By Joann S. Lublin And James R. Hagerty
Generation X is moving into the corner office, bringing a
different style to the way companies are run.
As older baby boomers retire, more companies are turning to
members of Gen X, those born between about 1965 and 1980, and
younger boomers, now in their mid-50s. Among companies that have
recently appointed CEOs aged 50 or younger are McDonald's Corp.,
Harley-Davidson Inc., Microsoft Corp., and 21st Century Fox
Inc.
Management experts say these younger bosses tend to share
certain qualities, though the traits aren't universally so. As
members of the first generation to use personal computers from
childhood, they are generally more tech savvy. They also spend more
time wooing and keeping younger staffers, and worrying about how to
keep products and services relevant for the rising millennials
projected to comprise 75% of the workforce by 2025.
Gen X and young boomer CEOs also generally take more risks and
react faster to sudden business shifts than the CEOs they replaced,
leadership specialists say.
"There is going to be a sea change in terms of the ways that
individuals in the corner office lead," predicted Sandra Davis,
founder of MDA Leadership Consulting Inc., a succession-planning
firm in Minneapolis. "They are far more nimble and agile."
Christopher H. Franklin, 50 years old, who became CEO this month
at Aqua America Inc., a water utility in Bryn Mawr, Pa., thinks his
generation of leaders is more focused on talent as well as
technology than predecessors were. He says he wants to delve deeper
into hiring and retention than many chiefs typically do, in part by
having Aqua's vice president of human resources report directly to
him rather than to the general counsel.
"Talent acquisition and retention is a huge component of what we
[new CEOs] need to think about," he said in an interview. "That is
where you get to set the culture."
The prior generation of chief executives cares about talent,
too. But "loyalty to one company was a source of pride," and so
they placed less emphasis "on human capital for long-term
competitive advantage," said Jeffrey Cohn, a CEO succession adviser
for boards.
Managing talent is a critical focus for the new CEOs because the
contemporary economy heavily depends on service and knowledge
workers, and corporate loyalty has faded as people change jobs more
often. Businesses gain a greater recruiting advantage from their
organizational culture than higher salaries or fast promotions,
concluded a May survey of 1,092 executives world-wide by
Futurestep, a unit of recruiters Korn/Ferry International.
Mr. Franklin, who was president and chief operating officer,
succeeded 69-year-old Nick DeBenedictis, CEO for 23 years. The new
chief wants to help his employees improve work-life balance--an
issue familiar to the father of three young children. On the day
Aqua announced his promotion, Mr. Franklin left the office for
several hours so he could attend and celebrate his son's eighth
grade graduation. Aqua has commissioned a study to "figure out how
we accommodate those [work-life] needs," he said.
Driving these changes in part are the needs of an even younger
generation. Millennials, people in their midteens to mid-30s, "have
a different expectation of what they're looking for in employers,"
observed Paul Winum, a senior partner at RHR International LLP, a
leadership advisory firm. They favor greater flexibility about
where and when they work, and "their hearts want to be engaged,"
Dr. Winum added.
Not all younger chiefs say they are part of a demographic
vanguard and several recent picks, including at Intel Corp., are
technically younger members of the baby boom generation. Dennis
Muilenburg, age 51, took over as Boeing Co.'s CEO on July 1 from
65-year-old Jim McNerney. He emphasizes continuity at the aerospace
giant, saying "I don't see this as a generational shift."
Others embrace the idea. "I'm the first Gen X leader of Harley,"
Matt Levatich, the 50-year-old CEO of Harley-Davidson, noted in a
recent interview. A 21-year veteran of the motorcycle maker, he
succeeded Keith Wandell, 65 years old, on May 1.
Mr. Levatich's relative youth is significant for a company long
viewed as dangerously reliant on aging baby boomers. Mr. Levatich,
who works at a stand-up desk and talks in a relaxed conversational
tone rather than rattling off bullet points, is careful to pay
respects to boomers, still the biggest buyers of Harley's
motorcycles, many of which cost between $20,000 and $40,000. But he
is spending much of his time trying to figure out how to appeal to
young adults and even teenagers.
The issue is more pressing at McDonald's, which has lost
allegiance among many young people eager for food with fresher
ingredients and fewer additives. Steve Easterbrook, age 47 when the
board promoted him to CEO earlier this year, has quickly made
several moves to address concerns often emphasized by younger
adults, including a plan to limit the use of antibiotics in chicken
bought by the chain.
At Microsoft, 47-year-old Satya Nadella in his 17 months in the
top job has been more open to working with young tech upstarts
compared with his predecessor, Steve Ballmer. Mr. Nadella regularly
meets with executives from startups in the Bay Area and beyond, and
he has made Microsoft's technologies work with some free software
tools popular with cutting-edge developers. Even Mr. Nadella's
wardrobe gives off a youthful vibe. He typically shows up at events
wearing dark jeans and a slim-fitting polo shirt, in contrast to
Mr. Ballmer's khakis and sport coats.
Some younger chief executives favor a flatter organizational
structure so they can make decisions faster. While some older
corporate chiefs also prefer fewer management layers, the practice
appears to be gaining popularity faster among the new crop of CEOs,
experts said. Thanks to flatter organizational structures, "the
younger generation of CEOs is more inclined to spend time with
their employees all the time," Mr. Cohn observed.
Chuck Robbins, 49 years old, who this month takes over at Cisco
Systems Inc., has assembled a smaller leadership team than the
current CEO, John Chambers. Mr. Robbins will have more operational
managers reporting directly to him because the company's two
presidents plan to leave, Cisco said in early June.
Shira Ovide contributed to this article.
Write to Joann S. Lublin at joann.lublin@wsj.com and James R.
Hagerty at bob.hagerty@wsj.com
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