Knowledge Center: Article
Route to the Top 2020: Interview with James Riley, group CEO of Mandarin Oriental Hotels2/3/2021 Heidrick & Struggles
James Riley is the group chief executive of the Mandarin Oriental Group. He joined the board in 2016 and has previously held a number of senior executive positions in the Jardine Matheson group since joining Mandarin Oriental from Kleinwort Benson in 1993. A chartered accountant, he was group finance director of Jardine Matheson from 2005 to 2016. He has been a director of Mandarin Oriental Hotel Group International since 2005. He was a non-executive director of the Hong Kong and Shanghai Banking Corporation from 2012 to 2016.
Heidrick & Struggles: How has your organization been impacted by the COVID-19 crisis, and how do you see a return to growth?
James Riley: I don't know about a return to growth, but a return to normal operating conditions is clearly is while away. So far, the impact on our business has been massive, not only financially but also in terms of the implications for our employees. There was a point earlier this year when more than two-thirds of our hotels were closed and almost all of our employees were either furloughed, working part time, or taking substantial salary cuts. There have been some changes since then; China bounced back very strongly has returned to fairly normal operating levels. The picture is mixed for the rest of the world as the situation is changing very quickly in every country. But the combination of a very low volume of business, the reduced workforce, increased restrictions, and high levels of uncertainty puts enormous pressure on everyone.
Heidrick & Struggles: What is the role of the CEO in this type of crisis?
James Riley: Leadership is the key element. The CEO needs to be able to maintain morale, motivate and encourage all employees, and provide a perspective on what is happening and what it means to the business. They also need to provide their employees with a sense of belief that there is a future, that they can see their way through the crisis, that they can still have a career in the business and the sector, and that one day there will be an ability to return to the standards and services and quality of operation that they came into the industry to be able to deliver.
We need to balance the seriousness of the crisis with a longer-term view that humanity is not made to socially distance and to be detached; we are a gregarious and social animal and, in time, people will return to travelling and socializing. As the world evolves and more AI becomes prevalent in many industries, the need for services will become ever more prevalent. And people’s desire for hospitality and holidays is going to get stronger, and with it the need for people in this industry. So, while there may be a short-term impact on our employees, their futures within the industry remains as robust and strong as ever.
More than at any other time, in a crisis, the role of the CEO is to be seen, to be heard, and to engage—not just with their peers and direct reports but with colleagues at all levels around the business, and show empathy when it comes to the circumstances they are dealing with.
Heidrick & Struggles: How do you think the CEO role will evolve from here on?
James Riley: I think that more and more CEOs will recognize and realize that the role is primarily about leadership. Whereas once upon a time, CEOs, like generals, were able to perceive leadership as making the right decisions while being somewhat removed from the organization, that has changed. Ultimately, the greatest CEOs will be those who are out there and visible to their people, able to energize and bring the passion that's needed to succeed, to walk the talk, to fight the good fight, to achieve the ends that are intended. And whether that is through actually physically being present or through video communications, whether it’s through tweeting and blogging to reach different demographics, the purpose is to create a leadership structure that engages and relates to the workforce, to the colleagues.
CEOs also need to make sure they have a leadership team that does the same thing—one person cannot sensibly do it all alone. They need a whole team that is equally passionate and energized. Hierarchy also needs to be addressed, particularly in hospitality, where is pretty embedded in the culture. It has to be challenged so that it resonates with the younger generation of talent.
So, in a nutshell, CEOs need to have the vision and the intellect to create an effective strategy for a business and as well as have the leadership qualities to help the organization realize that strategy. And I think it’s really important for a CEO to be eminently replaceable, through building a team strong enough to ensure that the organization can live beyond the CEO’s tenure.
Heidrick & Struggles: How do you think the skill set and experiences of future CEOs will need to differ from the ones required today?
James Riley: I see this as an evolutionary transition, and while some of the fundamentals of the job will remain, the role will continue to change in a more subtle way. The key characteristics I would look for are a good intellect, highest-level communication skills, a strong personality, and the ability to make tough decisions and lead an organization. Those are timeless requirements. What has changed is the definition of what good communication means today, how leaders tap into their own experience to inspire and lead, and the fact that they need to relate and engage with the whole workforce. And, as in any leadership role, they make sure they've got the people on their team who complement their abilities; no leader has all the qualities that are necessary, but a good leader is able to put in place lieutenants who have the strengths they perhaps are missing.
Heidrick & Struggles: Do you think that previous-sector experience is essential for a hospitality CEO?
