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(originally published by Booz & Company)


Navigating the First Year: Advice from 18 Chief Executives

Thomaz Menezes: I dedicated most of my time to the people on the top team. I needed to assess and analyze them, to understand that the dynamics were different, given that I was not an insider, and to position myself as the new leader. Then I built the team I wanted to work with; it took me about 15 months to do so.

Masami Yamamoto: Moving forward with proactive thoughts and energy was the most important mission as the new executive team took over from the previous management team. We needed to stabilize the internal atmosphere and have our employees focus on their customer service and business development activities.

S+B: In putting together that new team, many CEOs say they should have moved more quickly to replace people they thought would not work out. Do you agree?

Ian Livingston: Yes, but if you are a decent human being, you don’t take pleasure in removing people, particularly if although only averagely competent, they are decent people. You try to give them a chance, even though it is almost always a failure of hope over experience. It can also be difficult to find a replacement, especially an external candidate for a high-profile job, so in practical terms, you do have to continue with some people you might not be entirely happy with.

Britaldo P. Soares: When I became CEO of AES Brasil, one of my key short-term goals was to consolidate my executive team. I knew I should change many of the former executives, but it was a difficult task that required a multiphase approach.

During the first six months, I prioritized changes in the critical areas. The subsequent changes required more time and additional steps. I had to demonstrate to the board that even though I gave them new opportunities, these executives were not performing up to our expectations at that time. In a few instances, I even conducted a comprehensive executive performance review, working closely with HR, to make my case. Throughout the process, I had to find a balance between my frustration that the process was going too slowly, and the perception on the part of shareholders that I was moving too fast.

S+B: How did you engage the board during your first year as CEO?

Romain Bausch: In my case, it was quite special. Until I became CEO of SES, I had been a non-executive board member, so I knew the board quite well. Several directors personally owned shares, and some of them felt that they had to run the company. So what I had to do — and I think I did this quite diplomatically — was to shift the power over time from the board to management. Obviously, the board has to make all the important decisions based on good corporate governance. But proposals regarding strategy and the way the company should be run have to come from management and then be submitted to the board for discussion.

Ahmad Abdulkarim Julfar: I think it is especially important to align the strategic objectives of management with those of the board. Some of my board members at Etisalat, especially those from the private sector, are focused on dividends and near-term gains, whereas telecom is very much a long-term investment. We still distribute good dividends, and we are probably one of the best stocks on the market. But for telecom to succeed in the long term, you need to keep investing to build internal capabilities, especially when it comes to people, as well as investing in new technologies and innovation.

So we need to do more alignment on a one-to-one basis with board members on strategic issues. Different board members have different capabilities and interests, so you have to prepare them; you have to align them with the strategic objectives of the company.

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