For more information about Chief Executive’s 2012 40 Best Companies for Leaders:
40 Best Companies for Leaders: How Top Companies Excel in Leadership Development
40 Best Companies for Leaders 2012
The Best Private Companies for Leaders 2012
Private companies operate in a much different business environment than public companies. Nevertheless, private companies that commit to leadership development deserve to be recognized in their own right. They may not be as large, but with fewer external distractions, many are actually more focused on developing their people—if on a reduced scale and with fewer resources. Here are 10 that stand out among this year’s respondents.
JFE Shoji Service
|A. Ross Meyers|
Bombardier Sifang (Qingdao) Transportation Ltd.
|Jianwei Zhang, President and Chief Country Representative Bombardier China|
Are Private Company CEOs More Liberated?
It has frequently been suggested that executives who hone their skills at the helm of private companies have much more flexibility than those at publicly owned companies. Public company CEOs are constrained by their need to balance multiple objectives in a complex corporate ecosystem that includes Wall Street analysts, shareholders, their public culture and brand and other stakeholders. They need to be the face of the company, dealing with analysts interacting constantly with the media.
These added obligations can distract from a CEO’s focus on internal operations. Public company CEOs must also cope with the comparisons shareholders can make with returns garnered by hedge funds (fair or not) and with regulatory compliance issues. These trends can force public company executives to be more short-term focused on quarterly earnings targets and more risk-averse.
At private companies, executives are often less encumbered and make decisions autonomously. Management teams can focus on understanding the “science” of running their specific business and be more like business “technologists.” It is likely that these CEOs, who do well with the bottom line, will be left alone.
The impact on CEO priorities may be significant:
- Public companies have an intense focus on the numbers and stock price. These differences remain constant regardless of the size of the organization.
- In spite of the recent turmoil in the financial markets, public companies are significantly more likely to promote from within, regardless of size.
- Public companies find the cost of development processes and succession planning less prohibitive, again regardless of size.
- However, probably due to the greater range of external responsibilities, public company CEOs spend almost 17 percent less time on their own development and 7 percent less time on developing others than private companies, also regardless of size.
Public companies face a paradox: The demands on their skills are greater, but they have less time to maintain and hone them.