocess plays a significant role in manag-ing expectations about the process, servesas an independent resource for directorsand management to turn to with concerns,and may deliver feedback to individual di-rectors, if the board is not working with athird-party to facilitate the process.

The process incorporates per-spectives beyond the board direc-tors themselves, including thosefrom senior management andbest practices from outside thecompany.

Another way the board can limit the valueof a board assessment is to look only in-wardly at its own effectiveness. An emerg-ing best practice among U.S. boards,although still less common in Europeanboards, is to seek input about the board’seffectiveness from the key senior manage-

ment team members who interface withthe board. Soliciting input from the execu-tives who participate in most of the boardmeetings — such as the general counsel,the president, the chief financial officer andhead of human resources — can broadenthe perspectives on the board’s effective-ness in key areas, including board/manage-ment relations. As regular board observers,these executives often have very thoughtfulfeedback about what the board does welland what it could do better.

Board assessments also can be more valu-able when boards benchmark themselvesagainst other high-performing boards inthe same industry segment or against bestpractices in a specific area. For example,boards often want to know how they com-pare to peers in areas such as committeestructure, compensation and mandatoryretirement age. A third-party facilitator withsignificant experience in the boardroom

What can a board effectiveness assessment include?

• Board processes and supporting materials

• Board composition

• Committee organization and processes

• The role of the board and board leaders

• The board’s relationship with the CEO

• Board culture and dynamics

• Potential board development needs

• Overall board effectiveness

• Individual director effectiveness

The Ex

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and knowledge of governance guidelinesand regulations can provide perspectives onhow the board compares to its peers or“measures up” to the evolving standards ofcorporate governance by providing an up-to-date perspective on best practices.

The assessment process shouldgo beyond compliance issues toexamine board effectiveness.

Many boards have relied on director ques-tionnaires to conduct their assessments.This paper-and-pencil approach can providea sense of how directors are feeling aboutcompliance issues — whether or not theboard is involved in strategy discussions orCEO evaluations, for example — but theyare less valuable in revealing issues or con-cerns that are affecting the board’s effective-ness. While a board may be doing all of thethings it is supposed to be doing by law,these activities may not be yielding resultsthat are improving the outcomes for thecompany. Similarly, behaviors on the boardmay be preventing the board from servingas a strategic adviser for management orlimiting its strategic influence.

In the most effective board assessments, di-rectors are interviewed individually on a con-fidential basis and asked for both theirqualitative and quantitative assessment ofthe key areas that determine the effective-ness of the board. The assessment inter-views should be conducted by a seasonedboardroom consultant who understandsboardroom issues and CEO/board relations.Interviews typically are wide-ranging discus-sions, examining everything from boardcomposition and organization, boardprocesses, roles and responsibilities to com-munication, boardroom dynamics, theboard/management relationship and thequality of boardroom discussion.

As part of our process, we recommend thata full board evaluation include a review ofgovernance documents, committee char-ters, board meeting minutes, board meetingagendas and observation of a board meet-ing. Observing the board dynamics and ex-changes between directors during livemeetings can be a very useful input whenproviding advice and recommendations forimprovement, particularly related to thequality of board discussions.

The assessment process can reveal a varietyof issues and obstacles to better board per-formance. These range from easily ad-dressed operational complaints aboutmeeting length or the composition of theagenda, to larger, thornier issues concerningthe board’s role in strategic decision-mak-ing, gaps in knowledge and competencieson the board, and executive and directorsuccession planning. The corrective actionsrange as well — from improving the timeli-ness of board materials and winnowingoverly long agendas, to making changes inthe composition and, occasionally, the lead-ership of the board.

While many of the concerns that surfacethrough evaluations focus on board proce-dures, they sometimes go to the importantrelationship between the board and man-agement, which can vary depending on thesize and development stage of the company,the international makeup of the board andthe current state of the business. In Europe,many boards also are re-examining theboard’s involvement in areas such as suc-cession planning and strategy planning,considering whether the board should bemore involved earlier in the process, for ex-ample, to review the competitive assump-tions that are shaping management’sstrategic plan.

point of view

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45

Directors commit to reviewingthe results of the assessment andprepare an action plan for ad-dressing issues that emerged.

