Over the past few months, several CEOs of Lithuanian state-owned companies have left, or have been forced to leave, their positions. These include the heads of the Centre of Registers, the Infrastructure Management Agency, Lithuanian Airports and the Lithuanian Railways Group. This has brought an increasingly pressing question to the fore: will there still be people willing to take on the responsibility of leading state-owned companies?
The trend has once again sparked a comparison between what it means to lead a private business and a state-owned company – and why some executives actively pursue such roles while others increasingly avoid them.
Laura Duksaitė-Iškauskienė, an executive and board member recruitment expert, confronts this question every day in her work. According to her, money is not the reason executives are reluctant to take on leadership roles in state-owned companies.
“They do not stay away because the pay is low or too low – the pay is actually very good. They do not want these roles because they may be punished for things they probably did not do. They will be criticised for what they do, constantly scrutinised, and rarely encouraged or supported,” says Laura Duksaitė-Iškauskienė, Partner at executive and board member recruitment company Master Class Lietuva on the NOOR podcast.
In a conversation with NOOR Partner and employment law expert Marius Rindinas, she explains what really discourages strong candidates from taking leadership positions in the public sector. According to Duksaitė-Iškauskienė, today these roles tend to attract either exceptionally strong candidates with a clear vision and strong self-confidence, or those for whom reputational risk is no longer a major concern.
“You either need to have a very clear vision of what you are going to achieve and the confidence that any reputational stain will not stick, or a considerable appetite for risk – or it may simply be your last executive role before retirement,” she notes.
While the situation in the public sector is increasingly challenging, shareholders’ expectations of executives in private business have not fundamentally changed over the past decade or so – and they are certainly no less demanding.
“I have never met a shareholder who said that everything in their company was calm and settled. It is never enough and never quite good enough. At the same time, a new boundary has become very clear: polite and respectful behaviour towards the team is now a must. Without it, a leader simply cannot retain their people,” says Duksaitė-Iškauskienė, stressing that ambition should not be confused with aggressive behaviour.
Interestingly, when a shareholder or founder who has led a company decides to step aside, the search for a successor is sometimes referred to in the executive recruitment market as the “curse of three CEOs”. According to Duksaitė-Iškauskienė, shareholders may replace one CEO after another until they finally find the right fit – and often it is the third appointment that proves successful in the long term.
Leading a state-owned company today comes with significant responsibility and risk, but often without a sufficient level of trust from the shareholder. As a result, more and more highly qualified professionals are choosing a different path instead of pursuing CEO positions: board membership.
According to Duksaitė-Iškauskienė, even current CEOs, when discussing the next stage of their careers, often mention an ambition to join a board – frequently in an industry completely different from the one in which they have built their executive careers. One of the most sought-after sectors today is defence, attracting both executives and prospective board members.
“In Lithuania, shareholders are increasingly using boards to address business challenges. They want more expertise, stronger oversight and better governance,” she says, viewing the development positively.
At present, the state is the largest source of board positions in Lithuania: railways, airports, the Port of Klaipėda, the postal service and other companies require not only strong executives, but also competent and independent boards.
Duksaitė-Iškauskienė also points to another relatively recent trend: Lithuania’s largest companies are becoming increasingly attractive to international executives and board members in both the private and public sectors.
For example, the CEO of Lithuania’s first unicorn, Vinted, is Dutch. A similar trend can be seen in the energy sector: experienced German and Belgian professionals from major Western European energy companies serve as independent board members at companies within the EPSO-G Group, including Litgrid and Amber Grid.
Meanwhile, the opposite trend is becoming increasingly evident: Lithuanian executives are less and less willing to relocate abroad.
“Our executives simply do not want to leave Lithuania. They enjoy living here and have a very good quality of life. The willingness to move somewhere else to live and work has fallen almost to zero,” Duksaitė-Iškauskienė observes.
Internationally, Lithuanian executives are currently in greatest demand further east – particularly in Ukraine, where the reform of state-owned enterprises has already created demand for Lithuanian board members with relevant experience, especially in the financial sector.
The picture is different when it comes to Western Europe. Executives and board members from Western European countries are happy to come to Lithuania, while the movement of Lithuanian professionals in the opposite direction remains relatively rare.
According to Duksaitė-Iškauskienė, for Lithuania to become attractive not only from the East but also from the West, the country needs more internationally recognised business brands that are clearly associated with Lithuania. At present, even success stories such as Vinted or Revolut are not always perceived internationally as companies of Lithuanian origin.
“The more strong examples we have of companies that have become genuinely global and international, the more likely shareholders around the world will be to say: I need someone who has worked at Vinted or Revolut, because I want that experience,” she says.
This is the second episode of the NOOR podcast, in which Partner and Employment Law Expert Marius Rindinas speaks with Lithuanian business, legal and public-sector leaders about topical issues. The full conversation Laura Duksaitė-Iškauskienė, Partner at executive and board member recruitment company Master Class Lietuva is available on Spotify and YouTube.