Wanted: CEO Confidante

LONELY AT THE TOP? THE AVERAGE MID-LEVEL manager doesn’t know the half of it.

Consider Chris Richardson. When he became CEO of Schneider Electric’s $3 billion North American division based in Palatine, IL, he experienced a nearly instantaneous transformation. “I realized that fundamentally my relations with people would never be the same. Everyone has an agenda when they talk to you. You become more isolated, and you can never again be one of the guys.”

But as the poet John Donne mused in Meditation 17, “No man is an island.” Even CEOs need somewhere to go for a good old-fashioned heart-to-heart. It’s requisite to doing the job well. So where do they turn?

On an almost routine basis, CEOs have to make decisions that affect corporate reputations, shareholder wealth, and the jobs of thousands of employees. Only in unique relationships can a CEO afford to open up, be candid, be vulnerable.

As a rule, CEOs can’t choose confidantes from among their underlings, even high-ranking colleagues such as the CFO or COO. While CEOs do look to employees throughout the corporate hierarchy for guidance and counsel, truly opening up is a different matter. For one thing, employees have their own agendas and their own fiefdoms to protect. “It’s hard to get an objective perspective,” explains Robert Marston, CEO of the New York City-based Robert Marston & Associates public relations firm. “No matter how high in the hierarchy, an employee is still an employee, and has self-preservation as a concern.”

There are also issues of propriety. For many employees, exposure to a boss’s vulnerable side can be unsettling, even confidence shattering. CEOs sense this and do their best to avoid it. “You don’t want to show an employee any weakness, any self doubt, any concern about making a difficult decision,” says Marston. “Remember, you’re a CEO, which means nothing but confidence and high energy when you walk into a room.”

David Liu, CEO of The Knot, a New York City wedding product and planning service, agrees. “You’re not in a position to vent,” he says. “It’s unfair to burden employees with the issues you’re dealing with.” He adds, “If the people around you could be in your head for a nanosecond, they’d lose their minds. It’s a very lonely situation.”

There are also concerns about favoritism. Singling out an employee to be a confidante can undermine morale within an organization. Other employees may perceive that they’re being denied access to the CEO and withhold their input, which can intensify a CEO’s isolation. Recognizing the limits and drawbacks of having a confidante chosen from within the company, most CEOs opt for having an open-door policy and inviting feedback on an equal-time basis. There are exceptions, such as Michael Eisner and Frank Wells at Disney a decade ago. But the paucity of such anomalies serves only to define the rule. When it comes to finding a true consigliere with whom to share doubts and worries and fears most CEOs choose to look elsewhere.

Boards are no longer the potential confidante pool they once were. Gone are the days when boards were handpicked by CEOs and the brandy and flattery flowed freely at annual meetings. In today’s era of shareholder activism, boards are under intense pressure from institutional investors, the media, and various watchdog groups to monitor CEO performance. As a resutt, they’re wary about appearing too chummy with the CEO. After all, they can be personally liable if the company fails to perform. In this increasingly fractious environment, wise CEOs do seek guidance from their boards, and clue the board in on corporate troublespots early and fully. But it’s hard to cozy up to someone who may be called upon to replace you if the numbers come up short.

Andrew Sobel, who co-authored the book Clients for Life, reports that none of the numerous CEOs he spoke to about their confidantes mentioned board members. James Robinson, who’d been on both sides of the fence as the former

American Express CEO and a director of numerous firms, told Sobel, “There’s a we-they mentality on some boards. As a board member, sometimes it’s hard to be a real advisor to the CEO.”

“You have to distinguish between board members being helpful as sources of expertise and board members being receptive to a CEO’s innermost concerns,” asserts Sobel, who runs the Institute for Business Renewal, a strategy consulting boutique located in Santa Fe, NM. “Most CEOs are uncomfortable dropping their kimonos in front of the board.”

Lean on Who?

So who do CEOs turn to for a true heart-to-heart? Many report building solid relationships with consultants, preferably sole practitioners. CEOs tend not to confide in consultants working for large organizations, such as Booz Allen or McKinsey. Given heavy pressure to rack up revenues, such consultants may have “self-preservation concems”-to use Marston’s term-just as surely as do a CEO’s underlings.

Instead, lone-wolf consultants or ones who run small boutiques tend to be favored, particularly those associated with a university. Discretion is a key attribute. Consultants like Warren Bennis, David Nadler, and Noel Tichy have worked with dozens of CEOs and have proven track records of not violating trust.

