Chapter 8 / Attributes of CEO and Organisational Change People can't live with Change if there's not a Changeless core inside them. The key to the ability to Change is a Changeless sense of who you are, what you are about and what you value ~ Stephen Covey ~

CEO TENURE AND ATTITUDE TOWARDS CHANGE Research across several companies has consistently indicated that top executive tenure and organisational change are inversely related to each other CEOs tend to introduce substantial changes during the initial phases of their tenure, however, towards the later phases this tendency shows a decline, as they become conservative to change With time, vision becomes more constrained by the history and current status quo of the company, adversely impacting their openness to change Research found that executives with a shorter tenure are more maverick, open to taking risks and chances, reaching out for new opportunities and experimenting with non conformist strategies but with the increase in tenure, executives displayed lower risk taking capacities, rather preferring to follow established strategies and conforming to the mainstream trend 2

CEO EXPERIENTIAL ATTRIBUTES AND ORGANISATIONAL CHANGE Knowledge and experience are two invaluable assets that empower the CEO to consistently add value to his organisation Knowledge comprises not only conscious learning that CEOs accumulate through experience, but also tacit knowledge that work-related practical know-how brings This infinite stockpile of tacit knowledge inventory (TKI) comprises the basis of what is commonly known as intuition How much of tacit knowledge a CEO picks up from his experience, however, is subjective and varies with his individual propensity to glean out learning’s from different situations 3

CEO ORIGIN, STRATEGIC CHANGE AND FIRM PERFORMANCE Strategic change refers to a variation in the firm’s resource allocation in key strategic dimensions, to respond to a changing environment or to establish a strategic advantage over competitors A firm’s strategic Change can work in two ways Adaptive change - it can either help the company align itself to the industry environment improving firm performance Disruptive change - it can lead to non alignment and/or poor performance due to inefficient implementation Conducted survey results have concluded that the level of strategic change has an inverted U-shaped relationship with firm performance 4

CEO FUNCTIONAL BACKGROUND & DIVERSITY AND ORGANISATIONAL CHANGE A lengthy association with a single company endows the CEO with more company specific knowledge; whereas a diverse association with several companies in the same industry can offer valuable and different insights into the industry dynamics CEO’s industry experience not only carries performance implications for his organisation, but also has an important bearing on the organisations' tendency to undertake strategic change Porter (1985) contends that it would be rare to find a CEO who possesses the necessary background and experience, to be able to steer the organisation through all of its various life cycle stages CEOs with more extensive executive level management have been found to display higher levels of performance, evidenced by better asset management and hence firm performance 5

CEO EGO DEVELOPMENT STAGES AND ORGANISATIONAL CHANGE Research by David Rooke and William R. Torbert identified some startling analogies concluding that the personal development stage of the CEO has a direct impact on attitude to organisational change Leaders, who realize that mutual and voluntary efforts, rather than hierarchical guidance, are more likely to succeed in leading organisational transformation No kind of power exercised unilaterally can result in enduring change It is only when CEOs appreciate the difficulty of change and acknowledge themselves as being as vulnerable to the change as their employees can a sustainable change effort be driven 6

© Copyright 2011 The Art of Change Management Implementing Change from the Top ISBN: 978-93-80227-60-3 Published by Embassy Books, India. www.artofchangemanagement.com Author: Percy Agreras Dastur www.percydastur.com Email: contact@percydastur.com