The era of the inclusive CEO

The era of the inclusive CEO has arrived because of the increasing influence of stakeholders such as investors, employees and government. In the fast-changing business world it is no longer possible for CEOs to act alone.

by strategy + business
Last Updated: 23 Jul 2013

They need to engage and involved their boards, investors and others more effectively in order to retain their confidence. They might also learn more from them about the changing markets and ways in which to sell their products and services.

Robert Nardelli, recently booted out of Home Depot because of investors' concerns about the company's stock performance and his compensation package, may be the last of the imperial CEOs. In the by-now notorious Home Depot shareholder gathering of 25 May 2006 Nardelli presided over the meeting sans any other directors, would not discuss the company's performance or his own compensation and refused to answer shareholder questions. They were concerned about the company's losing edge when compared to nearest rival Lowe's, but Nardelli even refused to publish same-store sales comparisons.

The result of Nardelli's haughty approach was that he was fired. The signs are that today, inclusiveness will be the most important attribute of the CEO. He should be able to listen and engage with investors, employees and government to hear their points of view and concerns. Transparency about results and executive compensation packages will be an important requirement of the new CEO.

The recent scandal over the backdating of share options has revealed the dangers of trying to conceal the truth. The effective CEO will recognise his own strengths and his limitations and surround himself with talented board directors and trusted advisors who bring other skills and perspectives to the table.

The CEO must actively involve the board in strategy making in order to make the process work. In turn the board directors will need to step up their own knowledge so they can contribute more effectively.

The era of the inclusive leader
By Chuck Lucier, Steven Wheeler, and Rolf Habbel
strategy + business, special report, July 2007
Review by Morice Mendoza

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