BRIEFINGS PODCAST: Breaking Point: Have CEOs Reached It?

Breaking Point: Have CEOs Reached It?

NOTE: While this transcript has been reviewed, it may contain errors. Please review the episode audio before quoting from this transcript.

Jill Wiltfong:

Have CEOs reached their breaking point? How much pressure do they face today?

Mark Arian:

They're exhausted from the demands of the past several years.

Jill Wiltfong:

Are they prepared?

Radhika Papandreou:

Most CEOs are now public figures, if they want to be or if they don't.

Ellie Filler:

Anything can become public within seconds.

Tierney Remick:

We've moved to a culture of impatience, that is more aggressive and instilling fear than more inspiring and creating that platform for innovation.

[CEO]:

I don't need to tell you all that our firm needs serious help. I mean, we've gone through two CEOs in three years. So, the board and I have decided to unleash our secret weapon, a former CEO here, who has been cryogenically frozen since 1996, and had an impeccable track record. Everyone meet, Bill.

[Bill]:

Hi, everyone, I know time is short, so I'll get right to it. I see people are complaining that their bonuses aren't so big this year. Well just tell folks that they'll have to suck it up and tighten their belts.

[Employee]:

But, sir, aren't you afraid of a social media backlash?

[Bill]:

Social what now? Just do it.

[Employee]:

Bill, sorry to interrupt, but there may be a few things we need to update you on before we go any further. The actions you're suggesting may not actually fly into today's world.

[Bill]:

I suppose at least we can still count on our trustee 10% annual growth rate.

[Employee]:

Sir, we haven't seen double-digit growth in over a decade.

[Bill]:

So let me get this straight. You can't grow our company. You can't say anything, and there's a tech that can wipe you out. Nobody can do this job.

Jill Wiltfong:

Hi, I am Jill Wiltfong, Chief Marketing Officer for Korn Ferry, and this is Briefings, our deep dive into topics that corporate leaders need to care about.

Today, we have a special report for you. CEOs are, of course, hired to handle tough challenges and paid quite well for that. But imagine the crazy challenges today, all coming together at once. There's a once-in-a-generation technology that can wipe out your business (AI), a record number of activist campaigns, employees tweeting every slip up you make on social media. And we haven't even mentioned two wars going on and a wildly changing stock market. Little wonder we're seeing record turnover in a role that used to be so stable. At Korn Ferry, we were surprised just a few months ago when our own survey found that 71% of CEOs had imposter syndrome. So today we've assembled a special panel of experts. You don't want to miss this as we explore the question, Have CEOs reached their breaking point?

Before we start, if you're watching us on YouTube, please be sure to like, subscribe and leave a comment to let us know your thoughts on this topic.

So with me today is our Breaking Point group of panelists, each very familiar with the daunting challenges facing CEOs. We have with us, Mark Arian, CEO of Korn Ferry's Consulting Practice; Radhika Papandreou, Korn Ferry's President of North America; Ellie Filler, Managing Partner for Korn Ferry's CHRO practice in EMEA; and Tierney Remick, Vice Chairman and Co-leader of Korn Ferry's Global Board and CEO Practice. Thanks for joining us everyone.

Tierney Remick:

Thanks Jill. Great to see you as well.

Jill Wiltfong:

Mark, I'd like to start with you. Before we get into specifics, we know CEOs have been through tough times before, but how much pressure do they face today as compared to the past? Is it increasing?

Mark Arian:

In talking to CEOs, I would say they're exhausted from the demands of the past several years. It's been a really challenging environment and I heard one CEO say it's unprecedented. And look, it's not that in past years we haven't seen a myriad number of problem sets that CEOs have had to face. But I would say that it's the drumbeat of constant challenge coming at the same time that is different.

Jill Wiltfong:

Drumbeat indeed. So, let's look at some of these pressure points starting with AI. Obviously, there's not a CEO who's not aware of the technology and, worldwide, firms invested a stunning $200 billion on it last year. But you get the feeling that with all of their other challenges, it's hard for even the best leader to really understand what's possible here. Mark, are they prepared and can they be?

Mark Arian:

It's proving to be a challenging area for them. It's like Scylla and Charybdis, right? There's positive impacts on their business that they can see, but there are also a potential bevy of negative consequences that are concerning to them. So, you know, having not steeped in AI, they have a pretty steep learning curve like the rest of us, and I think they're challenged by it.

[Father – ‘Chef’ movie]:

He wrote something nasty about me and then I hit reply and it let me send a message to him.

[Son – ‘Chef’ movie]:

Dad, replies are public, everybody can read them, and it looks like he retweeted it to all his 123,845 followers. And he wrote back.

Jill Wiltfong:

We just saw a scene from the movie "Chef," in which John Favreau gets a rude awakening about the power of social media to amplify anybody's message. CEOs today are having a similar awakening to employees who can air complaints at a moment's notice to millions around the globe. We call them empowered employees. And Ellie, you've described it as being in a glass house for many CEOs.

Ellie Filler:

It's a lot more being in a glass house because anything can become public within seconds. Any issues can be blown out and used on various different mediums, especially disgruntled situations or, you know, even customers.

Jill Wiltfong:

Our own study found that the number of influencers on LinkedIn has grown roughly 700% over the past decade. So, it seems like things are only going to get harder for leaders who want to keep company matters private. Radhika, how should CEOs be thinking about all of this? This new dynamic?

Radhika Papandreou:

The court of public opinion has become stronger and stronger and more of a risk for a lot of CEOs. Most CEOs are now public figures if they want to be or if they don't. And so there are two things I think leaders need to have in order to sort of mitigate the risk of public exposure. And one of them is empathy and the other is agility and just be a good person. I think the people that are getting hit the hardest around social media and public opinion are CEOs that might not treat their people and their talent with kindness.