Another way assessments can fall short iswhen boards do not commit the time to re-view the results and address the issuesthat are raised. Some boards, for compli-ance reasons, begin an assessmentprocess, but then spend little or no time ondiscussing the findings. In addition to leav-ing issues unresolved, this lack of follow upcan generate cynicism about the processand the board leadership’s commitment toimproving effectiveness in the future.

Boards have to be open to the results ofthe assessment and be prepared to dealwith the findings. This involves having anopen discussion among the board mem-bers about performance issues that wereraised and prioritizing items that should beaddressed in the coming year. Follow-up istypically delegated to the governance com-mittee, which develops an action planbased on the board recommendations. Theboard reviews its progress as part of thefollowing year’s assessment.

Conclusion

Done properly, a board assessment is not areport card for the board as a whole or forindividual directors. Instead, it should beviewed as a tool for continuous improve-ment and learning. Successful assessmentprocesses:

• Reflect the culture of the organiza-tion and its board

• Are championed by a chairman orother board leader who participatesactively in the process

• Have shared support among all di-rectors

• Begin with clearly stated objectivesfor the board assessment process

• Include adequate time on theboard’s agenda to discuss the resultsand establish a clear approach foracting on the findings, including de-veloping an action plan with a time-line and milestones

• Are characterized by confidentialitythroughout the process

About the authors

Alice Au, Hong Kong, is a member ofSpencer Stuart’s Board Services, PrivateEquity and Financial Services practices.Susan S. Boren, Minneapolis/St. Paul, is anactive member of the firm’s Board Serv-ices, Life Sciences and Education, Non-profit & Government practices. Enzo DeAngelis, Rome, is a leader within the firm’sExecutive Assessment business in Italy andis a member of the Board Services Practice.

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point of view

You need a leader— Now what?

The right leader can take companies, organizations and

even communities to new levels of success and prosperity.

The wrong leader can sabotage years of progress, slowing

or reversing growth and eroding the organization’s credi-

bility with important stakeholders. With the potential risks

so high, how can companies improve their ability to make

leadership decisions?

In fact, there is no shortage of theories, assumptions or

conventional wisdom about how to choose a leader, for ex-

ample: inside candidates are always better than those hired

from the outside; a candidate’s age, industry expertise or

experience in the same role predict his or her likelihood of

success; and the most tempting piece of advice of all —

just hire a “star.”

A new book examines the factors behind choosing the right leader — and the assumptions and myths that can lead you astray

Ideas

68226_Body_Layout 1 12/12/11 12:17 AM

The Curious Case of Bill Perez*

You have a key leadership job to fill. Natu-rally, you want the very best person. Butwhat does this really mean?

Have you ever come across situations inwhich the same person, with similar man-dates executed more or less the same way,could be a spectacular success in one situa-tion and an outright failure in another? Whatdoes this imply about how to choose thevery best people for your top leadership po-sitions?

This is precisely what we will explore in theilluminating story of an American executivenamed William D. “Bill” Perez, who rosethrough the ranks to become the chief exec-utive officer of consumer products giant S. C. Johnson & Son, and then went on to berecruited from the outside to lead Nike andthen Wm. Wrigley Jr. Company.

• • • • • • • • • • • • • • •

Over the years, Nike rode the wave of —some would say drove — the fitness revolu-tion behind high-profile athlete endorse-ments, a continuous flow of new product

47

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* James M. Citrin, Julie Hembrock Daum, “The Curious Case of Bill Perez,” in You Need a Leader — Now What? How to Choose the Best Person for Your Organization (New York: Crown Business, 2011), pages 3-15.

Drawing on empirical analysis, case studies and the collective observations fromthe firm’s many years of client work, a new book by Spencer Stuart consultantsJames M. Citrin and Julie Hembrock Daum concludes that selecting the best per-son for a role is not about choosing a superstar. Instead, it’s about matching theright individual to the right situation, and using the right process to get it done.

Contrary to many of the myths and assumptions surrounding the selection ofnew leaders, You Need a Leader — Now What? argues that the process of choosinga leader should begin with a deep understanding of the organization’s needs andthe kind of person who will both fit into its culture and bring the right experienceand skill-set to get the job done — and only then go out to find the person whobest matches those needs. This may seem like common sense, yet in practice thisrepresents a different way of thinking for many organizations.

Every group — company, organization or community — has unique characteris-tics, requirements, cultural attributes and specific needs that must be addressedby its leadership. Efforts to hire a superstar CEO can backfire when the individualis not well-matched based on the organization’s specific attributes and require-ments. In their book, Citrin and Daum outline how organizations can design arigorous process for determining their leadership requirements and for identify-ing the individual best equipped to address them.

