The chemical and processing industries are most concerned about the problem

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In the face of globalization, commercialization and structural changes, rapid changes are taking place in the chemical and processing industries, including petrochemical, specialty chemicals, packaging, paper and other materials manufacturing. Increasing innovation pressures, the influx of private equity investors, ongoing mergers and acquisitions, and many other major risk drivers are promoting dialogue between the board and the executive office. Most importantly, facing the challenges facing them, executives are asking if they have the right leadership.

From our conversations with board members and CEOs in the chemical and processing industry, we found that the following five issues and their impact on leadership are the top concerns of executives:

Drive and manage structural changes

Define and find the next generation CPI leaders

Create a diverse and participatory board of directors

Encourage innovation and promote innovation commercialization

Capture the value of raw material price fluctuation

We hope that this executive briefing will be the beginning of the discussion, and let’s think about how to attract and retain the right leaders in the face of these challenges.

Drive and manage structural changes

In the past 20 years, globalization and commercialization have pushed the chemical and processing industry (CPI) to face severe challenges, which has brought pressure on profit margin. The company has responded through structural changes, including mergers and acquisitions and spin offs to create scale around core competitiveness, reshape business mix, and selectively enter new markets or regions.

As a result, there is an increasing need for board and executive level general managers who can bring about change, management skills and show true entrepreneurship.

Define and find the next generation CPI leaders

Once the baby boomer retires, the CPI senior management will face a significant risk of talent shortage. Over the past three years, 50 percent of top CPI companies have appointed new CEOs.

CPI CEOs are usually appointed internally, and the most common position before CEOs is chief operating officer. The external appointed CEO previously served as the chief executive level or head of business unit (BU) in another company; 58% of external CEOs are from the CPI industry.

Create a diverse and participatory board of directors

An effective board of directors should represent a wide range of perspectives that allow the company to develop (and implement) robust strategies while managing risks.

The work of the board of directors has never been so complicated. Traditional problems such as CEO succession and salary still exist, while shareholder rights protection, digital transformation and network security bring new challenges.

Encourage innovation and promote innovation commercialization

Innovation is an important lever to create competitive advantage, establish new revenue flow and balance the increasing commercialization in the value chain of chemical and processing industry (CPI).

CPI enterprises should further speed up the pace of innovation; We need more leaders to realistically promote sustainable growth by managing innovation in complex environments involving multiple and multi-functional roles.

Capture the value of raw material price fluctuation

Shale based raw materials have caused new investment in petrochemical industry due to their low price and availability. The US is benefiting from it (although oil prices are low, but the trend is still favorable), but investment intensity in other regions has declined, especially in Europe.

In the CPI industry, more and more technical engineering and capital management leaders are needed to build new plants. However, as solid project management experience becomes increasingly difficult to obtain in the United States, companies will need to be more creative in their talent strategy.