[Long-lived CEOs, who are they?]The secret of CEO longevity is…2013-08-01Hit:6831
“Only top 0.1% of CEOs are eligible to be called long-lived CEOs.”
Samsung Card CEO Choi Chi-Hoon, who has been a CEO for the past 19 years, introduces a theory for CEO longevity. According to CEO Choi Chi-Hoon, only 10% of all CEOs can exactly catch the essence of a problem. Among those 10% CEOs, one-tenth of them can find a solution for the problem. Again, 10% of them, i.e., 0.1% of all CEOs, can organize a team and push ahead with a plan. This logic is what CEO Choi Chi-Hoon has acquired through his careers at major companies such as GE and Samsung.
At this point, we can know that a key to CEO longevity is the problem-solving ability.
Experts say that many abilities are required to be a long-lived CEO. According to a survey conducted by ten experts including business professors, CEOs at consulting firms, researchers, and long-lived CEOs, the key requirements of CEO longevity include excellent performance, risk management, quick decision-making, self-improvement, offering and executing a clear vision.
Among those abilities, “excellent performance” is considered the most important ability that is required to become a long-lived CEO. Professor Lee Seung-Ju at KDI Graduate School of International Policy analyzes that CEOs can secure their positions when sales, operating income, and stock price harmonize with each other.
LG Household & Health Care Vice President Cha Seok-Yong provides a representative example. Since LG Household & Health Care appointed Cha Seok-Yong as Vice President in 2005, the company has achieved consistent growth in sales for the past seven years and increased its operating income for all of the past 32 quarters. In addition, its stock returns has risen most dramatically compared to other firms of LG Group. Samjinpharm CEO Lee Sung-Woo has also served five consecutive terms since he joined the firm in 2001. He has increased sales from 40 billion to 200 billion (in KRW).
Miele Korea CEO Ahn Kyu-Moon has achieved double-digit sales growth every year since his inauguration. Then, the firm’s headquarter in Germany guaranteed his retirement age of 65. Recently, there is an atmosphere that suggests ‘age is nothing, work together until the age of 70 years.’
Having a sense of ownership, offering a long-term vision, and executing the vision are also one of keys to CEO longevity.
SK Innovation Vice President Ku Ja-Yong has devoted all her energy into expanding the business abroad to make the firm as a ‘global energy enterprise’ since she took her office as CEO in 2008. As a result, the amount of export hit 47 trillion won in 2011 and 53 trillion won last year, thereby becoming the second company which has surpassed 50 trillion won of export following Samsung Electronics.
CEOs who can manage risk well also stay longer in their positions. Those CEOs are good at handling firms going bankrupt and admitting their mistakes if they made wrong decision on investment.
Hwaseung Chairman Ko Yung-Ryp, Meritz Investment Bank Vice Chairman Won Myeong-Soo, Hansaem Chairman Choi Yang-Ha could be typical examples. Chairman Ko Yung-Ryp carried out a large-scale restructuring of 11 Hwaseung Group affiliates when Korea was suffering from a foreign-exchange crisis and stabilized the group business in 2005. He played a role as a Kagemusha (i.e., shadow warrior) of group owners. Since then, he has gradually turned Hwaseung into the leading group which makes annual sales of 4.3 trillion won and has 26 affiliates at home and abroad. So, he was appointed Chairman of Hwaseung Group in 2008.
Meritz Investment Bank Vice Chairman Won Myeong-Soo built up trust during the financial crisis in 2008. At that time, Meritz Fire & Marine Insurance, one of the group subsidiaries, was confronted with a severe problem. As many shipbuilding companies went bankrupt, it suffered considerable losses from RG insurance (i.e., shipping finance) which is designed to compensate clients for the failure of ship delivery. Vice Chairman Won reported a loss for the first time since its founding. But, he made a profit next year and jumped up to be a leading insurance company. Consequently, it also gained a higher level of credit ratings.
Hansaem Chairman Choi Yang-Ha also took the foreign-exchange crisis as an opportunity. Despite the pervasive atmosphere of reducing workforce at that time, Chairman Choi rather decided to expand its business in an interior design industry and put the remaining manpower on the new business. While many furniture companies were going bankrupt, Hansaem could become the No. 1 furniture company based on its favorable performance on interior design.
“Long-lived CEOs have common sense. While other CEOs resort to an expedient to make profits in the short-run, long-lived CEOs operate their firms based on the principles. Eventually, they are trusted by shareholders and outside stakeholders,” said Professor Lim Chae-Woon at the Business School of Seogang Univ. The story that Samsung Life Insurance Vice President Park Geun-Hee referred to common sense and rationality as the most powerful weapons in a crisis could be understood in the same vein.
Being a long-lived CEO also requires good communication skills.
Samsung Electronics Vice President Kwon Oh-Hyun says that the role of leaders is communication. “CEOs should grant autonomy and responsibility to employees and make persistent efforts to remove a barrier between members in the organization,” says Vice President Kwon Oh-Hyun. He promotes the ‘smart work’ culture which gives employees more time by removing unnecessary practices and encourage employees to spend more time for self-improvement and family.
Hana Financial Group President Kim Jung-Tae hung up a sign ‘Joy Together’ on a door and opened his office to employees. He sometimes hosts dance festivals and participates in the festivals to communicate with employees.
CJ Korea Express Vice President Lee Chae-Wook spearheads the ‘open corporate culture’
CJ Korea Express Vice President Lee Chae-Wook changed the bureaucratic culture of public enterprise into the open culture when he was CEO of Incheon Airport. He was praised for building up ‘the integrated corporate culture’ in which team leaders choose team members directly and unethical behaviors are never condoned.
Experts also say that CEOs with an open mind can survive long.
“An open mind has nothing to do with a person’s age. Long-lived CEOs always think over how they can connect their business to various methods and areas that they learn. Also, this kind of trainings can help them cope with new situations and crisis well,” said POSCO Management Institute Senior Researcher Lee Yoon-Hee.
Here is an example. Intel Korea CEO Lee Hee-Sung makes a bucket list (i.e., a list of things to do before you die) that includes being an actor, playing dance sports, swimming, tennis, a drum, being a mentor to undergraduate students, founding a school in the Himalayas. He tries to carry out the list one by one. Now, he has a habit of enjoying the new surroundings. The habit is a pillar of his survival in a rapidly changing IT industry.
Their common habits are also worthy of notice. The most long-live CEOs are ‘morning people’ and spend considerable time in their health care. Except for few CEOs at foreign IT companies, over 95% of CEOs (i.e., 61 out of 66) responded that they usually get up at 5 o’clock in the morning to exercise (e.g., walking, weight-training, meditation) before going to work.
Langxess Korea CEO Ko Je-Woong always starts his days early in accordance with his belief that a hunter should go hunting although the gun is unloaded.
What would be the mottos of long-lived CEOs? Two out of ten long-lived CEOs, including Hansaem Chairman Choi Yang-Ha, Foosung Group Vice Chairman Song Han-Ju, and Intel Korea CEO Lee Hee-Sung, have the same motto ‘Man Proposes, God Disposes’. Their lives look exactly like the motto – building skills, biding time, and performing well when opportunities come.