CEOs Are Losing Faith in Their Direct Reports

Inflation seems to be plateauing, economic growth wasn’t as bad as many expected, and corporate profitability is still near record highs. But it appears that an increasing number of the world’s top bosses don’t believe their direct reports have what it takes to make their organizations succeed.

A new survey indicates that CEO confidence in their own executive-leadership teams has fallen from 74% in the first half of 2021 to about 66% in 2022. More bosses have expressed pessimism about the capabilities of their direct reports, their overall behavior, and their approach to tackling critical issues. “I hear with far greater frequency from CEOs who are hoping to upgrade the talent that reports to them,” says Alan Guarino, vice chairman of Korn Ferry’s Board and CEO Services practice. 

It’s not that CEOs see their direct reports as poor leaders or bad people. These senior executives earned their high-level roles through top-notch performance. But only truly exceptional leaders can perform exceptionally well amid the breakneck pace, complexity, and globalization of modern business, Guarino says. Executives who are focused only on managing risk or making incremental progress are no longer satisfactory for CEOs who are “playing to win,” Guarino says.

The survey results come at a time when top executives believe that their businesses could be in real trouble in the not-too-distant future. Despite robust hiring numbers and stock-market gains, an overwhelming number of CEOs expect economic growth to falter in 2023 and beyond. More than 4,400 CEOs were asked how long their businesses, if they continued on their current paths, would remain economically viable. Nearly 40% said “ten years or less.” The pattern was consistent across multiple industries, including telecommunications (46%), technology (41%), manufacturing (43%), and health care (42%).

Not every CEO feels that their executives aren’t up to the task. Indeed, many believe their teams are working hard and fast on their commitment to climate change, says Tierney Remick, vice chairman and co-leader of Korn Ferry’s Board and  CEO Services practice. ”I actually think CEOs have been impressed with teams’ willingness to lean in and learn about these issues,” she says.

The CEOs who have confidence in their direct reports likely make it easier for them to enact transformative projects, says Joe Griesedieck, vice chairman of Korn Ferry’s Board and CEO Services practice. Whether before or during the pandemic, these CEOs assessed their direct reports’ learning agility and ability to thrive and lead in uncertain environments. “The CEOs who just assumed that their teams would be up for and up to these challenges, without taking proactive initiatives to develop them for a transformative culture, are those who are most likely losing confidence,” Griesedieck says.

For more information, contact Korn Ferry’s Board & CEO Services practice. 

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