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Home » Excellence of Execution Is Top Concern For CEOs Worldwide

Excellence of Execution Is Top Concern For CEOs Worldwide

October 10, 2007
From The Conference Board

Execution is taking precedence over profit and top-line growth as a focus for CEOs around the world, according to a global survey of chief executives released today by The Conference Board. The survey of 769 global CEOs from 40 countries is from The Conference Board report, CEO Challenge 2007: Top 10 Challenges.

When asked to rate their greatest concerns from among 121 different challenges, chief executives participating in this year's survey chose excellence of execution as their top challenge and keeping consistent execution of strategy by top management as their third greatest concern. Sustained and steady top-line growth, which led the pack last year, now ranks second, with profit growth fourth, and finding qualified managerial talent fifth.

"This year's overall top challenge shows that CEOs from around the world are realizing that strong execution is a critical factor in driving profits and revenues," says Jonathan Spector, President and CEO of The Conference Board. "These executives are also becoming increasingly aware of the crucial role that people play in growing their companies."

Judging by this year's U.S. Top 10, finding qualified managerial talent (sixth place) and top management succession (seventh place) have become the dominant people issues for U.S. CEOs, replacing last year's top HR concern, healthcare costs. The two concerns are closely intertwined because competition for talented managers will become even fiercer as many baby boomers depart the "top of the house" to move into "third-stage careers" and retirement.

After ranking seventh last year, the challenge of employee healthcare benefit costs slipped out of the U.S. top 10 in 2007. Its lower ranking as a greatest concern is most likely due to the downward movement of average annual rises in employee premiums for employer-sponsored health coverage, illustrating successful implementation of cost containment innovations.

But the cost of employee healthcare benefits still ranks much higher for U.S. CEOs (16th) than it does for CEOs in Asia (where it ties for 69th place) or Europe (where it ties for 71st place). The annual CEO Challenge Top 10 report from The Conference Board details specific challenges that CEOs face across regions, as well as by the company's size, industry, and level of success--all factors affecting the concerns of CEOs.

CEOs in Asia rank finding qualified managerial talent as their top concern (38.6%), perceiving this need as being particularly acute, while it is only the sixth greatest concern for CEOs in Europe and the U.S.

Overall survey responses for Asia reveal other key differences. Chief executives in Asia are more focused on seizing opportunities for growth in China (fourth place) than their counterparts in Europe (19th place) and the U.S. (20th place). The same is true for expanding into India, a challenge top executives from Asia rank 10th, compared with 27th for European leaders and 30th for their U.S. colleagues.

CEOs from Europe show a greater concern with getting new, more responsive ideas out sooner, a finding that might be based on the needs of companies operating in a more mature market. Therefore, execution in terms of speed, flexibility, adaptability to change is a more dominant theme in Europe (third place) than in Asia (tied for eighth) and the U.S. (10th place). Similarly, of the regional top 10 lists, speed to market only appears in the European top 10.

Of the 125 publicly-traded U.S. companies grouped as either "more successful" or "less successful," CEOs from the "less successful" cohort feel more pressure from the costs of healthcare benefits (17.5%) than CEOs from "more successful companies" (10.4%). A comparison of the two groups also shows that the "less successful" U.S. CEOs (19.6%) report more strain from the costs/supplies of oil/energy challenge than their "more successful" counterparts (4.4%). (Those with average return on assets (ROA) greater than or equal to the median were labeled "more successful." Those with ROA below the median were labeled "less successful.")

With such cost pressures driving a sense of urgency, it seems only natural that 21.1% of the "less successful" U.S. companies rate speed, flexibility, adaptability to change among their greatest concerns, as opposed to 10.4% of their "more successful" U.S. peers. Similarly, 47.4 percent of the "less successful" rank consistent execution of strategy by top management among their greatest concerns, compared to 32.8% of their more successful U.S. competitors.
The Conference Board's CEO Challenge Survey 2007 was conducted during the first quarter of 2007. Respondents were asked to rate the magnitude that each challenge poses over the next 6-12 months on a scale of 0 (not applicable) to 5 (my greatest concern).

All findings and data in this report represent the accumulated experience of the senior executives surveyed. A subsequent report will explore the implications of this year's survey findings as articulated by chairmen and CEOs of leading companies from a range of industries around the globe. Their perspectives were gathered through a series of in-depth interviews, in which the topics ranged from balancing short-term and long-term goals under the relentless pressure for speed, addressing uncertainty and risk, succession planning and the availability of skilled labor, to the backlash against global outsourcing, the impact of rising energy costs, and what we are likely to see in the next wave of mergers and acquisitions.
http://www.conference-board.org

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