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From Where We Sit

What's in a list?

Anton Ng

Likemost persons, my interest is piqued by any sort of lists or rankings, from NBA’s all-time greatest to Billboard’s Top 100. Thus, when I recently came across the latest Harvard Business Review’s (HBR) list of best-performing CEOs,I really had to take a look.

What grabbed my attention was that the highest-ranked CEO that I have heard of in the list is Howard Schultz. The Starbucks CEO appeared at No. 14 and none in the Top 10 even sounded remotely familiar to me (No Mark Zuckerberg, ladies and gents!). Comparing the list with that of, a job-and-recruiting site, which has its own list of the highest rated CEOs (ranked by employees), there are only less than ten names that appeared on both.

So what sort of criteria did HBR use to come up with this ranking and what can we, “mere mortals”, learn from this?

Starting in 2015, HBR made a significant change in how it determines the rankings. From basing purely on financial returns, HBR included as a criterion the environmental, social and governance (ESG) performance, which accounts for 20 percent of the total score. This additional criterion considers certain non-financial aspects that are generating a buzz in recent years.

The ESG score gives weight to how a company manages environmental (e.g., energy use, environmental risk), social (e.g., relationships with suppliers, employees, and community) and governance (e.g., accounting methods, conflict of interest, illegal behavior) issues. The inclusion of the ESG score helps in increasing awareness that businesses are no longer simply about making money but also about sustainability, both for the companies and the ecosystems they are conducting their businesses in.

Similarly, this mindset of doing well and, at the same time, doing good, can also be embraced by individuals. We should consider having our own personal “ESG” metrics. Life is more than just money. There are other important issues like the environment, relationships, personal integrity, and ethical behavior that matter.

Interestingly, the top three CEOs took different paths in their journey to become CEOs. Lars Rebien Sørensen (No. 1) started his career at a global healthcare company, Novo Nordisk, in 1982 and was assigned to different operational roles before being appointed as its CEO in 2000. Martin Sorrell (No. 2), who has an MBA degree from Harvard, was essentially the founder of WPP (the world’s largest communications services group with 190,000 employees in 113 countries), after working in different fields like marketing, sports agency and food retail. Pablo Isla (No. 3) has a degree in law and worked in the Spanish government before being appointed as CEO of Inditex (regarded as a leading fashion retail groups in the world).

From these examples, we can gather that people can take different career paths but should acquire expertise and competencies along the way. One could either stay in just one company or move around working with different companies, get a post graduate degree, etc; but the important thing is the acquisition and development of competencies that would prepare one to be a good leader.

Another interesting dimension of this ranking is that HBR scored the CEOs, not on the basis of their most recent performances, but on their total career performance as CEO. Hence, this list is not about who are the talks of the town or who are acquiring the latest billions for their organizations; but rather about who have been doing exceptionally well for a longer while. This brings to focus the issue of meeting short-term goals versus keeping a long-term view in mind. Ideally, more weight should be placed on strategies and actions taken for a meaningful and sustained long-term result. However, in reality, the market usually measures performance on short-term results—quarterly even, for listed companies.

Applied in parallel context, do not sacrifice long-term goals when aiming for short-term results. Until such time a performance evaluation system that can help to measure the long-term impact of actions is developed, we should keep in mind the need to also consider the long-term values of our (or the people we are evaluating) short-term actions and decisions.

This HBR ranking of best-performing CEOs, to me, is more than just a list of who’s who in the business world based on certain criteria. There are valuable insights that we can apply as we go through our own personal climb in our chosen careers: that financial performance is not the be-all and end-all; that we should have our own ESG metrics; that we should make it a point to work on our competencies; and that our view should be more on long-term results than short-term gains.

Anton Ng is a Partner, Audit & Assurance of P&A Grant Thornton. P&A Grant Thornton is one of the leading Audit, Tax, Advisory, and Outsourcing firms in the Philippines, with 21 Partners and over 800 staff members.

As published in The Manila Times, dated 9 November 2016