Company Success Begins at the Top

Q: In an increasingly crowded market, what are Russell Reynolds’s key market differentiators?

A: Russell Reynolds has fairly clear and well-defined market differentiators, starting with the firm’s specialized focus on solving the most complex leadership challenges. Including the recruitment and assessment of Board Members, CEOs and C-suite executives. Leveraging more than five decades of experience, our standing as a private and global partnership is paramount since it allows us to extend and foster our client’s privacy and needs. Furthermore, we attempt to align our incentives, which can sometimes come into odds with firms that are publicly traded. Russell Reynolds’ international standing gives consultants the ability to identify and assess international talent in a global manner. Our approach is business driven, not role driven.

The firm has found extraordinary success in being a solution-focused firm. We approach CEO recruitment in a holistic, comprehensive manner rather than a process, project-driven manner. In Mexico, what has helped us is the solid and diverse business acumen of our team of consultants that include former general managers, bankers and management consultants, among others. We combine this previous business experience with our deep market understanding and unparalleled access.

Q: How does Russell Reynolds use data to identify “transformational” leaders?

A: There are always grayscales to consider in any business decision but the role of data is becoming increasingly prevalent. The years of experience, collective knowledge and applied business acumen helps Russell Reynolds to generate and use data to build actionable advice and proposals for our clients. Our data assessment helps mitigate risk while generating added-value solutions for our clients. To identify, flag and mitigate potential risks, we rely on a formidable global database, AI, predictive analytics and scientific research to understand competencies, profiles and trends. In the end, judgment is only as good as the data and data is only as good as the judgment used. While the firm uses data to formulate our final guidance and advise, this is supported by our expertise, business acumen and sound judgement. CEO recruitment and CEO succession efforts is not a formulaic nor mathematical process.

Q: How has high CEO turnover amid the Great Reshuffle impacted companies?

A: There has been significant CEO turnover in recent years, mainly rooted in the COVID-19 pandemic. While there were important contextual divergences across industries and geographies, the crisis was fundamentally the same across sectors, challenging C-suite executives on multiple fronts. COVID-19 was a gargantuan evolutionary challenge that forced CEOs to juggle the multilateral transformation of their individual roles, their company’s business model, digitalization, organizational design and other responsibilities, as demanded by a shifting market. Their ability or inability to maneuver, evolve and grow their organizations through the crisis played a deciding factor in the confidence endowed by the board of Directors. For many, the work is still ongoing as market conditions and expectations remain uncertain and volatile. At the other end, if the board of a company deems the performance of their CEO unsatisfactory, their time is up. Once this confidence is lost it is unlikely the CEO will remain within the organization, and it has unquestionably contributed to high CEO turnover.

Q: How does succession planning for CEOs differ from other organizational roles?

A: The No. 1 responsibility of a company’s board is to ensure CEO continuity. CEO succession is an ongoing process that should ideally begin on the successor’s first day. It should not be postponed until considered necessary, much less during a crisis. Consequently, it is necessary to establish an immediate, open and transparent conversation between the board and the CEO. It is an evergreen, multiyear strategic process involving the assessment of possible successors, market comparison, individual preparedness and developmental compatibility.

Q: The role of chief diversity officer has increased in importance in the last 16 months. What is the underlying cause and added value of this position?

A: Diversity, like sustainability, is not an option. It should be embraced and driven by companies as a strategic business decision. Globally, but particularly in the US, the Black Lives Matter movement created an awareness and urgency concerning diversity, equity and inclusion. The widespread elevation or appointment of Chief Diversity Officers sends two signals: a top-down, board-driven commitment toward diversity and an element of accountability across the organization. The latter is particularly important for the successful realization of diversity, equity and inclusion (DEI) initiatives; otherwise, companies risk establishing cosmetic, in-name-only and unsustainable mechanisms. Chief Diversity Officers should be empowered to change existing processes, drive difficult conversations, hold people accountable and propose different incentive and promotion schemes with precision and clarity.

Q: How has the emergence of a 4D World (Digital, Decentralized, Decarbonized, Diverse) impacted the baseline of necessary leadership skills?

A: The more senior an executive is, the more important the balance between leadership and competencies becomes. Technical skills may get someone through the door, but robust leadership skills like communication, setting strategy, influence and interpersonal skills help individuals stay and succeed in the C-suite.

The pandemic demanded the construction of a sustainable mindset or the ability to hold multilevel, systemic thinking while considering long-term stakeholder management. These contingencies are fundamental to market capture, innovative disruption and long-term sustained growth as the market continues to shift in accordance with pressures generated by the digital transformation, decarbonization and decentralization.

Q: What are Russell Reynolds’s growth ambitions for the future?

A: Our ultimate goal is to continue to generate value and advise boards and CEOs in their most critical talent decisions. The largest opportunity within the Mexican business ecosystem is institutionalization, namely adequate board governance and effectiveness that drive sound business decisions for an organization. Only with the right people sitting at the board of directors’ table having the right discussions, can organizations expect sustainable growth. It is not luck or coincidence that good CEO succession processes lead to good business performance nor that the best performing companies have the best governance standards.

Russell Reynolds Associates is the preeminent global leadership advisory firm with over 470 consultants in 46 offices working with public, private and nonprofit organizations across all industries and regions.