Diversity in Big-Company Leadership Shrinks as PepsiCo’s Indra Nooyi Prepares to Step Down

Diversity in Big-Company Leadership Shrinks as PepsiCo’s Indra Nooyi Prepares to Step Down

After 12 years at the helm of the multinational food and beverage conglomerate, PepsiCo CEO Indra Nooyi announced on Monday that she would retire from her position in October. Nooyi will be succeeded by Ramon Laguarta, the head of PepsiCo’s Europe and sub-Saharan Africa business, who has been with the company for 22 years. In an interview with the New York Times, the 62-year-old departing CEO said she was stepping down now in part to spend more time with her 86-year-old mother:

“You reach a point where you get tired,” Ms. Nooyi said. “Physically tired. And your family starts to demand more time of you. I’ve reached that point.” Inside PepsiCo, Ms. Nooyi was known for working incredibly long hours — as many as 20 hours a day, often seven days a week. When asked Monday whether she felt that made her a good role model for other women, Ms. Nooyi said, “probably not.”

“But you have to remember when I started working in this corporate world, there were hardly any women in the jobs I was in. At that time, 30 or 40 years ago, expectations for women were unreasonable. We had to produce a better product and do everything much better than the men in order to move ahead,” Ms. Nooyi said.

Nooyi’s departure will leave just 24 women leading S&P 500 companies, according to the non-profit organization Catalyst, though that number will bounce back up to 25 again when Kathy Warden takes up her new post as CEO of Northrop Grumman next January. Other women have stepped down from CEO roles at big companies this year, however, including Denise Morrison of Campbell Soup and Irene Rosenfeld of the snack food maker Mondelez International, so the gender balance of this exclusive club is on a downward trend.

Nooyi has discussed her remarkable path to corporate leadership in a number of interviews, as well as why more women don’t make it to the top. In her view, the dearth of women in the C-suite has less to do with sexist conceptions of what leadership looks like and more to do with a pipeline problem, Vauhini Vara explains at the Atlantic, pointing to an interview she gave on the Freakonomics podcast earlier this year. That’s because the critical point in many professionals’ careers coincides with the time in their lives when they become parents and raise their children—a responsibility that still falls primarily on women:

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ReimagineHR: What Employers Are Thinking Today About Building Tomorrow’s Leaders

ReimagineHR: What Employers Are Thinking Today About Building Tomorrow’s Leaders

At our ReimagineHR summit in Washington, DC, on Wednesday, dozens of heads of HR, HR business partners, learning and development leaders and specialists convened in a peer benchmarking session on leadership, or more specifically, what their organizations are doing to improve the effectiveness of their leadership in the future.

When we talk about leadership, different people and organizations have different ideas of what the word “leader” means. Most of the organizations represented in the room define “leader” as anyone who manages other people, while about 20 percent said it referred specifically to the top three to four layers of management, whose decisions affect the entire company. Other participants noted that while they have a specific definition of “leader” as manager, they expect all of their employees to demonstrate leadership, or identify employees who are not managers themselves but still lead their colleagues through their influence.

When we talk about leadership development, though, we are usually talking about identifying the people who will succeed the current generation of senior managers and executives at the organization. Here are some of the topics that came up in Wednesday’s discussion of what HR professionals are thinking, worrying, and getting excited about as they try to identify the leaders of tomorrow:

Developing Leaders for the Future Is the Primary Concern

The majority of participants said this was their biggest challenge at the moment. In the conversation that followed, several people attributed this challenge to the rapid pace of change in today’s business environment. Developing people within an environment of constant change is tricky, they said, as it becomes harder to be sure that what leaders and prospective leaders are learning today will still be valuable to the business when the time comes to use it. Even more importantly, the consistency of change means that leadership development becomes an ongoing journey. An employee can no longer acquire a single set of “leadership skills” and believe they will always be ready to lead with that skill set.

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Avon CEO Sherilyn McCoy Pushed Out by Activist Investors

Avon CEO Sherilyn McCoy Pushed Out by Activist Investors

Avon Products announced this week that CEO Sherilyn McCoy would step down at the end of next March after six years in the top position at the beauty products manufacturer and direct-marketer. According to the New York Times, McCoy’s departure was the result of investor pressure to change course after a series of disappointing financial reports:

Barington Capital Group and NuOrion Partners called on Avon Products’ board of directors earlier this year to replace Ms. McCoy as poor results weighed on its stock price. Media reports first emerged in June that Ms. McCoy, who has been the top executive at Avon since 2012, was expected to leave the company.

Avon Products on Thursday reported a net loss of $45.5 million in the second quarter — its third consecutive quarterly loss. The company also said that its revenue fell by 3 percent. Its share price has fallen 40 percent this year. The company said that its board had retained the executive search firm Heidrick & Struggles to assist in finding Ms. McCoy’s successor.

The news at Avon comes at a time when institutional investors are taken on an increasingly active role in shaping management and strategy at the companies of which they own shares, pushing for change in financial priorities as well as organizational culture and talent strategies, and demanding the ouster of CEOs whose performance does not meet their expectations.

