How important is the CEO of the company?

Boeing, Nike and Starbucks have replaced their chief executives in recent months. But how important is the person in the top job to the successful running of such large companies?

“There’s only one cat that’s on the hot seat,” says Alan Laughley, CEO of global consumer goods giant Procter & Gamble from 2000 to 2010 and again from 2013 to 2015.

P&G sells everything from Pampers nappies to Head and Shoulders shampoo, and Fairy washing liquid, with more than five billion consumers worldwide. And its workforce now exceeds 107,000 people.

Mr Leafley likens leading a firm of this size to being the manager of one of England’s Premier League football teams. In particular, they say it comes with the same risk of being fired if results don’t meet expectations.

“With football players, if they have bad weather, they don’t go,” he says. “Instead it’s the coach or the manager who’s going to go.”

Coffee giant Starbucks announced a CEO change in August, after declining sales due to factors including a complicated menu, stiff competition in China, and boycotts linked to war in the Middle East. Hopefully new boss Brian Nicol can turn the firm’s fortunes around.

To lure him away from the success he was enjoying running US restaurant chain Chipotle, Starbucks is paying him more than $100m (£79m) in his first year, in addition to taking him home. is using a private jet to allow him to travel 1,000 miles from Seattle in California to the firm’s head office in Washington state.

“It’s very clear that he has great expectations and the ability to turn the company around,” says executive coach Alyssa Cohen, who points out that the highest pay packages are set by the company’s board of directors. are carried out, and reflect their expectations of the CEO. Appointing.

Investors welcomed Mr Nicoll’s appointment on the day Starbucks’ share price surged 24.5 per cent. Chipotle fell 7.5% on the same day.

Mr. Nicol is now continuing efforts to simplify Starbucks’ menu.

“CEOs are the ones setting the strategy for the company,” Ms. Cohen added. “They’re the ones who set the culture for the company, and frankly, the buck stops with them in terms of their accountability.”

Marcia Kilgore is the Canadian entrepreneur behind skincare brands Soap & Glory and Beauty Pie, as well as footwear firm Fitflop. She says the role of CEO is complex, demanding and critical to a company’s success.

“You need someone who can really see the different streams of work that need to be done, and organize and prioritize them,” she adds.

“And somebody who can make sure that the different teams in the company are working together in harmony, and making sure that time isn’t wasted, money isn’t wasted, and those things. Don’t waste energy not moving the dial for the company.”

Mr. Lefley became P&G’s boss in 2000 because of his inability to make the right choices and steer the teams in the right direction.

His predecessor, Dirk Jagger, resigned following the failure of a major global restructuring he was leading. Cutting 15,000 jobs and 10 factories was intended to boost profits, but instead led to repeated profit warnings and steep share price falls.

As CEO it’s not about doing everything yourself, says Mr. Leafley, but about “enabling and empowering everyone in the organization” to do what they need to do.

“We had 100,000 people watching to tell the new CEO two things – ‘What happened?’, and ‘What are we going to do next?’.”

He explains that he decided to refocus the firm on serving customers and innovating new products, telling staff that “I’m confident that we’re all going to get us out of where we are and back.” Will get on track.”

Mr. Lefley added that clearly communicating his plans with employees was so “critical” that in those pre-Zoom days he flew around the world to meet with staff in person.

Inspiration and communication are also apparently at the heart of new Nike CEO Elliott Hill’s approach. Upon taking the job in September, he wrote to staff that he had “great confidence in his team and our future together” despite years of declining sales.

Miss Cohen, who has worked with companies including Google, Etsy and Johnson & Johnson, says that whatever the new CEO’s plans, trust is critical to any success.

“The most important quality you need to have to be a CEO is to know you’re going to be able to be a CEO,” she says. “There’s a sense of confidence, and a healthy ego that you need to bring to the table.

“The other thing you need to bring to the table is adaptability. You have to be able to assess a situation, make some critical decisions, and then adapt as you go.”

It’s not something she thinks can always be taught, which is why she says many people get “stuck” at the lower levels in a company. Ms Cohen adds: “You need to develop your own internal state of knowing that you can handle pressure, difficulty, the spotlight”.

This pressure is one reason why top CEOs are often compensated with huge pay packages. When it comes to the S&P 500 group of largest U.S. companies, the top earner was Hock-Ten at Broadcom with $162 million, followed by cybersecurity firm Palo Alto Networks at $151 million. Along with Nikesh Arora, and Stephen Schwarzman, investment giant Blackstone with $120 million.

The average S&P500 CEO last year was a record $16.3m, according to executive consultants Acular. That means they’re earning 196 times more than the average worker at their companies, and critics say CEOs aren’t worth more than their staff.

“It’s based on the silly notion that the guy in the corner office is somehow almost single-handedly responsible for corporate value,” says Sarah Anderson of the Institute for Policy Studies, a Washington-based progressive think tank.

She thinks it’s a problem that’s getting worse, and spreading around the world. “I think runaway CEO pay is bad for our economy, bad for democracy and bad for business,” she adds.

Mr Lefley agrees that the ratio between staff and CEO pay is “too high”, but the reasons why firms have to compete to attract the best talent.

He thinks the answer lies in giving CEOs “a modest base salary, and then everything else.”

“Ultimately, it’s like being a coach. If you’re not motivating people, and you’re not enabling them to do what you’re asking them to do, then you’re not working. are.”