We provide an edited excerpt of the first chapter here.

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introductions, and the company’s cult-like de-votion to founder Phil Knight, who with hisever-present sunglasses and wavy reddish-blond hair was the embodiment of cool. Heled the company’s initial public offering in1980, drove the organization past the $1 bil-lion revenue mark in 1986, and was profiledin an August 1993 Sports Illustrated coverstory under the headline “How This ManTurned a Tiny Sneaker Company into theMost Powerful Force in Sports.” In 2004, 45years after graduating from the University ofOregon (having be-come its most fa-mous, wealthy andphilanthropic alum-nus), and with thecompany exceeding$12 billion in rev-enues, Knight, then66 years old, wasready to turn overthe reins.

Both Knight andNike’s board of di-rectors became con-vinced that the way the company developedproducts, marketed to consumers and sold toretail was anachronistic compared with thebest practices of the most successful con-sumer products companies. The two logical,potential internal successors had little, if any,experience with the world-class marketingtechniques used by consumer products com-panies. Knight, therefore, felt he had to gooutside the company, conducting a highly se-cretive search for his replacement.

After reviewing 75 résumés, personally inter-viewing 15 candidates, and hosting a series ofmeetings with “the final four” candidatesfrom several of the world’s most renownedconsumer product companies, Knight made

his choice. It was Bill Perez, a highly regardedCEO, who had spent 34 years with S. C. John-son, the private company founded in 1886and maker of Johnson Wax, Windex anddozens of other household brands. Eventhough he had had eight years of experienceas CEO of a $6.5 billion global consumerproducts company, the announcement ofPerez came as a surprise to Nike employees,investors and the sports industry alike. Perezwas a well-respected chief executive, to besure, but an unknown outsider whose experi-

ence with Nikewas limited towearing thecompany’s run-ning shoes as amarathoner.Nonetheless, thechoice was seenas evidence thatNike wanted toprofessionalizeits managementapproach andimplement thedisciplines of

consumer packaged goods marketing, prod-uct development and market research.

Perez realized that he had to integrate him-self successfully into a distinct culture thathad limited success bringing in outsiders at asenior level. He had done his homework andtried to address this. Before Perez acceptedthe position, Knight and Perez had multipleone-on-one meetings and two dinners over ayear-long period. They talked about manage-ment philosophies, brand building, their re-spective corporate cultures, Knight’s vision forthe company and how they would work to-gether. By the time he accepted the CEO offer,Perez concluded that despite the differencesin industry sector and corporate cultures,

48

point of view

The process of choosing a leader should begin with

a deep understanding of the organization’s needs and thekind of person who will both fit into its culture and bring

the right experience and skill-set to get the job done.

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Six Common Leadership Selection Traps

As important as it is to have a rigorous process for defining the organization’s re-quirements and cultural attributes before selecting a new leader, it is just as impor-tant to know what pitfalls to avoid when hiring or promoting a leader into a key role.Here are several of the most common mistakes organizations make.

1 Mistaking charisma for skill

Personal charm is an attribute, like eye color or left-handedness. It can be a usefultool in navigating interpersonal relationships, but is nowhere near as important asperformance in critical parts of the job.

2 Using past failure to reject a candidate

Knowing that someone failed in a past role is important; knowing why someonefailed is essential. Sometimes a person fails in one organization because of factorsunrelated to his or her skills. Your company may well be the perfect environment forthat individual to flourish.

3 Assuming someone thinks like you do

Everyone approaches problems differently, and that mix of styles can sometimes re-sult in a harmonious work environment. However, hiring a leader with dramaticallydifferent cultural values will usually lead to discord and dysfunction. Understandingwho the candidate is must be a part of any candidate evaluation.

4 Failing to determine what kind of leader you’re looking for

Do you need a visionary? A nuts-and-bolts guy? If you can’t lock down your sense ofthe job, a potential leader will know it, and steer clear of a job that will necessitatepleasing opposing factions and bring nothing but headaches.

5 Rushing the process

Urgency can lead a company to speed up the due diligence process. Those skippedsteps could be crucial ones, though, like fully vetting the top candidates, or makingsure all relevant voices are heard when it comes time to make the final decision.

