23 October 2019
Topics in this article
  • Cost Optimization
  • Strategy & Planning

Research on how CEOs spend their time is bound to be interesting. At the weekend I was looking back over some old papers from Harvard Business School (HBS) and I came across this paper by Michael Porter and Nitin Nohria published at the beginning of the year on this subject. I urge you to read it, it is clear that CEOs have a busy, interesting, and sometimes stressful time.

According to the research, the average CEO in the survey worked for ~50 hours each week, and their firms had average revenues of $13.1bn. This constitutes about 2,600 hours annually if extrapolated to 52 weeks. 75% of time (1,950 hours) is spent with colleagues and board members. More interesting is the amount of time spent with customers (3%) and investors (3%).


Suppliers get only 1% of a CEOs time…that’s just 26 hours in a year! This can be put into context. In the average large business in US, Proxima research has shown that the business spends one dollar on people for every five dollars on suppliers (13% of revenue on people, 69% on suppliers).

In terms of time therefore, the CEO gives an hour for each $875k spent on his or her employees by the business, but only one hour per $348m to find out what suppliers are doing or can do for their business. This implies the CEO values a dollar spent on staff 398 times more than one spent on suppliers.

Well, if how they spend their time is an indication of CEO priorities, then should we be concerned at the lack of focus by the CEO on most of their cost base and the place where they can drive significant innovation? Of course one answer may be that their entrust their CPO’s to do this on their behalf, but since most CPO’s cite difficulties on getting “top table attention” this doesn’t quite add up.

“Time is a game played beautifully by children” – Heraclitus

This is a giant blind spot and perhaps one for the NEDs to reflect on. It is also something that may dramatically change in next 12 months. The most recent PWC 22nd Annual Global CEO Survey on CEO priorities, has the most significant priority being pursuit of ‘operational efficiencies’. Doing this fully must include engagement with suppliers, so perhaps we will see a long overdue correction in where CEOs spend their time.

This prompted me to think of recent conversations I have been engaged in with a number of executive search firms discussing the future dynamics of procurement teams. Apparently as supply chains come to the fore, the profile of the “next generation” CPO and skills and capabilities required are very similar to those of a CEO today. One of the key requirements that today’s CPO’s tend to lack? External focus – an understanding and ability to engage on what’s going on outside of procurement.

It’s hard not to smile, perhaps we are similar and different after all. But since we can assume there is not a queue of CEO’s ready to leap into procurement we must further underline the need to align what procurement does with the real needs of the business. Raise the profile and delight the CEO and we might start seeing more CPO’s taking the top jobs.

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