James Riley: Not remotely. Many hotel groups are run by people without a hospitality background. And I think this is the case in many businesses. I prefer to look for people with the vision, the communication skills, the personality, and the intellect needed for the job rather than for people who have done the job before. I believe that one of the fundamental mistakes some companies make when they hire a CEO is looking for an operator instead of someone who knows how to lead.
Heidrick & Struggles: Does a CEO need to understand the new digital trends, data, and the new technologies coming through?
James Riley: It’s very important for a CEO to appreciate the potential of technology to change both the way his business operates and the dynamics of the community and the world in which he lives, but it’s not necessary that they understand the details. That’s why, when it comes to diversity, I am particularly focused on diversity of age. The dynamic of a team that has only people over the age of 50 is a challenge in business thinking, as it's missing valuable perspectives from different age groups, especially as the age of our guests trends downwards.
One of the biggest problems I see is having boardrooms full of people all roughly same age, who will not necessarily have a holistic understanding of how to best deploy technology and make decisions with all the perspectives needed, nor will they see that the younger generations have a deeper insight into how customers’ preferences are changing the market.
Heidrick & Struggles: How can boards help their CEOs and their executive teams be more effective?
James Riley: Boards can help by ensuring that they listen and understand the businesses they're engaging and involved with—not only the businesses but also the people within the businesses. I see the board’s role as advising, bringing fresh insights and ideas, and providing a perspective; they are there to support the collective responsibility for the direction the company is taking.
Heidrick & Struggles: How do you think about the role of purpose at your company, and how do you build alignment around it?
James Riley: I think of purpose more from a visionary point of view. “Why are we here?” “What is the company trying to achieve?” I think that perspective is crucial in terms of motivating and encouraging people in our organization. It’s also essential to innovation. The tendency of a company to keep on doing what it’s always done is very often constrained by the way its vision has been crafted. But the vision also provides an aspirational playing field for people to be thinking on and working to expanding and developing their business outside historical constraints. Having a clear vision that is aspirational and stretching is important for both the business and its people.
Heidrick & Struggles: Shifting toward sustainability, Mandarin Oriental has a number of initiatives focusing on single-use plastic, suppliers, and support for communities. There are some debates going on right now around how to focus on sustainability—you might need to take a backseat to allow for a recovery. How will your approach to sustainability look in the next couple years?
James Riley: Sustainability is absolutely central on our business agenda. The pandemic should simply further reinforce that and should in no way be taken as an excuse to back away from it. Sustainability is something that needs to be led from the top and not delegated to a department. I take the view that no meeting should take place without it being on the agenda, and that doesn't refer to token elements such as turning the lights off, but factoring in how our decisions and actions have an impact on the environment. And I think, for a small company like Mandarin, the critical thing is to be thinking about is what it can do to make a difference—to really make a difference in how it leads, hence our focus on single-use and non-reusable plastic and on a variety of sourcing measures. Those are areas in which luxury hospitality has been notoriously bad, and in which there is a real ability to move and achieve some of those sustainability targets. It’s absolutely critical to set targets for the short and medium term, targets that require action rather than longer term objectives whose fulfillment will fall to a successor.
We haven’t made massive inroads in the past three to four years, but we have the right mindset to factor sustainability into the heart of what we do, understand what colleagues and guests really want and care about, and then build on that in a meaningful way that can benefit the communities in which we operate. That’s particularly relevant in hospitality, where we exist because people choose to travel. So, we have to make sure that we hold ourselves to the highest standards.
Heidrick & Struggles: Since taking up the CEO role at Mandarin, what has been your greatest challenge and how did you overcome it?
James Riley: I suppose the greatest challenge has been the pandemic, and I haven't overcome it, so the challenge is to make sure that the organization can survive, and to continue to exude the energy and passion that the service we deliver is known for, even at a time when those delivering it are under great personal stress and pressure. I don't claim to have overcome it because no one is out of the woods yet, but trying to ensure that I can deliver as upbeat and positive a message as possible and preserve as many jobs and livelihoods as possible while at the same time bringing the organization back to profitability is key.
Heidrick & Struggles: What would you like your legacy to be at the end of your CEO role at Mandarin?
James Riley: I don’t necessarily think of this as only my legacy, but I would like to see the company I am heading grow on the back of a platform I have helped build. I would like to feel that I helped evolve the organizational culture into a more personable and engaging one, where our organization looks after its people and helps them develop, advance, and realize their potential as far as possible.
To gain more insights on today’s CEO, see the full Route to the Top 2020 report.