6 Hiring a “number two” as a potential successor

It sounds logical to pick a CEO-in-waiting, who can learn the ropes on the job. Thereality is that someone in this position begins his or her tenure as a subordinatewithout the ability to exercise personal initiative. They lack the credibility of a true in-sider or an outsider charged with driving change, and tend to play it safe to hang onto the promised spot as chief executive.

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much of what he had learned over the yearsabout marketing, management and brandswas indeed applicable to Nike. He alsoadopted the appropriate mindset for someonemoving into a leadership role from outside theorganization. “I’ve got to learn from the Nikepeople and understand the culture,” he said.“The last thing I wantto do is disrupt it.”

Despite the best of in-tentions and extensivedue diligence on bothsides, it did not work.Armed with the per-sonal mandate fromKnight to apply the so-phisticated practicesfrom packaged goodsmarketing, one ofPerez’s early initiativeswas to go out withmembers of the com-pany’s sales force tovisit Nike’s largest re-tail partners. This isManagement 101 to those trained in the blue-chip consumer marketing world and exactlywhat Knight had hired Perez to do. Perhaps itwas his reclusive personality or perhaps hedidn’t think it was necessary, but whatever thereason, Knight had not communicated his en-dorsement of Perez’s new approach aroundthe Beaverton, Oregon, campus. The newCEO seemed out of step, and the whisperingcampaign soon began. Executives were fur-ther taken aback when Perez sought to estab-lish a consumer insights capability, usingmarket research to understand what cus-tomers were looking for in Nike’s offerings.Again, for marketers at S. C. Johnson, Procter& Gamble, PepsiCo or hundreds of othermarketing-driven companies, forming such a

group would have been considered a babystep toward linking product developmentwith customer preferences. But not at Nike.“We don’t ask consumers what they want,”the way of thinking went. “We design prod-ucts that they have never thought of andshow them that they want them.”1

Influentialcompany ex-ecutivesstarted talkingabout howPerez didn’thave an emo-tional connec-tion to theNike brand.He was toocold, overlynumbersdriven and an-alytical. Long-servingexecutivesstarted lining

up outside Knight’s Zen-garden-inspired of-fice, from which he rarely ventured. Behindclosed doors Knight was being buffeted bythese criticisms from trusted colleagues,many of whom had worked for Knight theirentire careers. And while Knight and Perezhad weekly meetings to review progress andpriorities, the communications were breakingdown between the two. Perez says that Knighthad not given him feedback about the con-cerns coming to him from the executiveteam. Since he thought he was doing pre-cisely what he had been hired to do, he wasshocked when at the seemingly routine Mon-day meeting on January 9, 2006, only 13months after assuming the CEO position,Knight delivered the fateful news. Perez told

50

point of view

1 Senior Nike executives are unapologetic about this approach, stressing correctly that other innovative companies such asApple also lead — rather that react to — customer preferences.

Have you ever come across situations in which the same

person, with similar mandatesexecuted more or less the same

way, could be a spectacular success in one situation and

an outright failure in another?What does this imply abouthow to choose the very best

people for your top leadershippositions?

68226_Body_Layout 1 12/12/11 12:17 AM

us what Knight said verbatim. “This is notworking. You can resign amicably or go fightit with the board.”

Perez did in fact appeal to the board, but tono avail. The irony is that Nike’s perform-ance during his short tenure was strong. Netincome surged 28 percent to $1.2 billionfrom a year earlier, while sales rose 12 per-cent to $13.7 billion. The problem was clearlynot one of performance. And contrary to themost common explanation, it was only par-tially a function of a cultural mismatch. Hadthe company been in a crisis situation, witha so-called burning platform for change, theinitiatives that Perez was attempting to drivewould have been more palatable and there-fore almost certainly more successful.

• • • • • • • • • • • • • • •

After the Nike debacle, Perez’s formerly stel-lar career was in disarray. He received anumber of calls about joining boards. But heturned them alldown because hewanted to get backto work and was al-ready on the Kel-logg and Hallmarkboards. He had“failed as a CEO”and had shown that“he couldn’t adaptto another culture” after a lifetime inside thestaid, private S. C. Johnson. Boards of direc-tors, even in his very own consumer prod-ucts industry, were reticent to consider himfor top executive positions. Perez was at acrossroads in his career, similar to manysevered executives. Should he attempt to

“get back up on the horse” and try to rebuildhis reputation? Or should he slip into acomfortable retirement? Surely he hadlearned the lesson never again to work as anoutsider CEO for a powerful chairman in afounder-led or family-controlled company.

