Let’s for a moment think about what a major super fund might look like in 10 years’ time and what that will mean for a future chief executive.
Firstly, a quick reminder of the industry shape in a decade. The received wisdom is that the superannuation fund industry could well end up with a small number of mega industry funds, a few focussed smaller industry funds, next to no corporate funds, some large retail funds, and the SMSFs.
The perennial challenges of member engagement, system security in a totally internet connected age, product development and investments will remain. Broad digitisation will be commonplace and benefits from fintech innovations will be commonplace.
So spare a thought for our future super fund CEO, be they leading a large or niche smaller fund. They will need to be accomplished people leaders working with a diverse board and teams, keen strategists to ensure their funds remain relevant in a vastly competitive market, excellent stakeholder managers and negotiators, risk aware, investment knowledgeable, have a highly commercial approach, and probably the patience of Job dealing with various regulators and government. They will need all those skills yet receive probably half the pay of CEOs in the commercial sector.
As the sector could treble in size and increase in complexity, our future CEO will need to be across the usual operational and technical issues so let’s look at what will set apart the best future CEOs.
Leadership and building the culture – the future CEO will need to be a talented people and business leader. This humble leader will succeed only by building high functioning, collaborative, diverse teams, and reinforcing their fund’s culture to access limited top talent. To continue to be relevant to their members, the fund’s culture will need to be well aligned with its business strategy and purpose.
Most CEOs are master delegators but they cannot delegate the development and promotion of their organisation’s culture. Like a sports team captain or coach, they need to be the role model that energises that culture. Keeping in touch at multiple levels, building informal networks, is very important to reinforcing culture as well as team cohesion. Surveys have shown that most CEOs refer to their organisation’s culture as their highest priority and will often be most remembered for it.
Stakeholder management – in the complex world of a modern super fund, stakeholder management is possibly the most complex area requiring mastery. Whether internally or externally administered, stakeholders will be increasing diverse and demanding. CEOs will always need to be attuned to dealing with regulators, government and Treasury.
As the assets of the system possibly treble over the next decade, the increasing community expectations of coverage, equity and social responsibility will only grow. Future CEOs and boards will need to be agile and recognise the social contract they have with the community. As account balances grow, member activist groups similar to the Australian Shareholders Association lobbying for change in super will likely grow. Social media will allow members to organise themselves into groups and become more active.
Digital age communication skills – in addition to our CEO being a confident communicator with the board and senior teams, they will also need to relish the chance to speak and listen to all staff and members via town hall meetings and video and be an active social media tweeter. They will be a high touch leader looking for opportunities to communicate with all stakeholder communities from Albany to Canberra to Cairns!
Commercial and sophisticated risk focus – the future CEO will be operating in a very tough competitive environment in both financial and risk management terms. They will need to ensure members receive value for money while capitalising on their unique and privileged position as the fiduciary in control of significant guaranteed annual cash flows. In this highly interconnected world, robust risk management systems will be a huge focus as fraud and hacking could destroy a fund’s reputation instantly. Consummate commercial and risk skills will be in high demand.
Investment knowledge– in the early days of super, the chief executive and chief investment officer roles often overlapped. While the future mega fund will have large specialised investment teams and the smaller niche fund will outsource, a CEO will need to remain very close to the investment function. CEOs will be expected to be able to speak /tweet to member forums confidently on investment matters.
Over the last 25 years, we have seen a huge skill set upgrade as we have moved from small fund secretariats supporting their boards to the scale and complexity of today’s industry. In a decade, we will have a $4 trillion industry and many $100 billion funds so the future CEO will need to step up big time again.
Michael Swinsburg, managing partner, Asia Pac, Alexander Hughes Executive Search