Jill Wiltfong:

We know that it's not what many who took the job were expecting, but here's another thing. They weren't planning on this: a lack of revenue growth. By any measure, it's just vanishing. Annual revenue growth in 2024 was the lowest ever of any year in the 21st century that didn't have a recession in it. So Ellie, maybe you first, can you paint the picture of why growth has always been so critical for leaders?

Ellie Filler:

Well, at the end of the day, it's what they're measured on, right? It's an expectation. It's linked to the share price. It's linked to success. I don't think this has been any different for any CEO throughout history. So going for growth and sort of, you know, enabling growth is what defines a successful CEO.

Jill Wiltfong:

Radhika, you've talked about innovation, like the kind that saves consumers time and money, as key to solving this growth problem. Tell me more about that.

Radhika Papandreou:

Innovation is becoming much more critical as we go through this technological change and the swiftness of technological change. And it doesn't matter if you're making hamburgers or if you are an AI company, you have to be innovating. That is the most important thing that CEOs are thinking about today.

[‘Wall Street’ movie]:

I create nothing. I own. We make the rules, pal. The news, war, peace, spam and upheaval, a price for paperclip. We picked that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you, buddy? It's the free market and you're part of it.

Jill Wiltfong:

That's a scene from the movie "Wall Street" where infamous Wall Street investor, Gordon Gekko, explains the power of his position to his young protégé. Tierney of course, today's activist investors may not be so diabolical, but they still can be a source of really great pressure for CEOs. You actually mentioned that they can even hamper the kind of innovation and growth we were just talking about. Can you elaborate on that?

Tierney Remick:

2024 had the most campaigns, over a thousand were launched. And I think it's that they typically are very much motivated for short-term financial gain, which can be a pressure point that directly conflicts with long-term value creation for shareholders.

Jill Wiltfong:

Given that these kinds of investors have a fairly big influence, what's the best way for CEOs to deal with them?

Tierney Remick:

At the end of the day, it is distracting. It is taking them away from the day-to-day role of driving the company forward. And so finding that proper balance is the most important place boards and CEOs can settle.

Jill Wiltfong:

Hmm, I can see that. Ellie, you have a thought on all of this as well.

Ellie Filler:

Having somebody who comes in and starts to dictate "this is not the way" and "don't do this." It's, we can only imagine that it must be an enormous frustration and an enormous personal affront to CEOs to sort of be told, well, what you're doing isn't quite right here right?

Jill Wiltfong:

I know both of you have always mentioned that smart CEOs can try to stay ahead of activists by anticipating their concerns. Hopefully we'll see more of that this year. But in any case, Mark, I think as a sitting CEO, you deserve the final word on our Breaking Point special. The world isn't going to get any easier for the person in the corner office. How do you think they should best approach all of these daunting tasks?

Mark Arian:

I go back to my training. First of all, be humble. Recognize the magnitude of the change in the context. Think integratively. Be inclusive in decision making. Don't be afraid to be a voice to customers, the social media, employees, investors about the organization's purpose and the value you create. I mean, there's some basic fundamental tenets and yes, communicate process where I don't have all the facts.

Jill Wiltfong:

Very nice, thanks to all of you for being a part of the special report. I hope any struggling leaders out there can take heart knowing they're definitely not alone and that there is ultimately a way forward through these high-pressure times.

Thanks for tuning in for our special report. Be sure to see our special issue of Briefings magazine on this as well as a host of articles we're putting out around breaking points. Up next, be sure to stick around for This Week in Leadership for a brief recap of the big news in business.

Rupak Bhattacharya:

Hi, and welcome to This Week in Leadership. I'm Rupak Bhattacharya, and here's a quick look at what else is happening in business.

[Narrator]:

To understand the benefits that you get from your employer.

Rupak Bhattacharya:

Despite strong efforts by HR departments to broadcast benefit increases, it turns out that just 29% of executives fully comprehend them. For firms, this can be problematic when it comes to employee retention and experts advise providing an annual two-page total reward statement to employees.

[Narrator]:

Job hopping to advance in your career.

Rupak Bhattacharya:

A remarkable 44% of tech employees plan to take a new job in the next 12 months, which could spell serious trouble for the countless firms racing to adjust to AI. In response, rather than focusing on retaining skilled employees long term, firms are emphasizing skills that are needed immediately.

[Narrator]:

The rising cost of healthcare.

Rupak Bhattacharya:

Firms will likely face an increase in healthcare costs of 7.7% this year, up from 6.5% in 2023 and 6.9% in 2024. Experts say that while many firms will pass these expenses along, some may also adopt measures like more proactive healthcare, such as front-end screenings to reduce costs later.

For more insights on business and leadership head to kornferry.com/insights.

Jill Wiltfong:

The Executive Producer of "Briefings" is Jonathan Dahl. Today's episode was produced by Rupak Bhattacharya, Nadira Putri, and Teresa Allan. And it was edited by Jaron Henrie-McCrea. It contains reporting by Russell Pearlman, Arianne Cohen, and Peter Lauria.

Our video segment contains original artwork by Frazer Milton, Hayley Kennell, Jonathan Pink, and Sasha Kostyuk.

Don't forget to read our magazine, available at newsstands and at kornferry.com/briefings. That's it for Korn Ferry “Briefings”. I'm Jill Wiltfong. See you next time.

Jill Wiltfong:

I see, I'm sorry, I'm trying to edit this as I talk and I should do that. Tierney, you got me all flustered. Woo! Well, let me try that again.