Part of what makes McCoy’s departure from Avon noteworthy is that she is among a very limited number of women at the helm of a major corporation. Furthermore, as the Times‘ Julie Creswell remarks, she’s the latest in a string of women CEOs who have been pressured to resign by activist investors:

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What Business Leaders Can Learn from GE’s CEO Succession Plan

What Business Leaders Can Learn from GE’s CEO Succession Plan

Earlier this month, Jeffrey Immelt was replaced as CEO of General Electric after 16 years at the helm of the company. Much of the coverage has depicted Immelt’s stepping down as a result of investors losing confidence in his leadership after GE’s stock underperformed in the past year, as in this Bloomberg report, for example:

Amid mounting pressure from activist investor Trian Fund Management, GE said Monday that Immelt will be replaced by John Flannery, a 30-year company veteran who oversaw a jump in profits at the health-care unit. In a sign of just how great opposition to Immelt had become in the investing community, the stock soared the most in more than a year and a half after the announcement was made.

This was not a snap decision by GE’s board of directors, however. In fact, the planning for Immelt’s succession began not in 2016 or 2015, but all the way back in 2011. Susan Peters, Senior Vice President for Human Resources at GE, shared the company’s strategy in a LinkedIn post, illustrating a thoughtful process befitting a giant corporation responsible for hundreds of thousands of employees and hundreds of billions of dollars in assets:

First, we knew it would take years to move potential candidates through the leadership roles that would develop them. We began intentional moves of key leaders to give them new, stretch experiences with ever increasing exposure to complexity.

By 2012, we wrote the job description and then continuously evolved it. We focused on the attributes, skills and experiences needed for the next CEO, based on everything we knew about the environment, the company’s strategy and culture.

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More CEOs Losing Their Jobs to Ethics Scandals

More CEOs Losing Their Jobs to Ethics Scandals

In the past few years, CEOs have become substantially more likely to be removed from their positions due to ethical misconduct or scandals, even though the number of CEOs dismissed for such reasons remains quite low overall, according to a new study by Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera of PwC/Strategy&. At Strategy+Business, the authors lay out their findings and discuss their implications:

Globally, dismissals for ethical lapses rose from 3.9 percent of all successions in 2007–11 to 5.3 percent in 2012–16, a 36 percent increase. The increase was more dramatic in North America and Western Europe. In our sample of successions at the largest companies there (those in the top quartile by market capitalization globally), dismissals for ethical lapses rose from 4.6 percent of all successions in 2007–11 to 7.8 percent in 2012–16, a 68 percent increase.

Our data cannot show — and perhaps no data could — whether there’s more wrongdoing at large corporations today than in the past. However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years. In fact, our data shows that companies are continuing to improve both their processes for choosing and replacing CEOs and their leadership governance practices — especially in developed countries.

Instead, Karlsson, Aguirre, and Rivera suspect this increase to be related to changes in the business environment that make unethical behavior at the top of the corporate pyramid more likely to come to light and amplify its reputational risk. They identify five specific trends driving this change:

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Survey: Most American Employees Plan to Work Past Retirement Age

Survey: Most American Employees Plan to Work Past Retirement Age

Three quarters of employed American adults plans to keep working either part-time or full-time after they reach retirement age, according to a new survey from Gallup:

Nearly two in three employed U.S. adults, 63%, say they plan to work past retirement age, but on a part-time basis. An additional 11% say they will work full time once they hit retirement age. A quarter of employed Americans say they will stop working altogether. …

Of those who say they will continue working, but only full time, the majority plan to do so because they want to, not because they have to. The proportion of “want to” versus “will have to” explanations has edged up slightly since 2013. The percentage who say they “want to” keep working part time has also risen, from 34% to 44%. There has been a decline in nonretirees’ intentions to continue working full time, from 9% “will have to” in 2013 to 5% today, while the percentage who “will have to” work part time has dropped from 26% to 18%.

Americans also have differing views on what constitutes “retirement age,” Gallup found. While the official retirement age—i.e., the age at which Americans can being collecting their full Social Security benefits—is 65, only about a quarter of respondents to the survey said they planned to retire at exactly that age, while 39 percent said they intended to retire after 65 and 29 percent said they expected to retire earlier.

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Starbucks’ Schultz Hands Over the Reins Once Again

Starbucks’ Schultz Hands Over the Reins Once Again

Starbucks founder and longtime CEO Howard Schultz passes the torch to his president, board member and longtime friend Kevin Johnson today. Noting that Schultz has left Starbucks in the past only to return to the CEO’s office twice, Washington Post columnist Jena McGregor wonders whether this succession will be more successful than the previous attempts:

Now, Schultz and Johnson will again attempt one of the most delicate transitions in all of business: The handoff by an iconic, wildly successful CEO or founder to a successor. It’s a paradigm of its own, fraught with potential for ego clashes and muddled lines of authority, and one of corporate America’s most precarious high-wire acts. For founders and CEOs closely associated with a brand’s success, their identities “are often hyphenated with the enterprise,” says Jeff Sonnenfeld, a professor at the Yale School of Management. …

That division of specific roles and responsibilities is also what observers say could help the succession stick this time around. Schultz has carefully outlined what he plans to spend his time doing in his post-CEO role: Running the company’s premium Reserve brand and shepherding its Roastery locations, the company’s new sprawling tasting-room style temples to coffee. In addition, he’ll continue to lead the company’s social impact initiatives, such as hiring refugees across its global locations and offering college benefits to baristas. “He’s got meaningful projects to work on, something he’s really impassioned about,” said Sonnenfeld, who described Schultz’s role in the first CEO handoff as less well-defined.

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