The challenge of staying relevant in today's corporate climate

Mark Stelzner recently posted some interesting statistics on the plummeting average tenure of C-suite executives:

CEO: A 2007 Harvard Law School study shows that a “manager CEO” of a S&P 500 firm averages 5.5 years of tenure.  Crist Associates’ 2007 Volatility Report also shows the majority of CEOs with less than 5 years of service.

CFO: Spencer Stuart has CFO tenure at 4.3 years - and falling (Crist at 5 for all CFOs).

COO: Chief Operating Officer tenure is shrinking to just under 3 years, with the total number of Fortune and S&P 500 COOs diminishing at a perilous rate.  

CIO: According to the 2008 State of the CIO poll results, a Chief Information Officer’s average time in seat is about 4.4 years, down from 5.1 years in the prior period.

CMO: Spencer Stuart’s annual study shows Chief Marketing Officers at a mere 26.8 months, which is actually up from 23.2 months in the prior year.

CHRO:  Workforce Magazine’s analysis putting an average CHRO in their seat for approximately 3.1 years.  

These stats got me thinking more about how organizations today are rethinking their organizational strategy in a challenging economy where talent management is ever-critical to the business, and non-core functions are becoming increasingly subjected to lower-cost outsourcing solutions.  So why are C-suite tenures all getting shorter? 

Marketing:  is far too tactical in many organizations, and often a scapegoat for poor sales performance.  Marketing managers are focused far too much on administrative tasks, such as distributing press releases, managing mailing lists etc.  Refreshing the CMO every couple of years can add some gloss to the lipstick on that pig.

HR:  like marketing, HR is often far too bogged down in administrivia such as benefits admin, compensation management and compliance.  High attrition, low worker morale and a general lack of strategic involvement in the core business drives many CEOs to revolve the CHRO door every three years.

IT:  until recently was a shining star in the company, but the prevalence of lower cost third-party services is rapidly transforming the role of the CIO from technology evangelist to cost-containment expert.  Inability to keep costs down and failure to meet punishing deadlines is seeing the CIO's tenure shrinking close to the four-year level.

CFO: Y2K, the dot-com bust a vicious 9/11 fueled recession, and now a credit crunch and a further economic squeeze has made the life of the CFO about as easy as being Elliot Spitzer's publicist.  Like their CEO bosses, the CFO is taking the fall every 5 years for poor financial performance.

In short, the support functions for a business are becoming increasingly less ingrained with core business strategy and revenue-generating activity.  Effective business line managers are constantly becoming smart people managers; retaining and nurturing their talent which adds dollar-value to the enterprise is now a core managerial skill.  They are also honing their ability to manage their P&Ls to further their careers and use front-office applications effectively to help drive their business forward.  In addition, effective sales managers increasingly encourage smart, targeted marketing activities to generate new business opportunities; they know what their clients want and how to reach them.

As today's enteprises become more global, they increasingly need to structure their core business units to push their products and services into new markets quicker than ever, with their cost of sales at a minumum.  Developing talent, marketing to new customers and managing the finances are more important than ever to the global enterprise as they learn to become more nimble and competitive in this business climate.  However, these real value-add activities are less frequently taking place in siloed HR, marketing and finance departments - they are becoming pervasive across business functions that are core to developing and running the business.  Is this what is really driving BPO and ITO - the desire to drive out high-cost services that have lost much of their value to the enterprise?  And are the traditional business support functions losing their relevance? 

All-in-all, the business support functions need to be more closely aligned to the core business lines to add greater value to the business.  So by shedding the routine low-value work, CEOs can focus their C-suite executives on driving better people-management, better marketing, better financial planning across their product and service lines globally and set performance metrics that hold them directly accountable to aligning their craft with corporate performance.  And yes, tenures may still reduce even faster in the short-term, as support functions become more accountable for adding value to the business, but how else can you change executive behaviour?

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.....how relevant are you?

Comments

[Lori Blackman]

How can we support and advocate for the effective business line managers who are becoming smarter and smarter "people managers; retaining and nurturing their talent which adds dollar-value to the enterprise"?

