Three Traps Facing New Corporate Centre Executives

What Companies Should Consider When Hiring for Corporate Role

By Sven Kunisch & Eva Bilhuber Galli

When appointing corporate centre executives, many large firms focus on the candidate’s proven managerial track record in the firms’ business lines. Although such experience can be a valuable asset for corporate centre executives, it can also be a bothersome liability. The authors discuss three traps commonly faced by corporate centre executives with extensive business-line  experience, and suggest ways to avoid them.

In today’s large firms a proven managerial track record in one or more of the firm’s business lines has become an indispensable prerequisite – at least for those wishing to make it onto the short list for a corporate executive role.Business-line experience, which we define as general managerial experience gained from having managed a market, region, or operations in one of the firm’s core businesses, often seems even more important than the specialist skills a corporate role might require. An executive searcher highlighted this general trend, stating: “Business or industry experience in a candidate’s track record is absolutely vital. If I have a candidate without extensive business-line experience, most of my clients are unwilling to even consider that candidate. A wide range of arguments is needed in order to convince them to consider such candidates, who often have a favorable track record in terms of the required skills.”

The grounds for this trend are obvious: by moving managers with business-line experience into corporate roles, many firms are responding to the market pressure to incorporate more value-added thinking into their headquarters’ operations. As corporate centres are frequently criticised for being too bureaucratic and specialised, companies assume that candidates with a managerial business-line background are best equipped to provide the expected business- and customer-orientation in a corporate centre role.

Is this assumption correct? Empirical evidence suggests rather the opposite: in fact, many multidivisional firms report that exploiting their cross-business synergy potential to a full extent is still one of their most intriguing challenges. This is reason enough for us to ask: is prior business-line experience a good preparation to meet the enduring challenge that corporate centre executives face – the need to create added value for the business-line organisation?

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