Bill Perez and Bill Wrigley Jr., however, cameto an altogether different conclusion. Whathappened next to Perez helps demonstrateperhaps the essential truth when it comes tohiring a person for a top leadership job:It’s not about selecting a great individual todo a job. It’s about matching the right indi-vidual to the right situation, and using theright process to get it done.

That is our central message, one contrary tomuch that passes for conventional thinkingabout which people to place in senior-levelpositions. It’s less about going out to findan individual superstar and more aboutdeeply understanding what an organizationneeds and what kind of person would bothfit into the culture and bring the right experi-ence and skill-set to get the job done and

then going outto find the bestperson tomatch theneed. Whilethis may seemlike commonsense, we’llhelp you under-stand that this

is a different way of thinking. Our goal is toprovide you with a framework for filling keyleadership positions not only at the top butthroughout your organization.

• • • • • • • • • • • • • • •

51

Idea

sIt’s about matching the

right individual to the right situation, and using the

right process to get it done.

68226_Body_Layout 1 12/12/11 12:18 AM

William Wrigley Jr. II2, who stood at the helm of the company his great-grandfatherfounded in 1891, determined that he needed aseasoned executive to help navigate the com-pany through the difficult absorption of theAltoids and Life Savers businesses acquiredfor $1.5 billion in 2004. Wrigley suggestedPerez as a candidate to the company’s boardbased on his CEO experience at S. C. John-son, where he had led the acquisition and in-tegration ofnumerous con-sumer companies.Wrigley and theboard conducted in-tensive due dili-gence on Perez’stroubles at Nikeand his extensivecareer at S. C. John-son, speaking withboard directors andformer direct re-ports from bothcompanies. SinceWrigley and S. C.Johnson shared many of the same retail cus-tomer accounts — including the largest su-permarket chains, drugstores and massretailers — they were able to get an unbiasedmarket point of view on Perez’s reputationand management style. This research plus ex-tensive conversations with Perez, duringwhich he dispassionately shared his lessonslearned from the Nike saga, helped Wrigleycome to the conclusion that Perez’s failurewasn’t a question of him being “a bad” CEO.Wrigley also recognized that his company hadmore similarities to S. C. Johnson than toNike in its management approach, the way itsold into the retail channel and its marketing,advertising and product developmentprocesses. So they decided to go with Perez.

The decision to appoint Perez was quickly val-idated inside the company, and soon in themarketplace and on Wall Street. Unlike Nike,where Knight had been mum about thechanges that Perez was implementing, thistime he had the visible and well-communi-cated support of chairman Bill Wrigley Jr.Perez was therefore able to immediately re-align global operations to have all of the re-gions report directly to him. He had the

mandate to getdirectly involvedin product devel-opment, engag-ing freely with thecompany’s foodscientists, flavor-ing experts andmanufacturingmanagers. Basedon his past expe-rience workingwith S. C. John-son’s sales forcewith grocery andconvenience

stores, he was able to relate to the Wrigleysalespeople about how to win more shelf fac-ings from the competition with the major re-tail customers. The result? Wrigley sawmarked growth in international profits from amore efficient global supply chain. The prod-uct development teams revamped the flavorsof their Extra and Wrigley’s brands and spear-headed the introduction of the Slim Pack, asleek, 15-stick envelope-style packaging thatwould be more durable and portable. Mostsignificantly, Perez convinced the company’smanagement team and board that their nine-figure investment in 5 Gum was worth it. Thenew packaging, marketing and flavoring for-mulations unleashed unprecedented growthin the core chewing gum business in whatwas an otherwise mature industry.

52

point of view

Perez’s success as an externally recruited CEO at Wrigley defied much

conventional wisdom about top management recruitment,

such as: Don’t select an executive who “failed” or

that recruiting executives fromthe outside is much riskier.

2. Bill Jr. is the son of William Wrigley III (1933–1999), the grandson of Philip K. Wrigley (1894–1977) and the great-grand-son of William Wrigley Jr. (1861–1932).