Well, first let's not reinvent the wheel. Believe it or not, tremendous value can reside in the siloed, even tactical practices of our HR and marketing functions. So, how might we go about excavating the pertinent information? How might we garner this information from our “partners” within HR and other functions? Are there ways for us to come together and speak the same language?

I’m beginning there might be some hope. Quite by accident, I used the term “Talent Portfolio” while trying to convey some ideas to a few of my IAOP colleagues and the resulting discussions and responses have been a lot of fun.

In fact, it was one of those incredibly “effective business line managers” who proceeded to call me in the two weeks following our first “Talent Portfolio” discussion to share that he had never thought of his team or talent management responsibilities in the same way. Viewing his team as his “talent portfolio” resonated with him as he intuitively began applying all of the “financial portfolio” considerations to his role in “talent” planning, acquisition, development, retention, performance analysis and management, etc.

I am not professing that the term, “Talent Portfolio” or the management practice of “Talent Portfolio Management” (analogous to HR, Human Capital or Talent Management) is a silver bullet to the profound challenge originally sited in this post. However, I do think that communication gaps such as the long-term one that has existed between HR and business as well as the more recent occurrences between US, Indian and Nicaraguan teams have and will continue to create and recreate silos.

I do think it is therefore imperative that we communicate conscientiously and adapt solutions from wherever they may currently exist to help each individual who is willing to make the individual investment needed to improve “people-management, marketing, and financial planning across the product and service lines globally and set performance metrics that us directly accountable to aligned corporate performance.”

[Tresha Moreland, SPHR]

“If you don't like change, you're going to like irrelevance even less. General Eric Shinseki, Chief of Staff, US Army.

Traditional business support functions will lose their relevance if they don’t evolve and change along with the companies they support. C-suite tenure change is just part of that evolution in terms of bringing in fresh ideas. But each functional department must move from striving for “continuous improvement”, to “continuous innovation” to achieve and maintain relevance.

Further, it takes bold ideas and strategies to stay relevant in today’s business climate. Better yet, it takes clear strategy and bold leaders to drive innovation, thus relevance, throughout each functional component of the company. Business process outsourcing, offshoring is one option but so is, silo busting - full integration of functions, enhanced technology/automation and/or web-based support.

Truthfully I think it is critical to drive an internal innovative culture, to stay relevant not only in functional departments, but as a company, in today’s business competitive climate.

[Michael Weissman]

1. Deliver. The best way to keep your job is be worth it
2. Manage expectations. You will be expected to deliver the impossible. Get reasonable expectations set and then beat them. You are only valued when people are positively surprised by your performance.
3. Repeat if necessary.

[Ken Thomas]

Phil,

From my perspective, staying relevant requires an inner desire to take the time to constantly scour the horizon for the latest information in your respective field and then apply it to your current situation.

Have a vision for where you want to take your organization. In today's busy work place, this is often a huge challenge as it is too easy to work only on the here and now as opposed to thinking about "how will I make this a better place in the future."

Kind regards,
Ken Thomas

[Robert Andrews]

This is an excellent and bold article. You have nailed on the head the real issues of business support functions being increasingly alienated from the rest of the business. Today's companies are clearly challenged to re-structure their HR, marketing etc to get these functions closer to the core business - or outsource them.

Robert Andrews

[Tony]

A few thoughts:

Commoditization of administrative functions makes the make vs. buy decision easier. Maturity of vendors enhances the opportunity.

Leadership in administrative functions is focused on costs, not value, because the value is difficult to calculate. The result is administrative functions become less relevant. This is the fall out of the "if it moves, measure it" theology that administrative and operations teams have adopted - and what has stifled innovation.

Marketplace dynamics is putting the focus on product innovation. Administrative functions cannot flex fast enough to support the innovation.

The role of the business is much more diverse. They source their own vendors, develop their own products, develop marketing strategies, and provider their own support services. Why? Because the centralized functions are simply too inflexible to react to the top line pressures.

I met one CHRO who wanted to outsource for only one reason: to create a contract that would limit the budget reductions the CFO asked him to make every year. I suppose many CIOs have done the same. Cost focused deals have exploded when supplier profitability failed to meet market expectations.