THE ENTERPRISE
What should we expect of our leaders? That question has perplexed people for time immemorial. When you serve on several corporate boards, in an era of highly sensitive (and litigious) shareholder-director relations, you realize that the question becomes an even more important one.
According to some people that I consider to be "experts" in the field, CEO screening and selection is perhaps one of the least rigorous and most dysfunctional of hiring processes. A few networking contacts, a dinner or two, a couple of face-to-face interviews and a bit of reference checking and a CEO is (often) selected. This kind of process is fraught with peril. It is just a cut above using the "good old boys club" method. (We all like him, let's hire him.)
There are better, more rigorous means of executive screening and hiring. Companies like Development Dimensions International (DDI) have highly developed processes to help make this critical choice of a leader for a company. (Disclosure--my son Mike works for DDI as a Global Account Manager). Once hired, boards see a CEO perhaps 4-6 times per year for a day or two, usually in a highly structured setting, which is controlled by the CEO as to agenda, attendees and content.
It's little surprise then that investors wonder how well directors are doing their jobs when a company's results "go south" and the CEO appears to at least be at the top of the list of responsible "suspects". What can be done?
First: Before Hiring:Screen and hire more rigorously, using proven screening processes for testing and evaluation. Check backgrounds rigorously too--beyond just the perfunctory reference checks (only a fool gives a reference that will speak poorly of them).
Second: After Hiring: Arrange some non-structured settings in which directors have access to management 1-2 levels below the CEO to judge how those people "feel." And arrange some board meeting settings with the CEO absent, in which hir/her performance can be discussed frankly and openly.
Third: Ongoing: Do a formal evaluation of the CEO after a reasonable amount of time in the job--usually 9-12 months. Involve multiple constituents in this evaluation, in what has become known as a "360-degree evaluation process. Pay close attention to nuances, since most people are reluctant to speak poorly of the boss for fear that it will be a politically disastrous move to their career.
Finally: Realize that, as Peter Drucker has repeatedly stated, the role of the CEO is a unique and critical one in American business. While superstar CEOs are a myth created by overzealous business media, a solid and respected leader in the CEO spot (and several spots at the next level too) is essential to a company's success.
What are the characteristics of such a leader? That is an excellent question, and one which I will take a stab at answering in the form of my list of "Eight Characteristics of Successful Leaders."
• Demonstrates an intense customer awareness and sensitivity
• Has a passion for the business and a strong sense of purpose and focus
• Recognizes the importance of and shows sensitivity to relationships
• Shows the ability to select, inspire, organize & lead talented people
• Does planning that is inclusive & the plan is then widely communicated.
• Puts in place results-based metrics & provides timely, effective feedback
• Uses technology effectively to improve the business' competitive position
• Has a strong understanding of the "bottom line" and what drives it.
Obviously the list could be longer, but this one is a good starting place--and the list applies to any leader--not just a CEO. It is a tough list, but then leadership and management is tough work. But then you probably remember the old saying, "when the going gets tough, the tough get going."
Best, John
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