Kevin Kelly

The average tenure of a US CEO is now under two years, and according to Wharton executive compensation expert Wayne Guay, failed CEOs rarely get another chance. Which brings up this question for Kevin Kelly, CEO of the biggest executive search firm in the world, Heidrick & Struggles: Despite the perks, is the C-suite all that attractive today?

“I was at a conference recently speaking before a couple hundred people,” Kelly says, “And I asked for a show of hands of how many people wanted to run a company. It was no more than 20 or 30.”

One reason the job is so difficult is that some American notions of leadership aren’t that applicable to a world in which the US isn’t the sole economic power. We recently spoke with Kelly at Heidrick’s headquarters in Chicago about how today’s collaborative business world demands new skills.

PwC: Newsweek’s Fareed Zakaria, author of The Post-American World, says the US isn’t declining as much as the rest of the world is catching up. In this rise-of-the-rest scenario, how must leadership at US companies evolve?

KK: I was at a CEO dinner in China a few weeks back, and I was asked by someone in the audience, “Kevin, how many Chinese CEOs could run a Fortune 500 organization today?” I said that I didn’t know if there were any, at which point this gentleman said “That’s okay— I don't know any foreigners who could run a Chinese company.”

If you look at the rapid pace of internationalization and globalization, I think the ability to maneuver through different cultures across the globe is going to be critical. For leaders, emotional quotient—EQ—has proven just as important as IQ, and now we have a third element coming into play—cultural quotient, or CQ.

PwC: Do you think that this cultural quotient is currently on the radar of American companies as they tap future leaders?

KK: Absolutely. Even today, if you look at the number of executives with international experience who have risen to be CEOs—whether those years were spent in Asia, Europe or Latin America—it’s clear that a global perspective is invaluable. It will only get more so, as growth for U.S. companies increasingly comes from outside North America.

The dictatorial CEO will die out given the different cultures that will have to be navigated and the different people that will have to be engaged in order to drive a global strategy.

PwC: So communications skills will be paramount?

KK: Yes, it will be crucial that US CEOs can communicate the direction and vision not only domestically or in North America—in other words, as a US company—but as a global firm.

PwC: US companies are collaborating in unusual ways today, not only with each other but with NGOs, customers, and other stakeholders. What does this broad range of potential collaborative relationships imply for leadership skills?

KK: We’ve gone from an age of information to an age of participation. What used to give most organizations a distinct advantage was the proprietary information they could use and leverage to their own advantage.

With the informational playing field evening out, organizations will create value by collaborating with all kinds of players that they never thought of before. One great example is Komatsu, the large Japanese heavy-machinery company, and Caterpillar here in the US. These are big global competitors, but Caterpillar uses Komatsu’s technology to detect equipment failures—before they happen—in items like brake pads. Now, are they still competitors? Sure. But they are also collaborating.

PwC: The demographics are pretty frightening when it comes to developing talent in the science, engineering and technology sector. Are we, as a nation, doing enough to combat this upcoming skills gap?

KK: The demographics are frightening, and not just in the sciences. Fifty percent of Fortune 1000 listed officers will retire in the next three to five years. Over the next couple decades, there will be 75 million fewer Japanese and 65 million fewer Europeans.

But the US has other issues in these areas besides demographics. If you look at engineering, for example, China and India have each become more advanced than the US in how they develop and educate. In North America the perception is that if you are an engineer, you are going to be put into the “technical” box. In Asia they’ve created a career path for technicians because it's seen as a core, integrated skill, not the “IT department.”

PwC: There’s been a lot of discussion about how Generation Y, collectively, approaches the concept of work much differently than previous generations. Do you think every generation starts out as different and that Generation Y will end up being far more similar to previous generations than we might think?

KK: Generational definitions can sometimes obscure more than they reveal but I do believe there are important and unique characteristics in the behavior of Generation Y—those born from 1978 to 2005. These individuals grew up getting constant feedback, going through an interview process to get into elementary school at a young age, and being much more supervised in highly structured environments as kids. I was talking to a senior banker recently who interviewed a young candidate who had brought his mother with him. She explained that he had a lot of options and she wanted to make sure that that was the right environment for him!

PwC: As Generation Y ages and its members start landing leadership roles, how do you think their different views on work will change executive leadership?

KK: Generation Ys expect to be able to choose where and when they work, using technology to escape traditional office hours and space; they do not see strict separations between work and life. Similarly if a company is not treating them as they think they should be, or they don’t feel that they are learning enough, they will not think twice about leaving. Many CEOs I speak to are wondering how you drive a global strategy when faced with those kinds of retention issues. You are going to see some real attempts at changing corporate culture to try and retain these employees. Maybe you give someone very young an international experience, or let a person study a different language on company time.

PwC: And the converse is true, as well, right? With such a looming talent gap, there could be value in keeping older employees around longer.

KK: That expertise is desperately needed already, there is a huge need for individuals who want to work for two or three months, or a few hours per week, and they could still add value to 10 or 15 years beyond the official retirement age.