Diversity. Cybersecurity. Mega-mergers. Those were certainly major issues in 2017. But they were all dwarfed by even bigger disruptions this year. Five upheavals not only were on the minds of board directors and executives alike, but they also are poised to have lasting ramifications over the long haul. Here are the top five lasting disruptions of 2017.
5. Women rising up
2017 was a big year for women, beginning with the Women’s March protests that followed President Trump’s inauguration and culminating with the revelations of several women in media and entertainment about rampant sexual abuse by powerful men. Jane Stevenson, global leader for CEO succession at Korn Ferry, describes it as a year of “activation”—a time when the national conversation not only focused on the mistreatment of women in the workplace, but on the need for businesses to have more gender diversity at the top. Indeed, a recent study by Korn Ferry shows that female CEOs tend to share a strong sense of humility, agility, resilience, and an ability to manage ambiguity. In a world where digital technology is rapidly changing the game for many companies, Stevenson says there’s a growing need for those capabilities. “At this time in history, when there’s so much agreement that there’s a need for strong leadership, how could we possibly disenfranchise 50% of the population?” she asks.
4. Government wildcards
Countries all over the world proved hungry for radical leadership bets in 2017—among them, the appointment of France’s youngest president, 39-year-old Emmanuel Macron, who entered the race without an established political party and won the vote despite his globalist views; the appointment of 37-year-old New Zealand President Jacinda Ardern, the world’s youngest female leader, tasked with turning around the country’s staggering homelessness rate; and the fall of 93-year-old Zimbabwe President Robert Mugabe, who resigned after 37 years of rule amid calls for his impeachment. In the US, President Trump has perhaps proven the biggest wildcard of all—the reality TV celebrity turned head of state has had a presidency underscored by dramatic changes in policy and surprise eliminations. The only constant is the widening gap between Republicans and Democrats: the partisan divisions that reached record levels during President Obama’s presidency have further ballooned under Trump, according to Pew Research Center.
3. CEO Shuffles
Research shows that organizations lose millions of dollars when having to replace a CEO, but in today’s fast-paced environment, it’s a risk companies are willing to take. One of the biggest stories of the year was Uber CEO Travis Kalanick’s resignation, a result of investor pressure following a series of setbacks at the company. Avon, GE, Ford, Honeywell, Mondelez and Teva Pharmaceutical also ushered in new chief executives this year, a sign that investors and shareholders of traditional companies are looking for leaders who can find new revenue streams and execute at a time when technology has made it easier for smaller companies to join the market.
2. Shareholder activism reaches new heights
It has been a banner year for the activist investor. As of October, shareholder activists had deployed $45 billion on new campaigns year to date, nearly double the amount for all of 2016, according to a report by financial advisory firm Lazard. GE, Nestle, and Procter & Gamble are just a handful of the companies that faced tough calls on their leadership and direction in 2017, and more are expected in 2018. Experts advise board directors at companies to think more like activists and get ahead of ongoing pain points before they’re forced to. According to a recent Korn Ferry paper, directors should ask hard questions (e.g., is our portfolio too complex? Is management top-notch? Is the cost structure too high? Have we missed an inflection point?) and be on watch for underperforming assets, a low stock price, and large management payouts at a time of stagnating earnings.
1. Company culture dominates
If 2017 has taught us anything, it’s that culture matters. What used to be a nice-sounding word on onboarding pamphlets has become a serious recruiting tool: A recent survey shows that the No. 1 reason job candidates choose one job over another is company culture. (Only five years ago, the main reason was benefits packages). Another study found that “driving culture change” was one of the top three priorities for more than 7,500 executives across the world.
Why the focus on culture? Organizations have found that when they lead with purpose, transparency, fairness, and accountability, they’re able to attract and retain better talent, and inspire greater creativity and innovation—all of which ultimately helps their bottom line, experts say. Entire industries are looking at their culture as well. The recent revelations in Hollywood are an example of what happens when unhealthy culture runs amok. “You just don’t get a lot of stories of people firing high performers who have behaved badly. But it’s something that can actually turn a culture around,” says Signe Spencer, client research partner at Korn Ferry.