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In less than two years with Perez as CEO,Wrigley’s share price increased by 50 per-cent, fueled by growth in revenues and netincome of 23 percent and 29 percent, re-spectively. With Perez, the Wrigley Companywas flourishing once again under the leader-ship of a CEO who came from the outsideafter three generations of family manage-ment. Perez’s success as an externally re-cruited CEO at Wrigley defied muchconventional wisdom about top manage-ment recruitment, such as: Don’t select anexecutive who “failed” or that recruiting ex-ecutives from the outside is much riskier.

By October of 2008, Wrigley had gone froma solid to star performer under Perez, and itbecame an irresistible acquisition target. Sowith the support of the Wrigley family andthe company’s board, Perez led the sale ofWrigley to Mars. The $23 billion deal repre-sented a 28 percent premium over the shareprice, and the sale was overwhelmingly ap-proved by shareholders. In a less formalvote, the deal also won the approval of thecompany’s management, who would stay inplace as Wrigley became a stand-alone busi-ness unit of Mars. After the closing of thesale, Perez was able to leave the company,satisfied that it was in good hands and thathis executive reputation was back intact.

The Lesson

It’s not that Bill Perez was a “good” leader atWrigley or a “bad” one at Nike that led to hissuccess or failure. He had substantially thesame directive at Nike and Wrigley. And heactually did many of the same things asCEO in both situations.

It turns out that it was really less aboutPerez the individual and more about Perez

as a piece in distinctly different puzzles. AtS. C. Johnson and Wrigley, Perez was theright fit. Even though he was the same per-son, the situational and cultural contextswere completely different at Nike, and thathelps explain much of why the outcomeswere dramatically different. His experience isan illuminating example of how even an ex-cellent manager will be successful only ifproperly matched to the environment intowhich he is placed. If the piece does not fitnicely into the contextual jigsaw, all the tal-ent, skills and experience will be for naughtor worse.

About the authors

James M. Citrin, Stamford, and Julie Hembrock Daum, New York, co-leadthe North American Board & CEO Practice.Together, they are authors of You Need ALeader — Now What?, published in October2011 by Crown Business.

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point of view

54

As the premier firm for board and CEO counsel and recruitment, Spencer Stuart plays an activerole in exploring the key concerns of boards and senior management and in the search for inno-vative solutions to the challenges they face. Through a range of articles and studies, we examinebusiness trends and developments in governance and their implications.

In addition, we annually publish board indices looking at the board composition and practices ofpublic company boards in more than a dozen countries and in industry sectors such as retail andhospitality.

Please visit our website to view Spencer Stuart articles featuring topics relevant to your businessand career.

Governance and CEO Leadership Topics

research insight&

Spencer Stuart U.S. Board Index 2011

Recruiting the Digital Director

Better under Pressure:How Great Leaders Bring Out the Best inThemselves and Others

Evolution or Revolution?Changes in Britain’s boards of directors from1960 to 2010

Succeeding at Succession

Succession Planning —What Lies Ahead

CEO Succession: Makingthe right choices: A study of CEO transitions acrossfour prominent Europeanmarkets

You Need a Leader —Now What? How to Choose the Best Person for Your Organization

68226_Body_Layout 1 12/12/11 12:18 AM

55

Res

earch & In

sigh

t

Understand the Talent Tradeoffs: Strategies forBuilding a Latin American Investment Team

Three Traits Every CEO Needs

Opportunity Emerging FromCrisis: The Future of RealEstate Leadership

Four Practical Talent Management and RetentionIdeas for Asia Pacific

Leadership in the Cloud Computing Era

Changing Places: The challenges and benefits for CMOs of making asector transition

Developing the Next-Generation Asian Hospitality Leader

Diversity: Acting on WhatWe Know

Innovating for a digital future: The leadership challenge

Leading Through Volatility

Other Studies and Articles

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56

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Spencer Stuart advises clients on senior leadership matters, includ-

ing succession planning and management assessments, and helps

recruit effective executives across functions and industries through

our dedicated practices.

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About Spencer Stuart

Spencer Stuart is one of the world’s leading execu-

tive search consulting firms. Privately held since

1956, Spencer Stuart applies its extensive knowl-

edge of industries, functions and talent to advise

select clients — ranging from major multinationals

to emerging companies to nonprofit organizations

— and address their leadership requirements.

Through 53 offices in 29 countries and a broad

range of practice groups, Spencer Stuart consult-

ants focus on senior-level executive search, board

director appointments, succession planning and in-

depth senior executive management assessments.

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