LEADERSHIP REQUIREMENTS IN THE "NEW EUROPE:" AN AESC STUDY

CEOs across Europe view the further integration of work cultures, operations and brands within European corporations as their biggest challenge; this is one of the main findings of a study published today by the Association of Executive Search Consultants Europe (AESC). The study pinpoints a shortage of top management, with the necessary international and cross cultural skills as the major obstacle to integration. The AESC study, undertaken by professors from the London Business School (LBS), is the largest of its kind, with a sample of 200 CEOs and COOs across 15 countries.

The LBS professors identified a number of challenges facing firms in Europe and found great divergence in their readiness for Europe, according to their size and provenance.

• Operationally at odds: While US owned firms seem to have achieved considerable integration in Europe, European owned firms have not. UK firms lag behind their French and German counterparts. The smaller, and more local the firm, the less integrated it is likely to be.
• Commonality of culture: The study found that company culture is the area that presents the greatest integration challenge. Whereas, 79% of US owned firms agreed with the statement "Our company culture is similar in each of the operations in Europe", the equivalent figure for European owned firms was only 40%.
• Streamlining brands: The biggest challenge to having pan-European brands is for locally operating European firms who are still overly reliant on local brands. Again it is the US owned firms in Europe that have made the most inroads in developing pan-European brands. Over the next few years, companies in all countries expect their brands to become less local.
• Today’s Euro Bosses: The study findings suggest that while many of today’s CEOs are well equipped for a European role - on average they have worked in four countries and speak 2.8 languages - 81% are now working in their native country.
• Greater challenges demand new skills at the top: The CEOs identified a broader skill set for their successors than themselves. Their successors will need to outperform them in at least five crucial areas, all of which are related to international and cross-cultural ability and experience. The areas identified were: adaptability in new situations, international strategic awareness, ability to motivate cross-border teams, sensitivity to different cultures and international experience.

The majority of CEOs identified that there would be a shortage of top managers coming through with these skills.

“With European monetary union approaching in a few month’s time, the study has identified that on a number of dimensions, many European firms are not geared up to face the challenges posed by the New Europe,” says Dr Jürgen Mülder, European Chairman of the AESC. “Interestingly, it is the American subsidiaries who display a greater degree of European readiness,” he continues.

Addressing the skills deficit

While there is a scarcity of top managers with the requisite skills to take their companies forwards in the New Europe, the study identifies a number of issues that compound the problem.

• Multi-country experience: most managers have had limited exposure to living and working in other countries in Europe· Complexities of the EU: the regulatory and economic framework of the New Europe eludes many managers.
• Short termism: many firms have not prioritized succession management; they have not sufficiently addressed the recruitment or development of top managers with the requisite skills for the New Europe.
• Tunnel vision: most Europeans have been trained to think more about the differences among markets rather than the similarities. The study identifies a number of ways to find and prepare top managers for the increasingly complex role of Euro-CEO.
• Encourage pan-European experience: firms need to reduce structural, psychological and cultural barriers to working abroad, not only for younger employees but for middle and senior managers as well.
• Plan for succession: firms need to put in place a recruitment strategy to ensure they have successors in place with the requisite skills for the future, not just those which have yielded success to date.
• Widen the field: firms need to institute less traditional recruitment and promotion policies, and consider looking outside the company, and even outside the industry, for talent at all levels.
• Change the market paradigm: firms need to re-train their managers to think about synergies across European markets more than differences among them·
• Focus on Europe: firms need to make pan-European thinking central, not merely relegating EU policy and regulations to peripheral specialists.
• Train for the future: firms need to encourage greater national and cross-national investment in Euro-aware education generally, not only at schools of management but also at primary and secondary levels.

Maury Peiperl, of the London Business School, concludes: “Clearly, many companies in Europe still need to face the impending shortage of top management talent head on. European managers, rather that concentrating on the distinctions among European markets, or even among countries and industries, must begin to focus on the larger picture. The new European CEO - adaptable, internationally experienced, fluent in a variety of cultures - must lead these companies not only throughout Europe, but in the wider global marketplace.”