The Corporate Elders

by Liz Mellon

In public life, “The Elders,” chaired by Kofi Annan, is an independent group of global leaders who work together for peace and human rights. The idea started with a conversation between entrepreneur Richard Branson and musician Peter Gabriel. The idea they discussed was simple: many communities look to their elders for guidance or to help resolve disputes. In an increasingly interdependent world—a global village—could a small, dedicated group of individuals use their collective experience and influence to help tackle some of the most pressing problems facing the world today? Richard Branson and Peter Gabriel took their idea of a group of global elders to Nelson Mandela, who agreed to support it. With the help of Graça Machel and Desmond Tutu, Mandela set about bringing the Elders together and formally launched the group in Johannesburg, July 2007. Their website tells us that the Elders aim to offer an independent voice, not bound by the interests of any nation, government, or institution and are committed to promoting the shared interests of humanity and universal human rights.

Elders are wise, experienced people to whom others can look for advice. Let’s look at the role of Elders in the business world.

The Elders are a small number of very senior executives who sit alongside the CEO and agree the strategic direction for the company. They will include the heads of the major business units, because success or failure in these large parts of the business can support or threaten the financial health of the whole. There may be leaders of the key functions, always finance, not always human resources. (Leaving HR off the team is puzzling. An organization is a collection of people pursuing a set of common goals. Why exclude the person responsible for making sure the organization has enough of the right people to achieve its strategic aims?) Finally, it may include some specialists or technical experts where these are part of the core capability of the business; for example, safety in the construction or extractive industries. Occasionally the group will co-opt members for short durations on specific topics.

The Elders tend to be a rich mix of the inherited and the imported, the ones the CEO trusts and wants to recruit as well as the sitting incumbents. The CEO is also an Elder, but in considering him or her as one of the Elders, this acknowledges that the CEO role goes much further. The executive team of Elders can number from roughly 5–20 people in size, depending on what we expect of them. A smaller team tends to be more tightly focused on strategy formulation and communication. A larger team is both harder to manage and less likely to be intimately involved in formulating the strategy because the goal of reaching agreement is harder with 20 people. It’s not impossible, but more challenging.

Why would a CEO decide to work with a bigger advisory team? There could be several reasons. Maybe the CEO wants to keep potential disruptive influences in the room close and under observation. Perhaps it makes communicating across the whole organization easier, if functional heads together with the leaders of business units debate and conclude in the room together. Potentially, it could be to allow the CEO to scan all voices and keep an eye on talent as part of a succession planning process. It could even be to keep control—the CEO can act as a benevolent despot, because the chances of all 20 ganging up on him or her are slim.

Every new CEO casts a critical eye over the executive team he or she inherits. There may be overlap with the CEO’s own expertise, or gaps in the skills or capabilities needed to take the organization forward compared to what was needed in the past. There may be personality clashes with certain members. But the CEO doesn’t have free rein to replace Elders at will; politics, vested interests, powerful heads of key business units, and existing relationships will all limit the capacity to act. One CEO said: “I changed some key people on my team—casualties help. I still have a couple of passengers, but you can’t sack everyone and they can stay as long as they do no harm.”

“Casualties”? It’s a really symbolic act. Dismissing Elders reinforces the CEO’s power but can also signal change in the organization—the former member may represent a part of the business that won’t be important to the strategy in the future, or may not be there at all. And if that team member was disliked or generally seen as a poor role model, then moving that person on will bring real relief to employees.

And “passengers”? Everyone in the organization looks up to the top team, obviously to the CEO more than anyone else, but to the executive team members too. They are seen as powerful in their own right in addition to the power they have because they work so closely with the CEO and can put ideas into his or her head. Yet some of them may not be powerful at all, but passengers, safe in their position as long as they don’t interfere or mess anything up. It’s really a matter of pragmatism and politics. Pragmatism because the CEO needs to focus on getting the shape of the team broadly right, not exactly perfect—just make sure it works well enough. And politics, because these are powerful players and even if they lack talent, they will have built networks and relationships, inside and outside the organization, that can make them hard to shift. Handle with care.

Liz Mellon of Duke CE is author (with Simon Carter) of The Strategy of Execution (McGraw Hill, 2013) and Inside the Leader’s Mind (FT Prentice Hall 2011).