There’s also a sense that such high-level consultants bring a wealth of experience, drawn from numerous clients and case studies. They’ve seen it all-and they’re generalists to boot. CEOs look to these consultant confidantes for a valuable outsider’s perspective, free from the mindset of any one particular company or industry. They’re also seeking candor-brutal truths that may not be forthcoming from other sources.

Chris Nedza, CEO of Atlanta-based CMD Services, reports confiding in Jeffrey Sonnenfeld, head of the Chief Executive Leadership Institute and an adjunct management professor at Yale. Nedza looks to Sonnenfeld to help him sort out governance issues and to refine his managing style. “Jeff gives me the good, the bad, and the ugly,” says Nedza, whose literature fulfillment firm stocks libraries and maintains magazine subscriptions for large companies. “I’m not interested in fluff like `You’re a good boss and everything is great.’ I’m interested in where I’m falling short because I want to fix it.”

While company loyalty may change, CEOs often continue to rely on the same trusted counselor. Tom Stephens-now retired-was CEO of Manville during the dark days in the early 1980s, when the company faced astronomical asbestos-related liability. It was a thankless job: battling lawyers and insurance companies, fielding tough questions from the media and shareholders, enacting massive layoffs, and contending with crippling morale problems. Deeply frustrated, Stephens turned to a “corporate shrink”-a consultant trained in psychology named Bob Chapman. “He saw things that I didn’t necessarily see,” says Stephens. “He challenged me and helped me to be a better leader.”

Under Stephens’ watch, Manville successfully reorganized and ultimately emerged from Chapter 11. Stephens then moved on to greener pastures, taking the top job at MacMillan Bloedel, a forest products company. But in his new job, he continued to consult Chapman. “The Manville experience really cemented us,” says Stephens. “When you’re down in the foxholes you learn who you can trust.”

Stephens’ comments speak to another critical issue regarding confidantes. Relationships don’t happen overnight. Trust must be built up over time. “People don’t really become confidantes until you have some history together,” says Irwin Jacobs, CEO of Minneapolis, MN-based Genmar Holdings.

“True confidantes are rare,” adds Jacobs, whose $900 million firm encompasses several luxury boat manufacturers, including Glastron and Larson. “Frankly, I’ve had some great disappointments. I’ve even had people whom I considered confidantes who turned out not to be.”

A proven track record is a prerequisite, concurs Bob Dilenschneider, the CEO of a Manhattan public relations firm who has served as a confidante to various CEOs over the years. “You don’t just go to the Yellow Pages and pick somebody,” he says. “I worked with one particular CEO for 16 years. One day we were at a small hotel in Switzerland and this man finally said, ‘I can trust you. You’ve never used the information I’ve given you in a compromising way.”‘

Some CEOs test potential confidantes. Nedza of CMD Services, for example, sometimes reveals a piece of personal but harmless information to see if it comes back to him via the grapevine.

CEOs often place their hard-earned trust with other CEOs. “When you’re the CEO, there’s really no one else within your company you can turn to who sees the world exactly as you do,” says Randall Tobias, chairman emeritus of Eli Lilly. When he was the company’s CEO, he looked to fellow top dog Norm Augustine. Augustine, CEO of Lockheed Martin at the time, was an old friend, someone Tobias trusted and respected, and who also happened to be in a very different industry.

This might seem to defy conventional wisdom. After all, the rap on CEOs is that when God handed out egos, these are the men and women who got in line twice. So it’s hard to imagine a pair of these titans in the same room, let alone sharing feelings, doubts, insecurities. But the reality is that CEOs are members of an elite club. And, because they face many of the same broad challenges and concerns, a fellow CEO-provided he or she isn’t a direct competitor-is often best equipped to understand a particular dilemma. What’s more, much like celebrities, CEOs are isolated in part by the effect of their power on others.

“CEOs sense deference and they sense cloying agreement,” says Marston. “They see it around them all the time. So they come to value strength. There can be a kind of trust, CEO to CEO, even a bond based on mutual respect for shared stature.”

When Ray Smith was weighing a merger between Bell Atlantic and TCI, he found straight talk to be a scarce commodity. So he arranged a meeting with Steve Jobs. Jobs, Smith figured, wasn’t likely to mince words.

Robert Villency, CEO of Maurice Villency, belongs to a specialized forum -CEOs only. Its dozen members were carefully screened to ensure that there were no competitive conflicts, such as two CEOs whose companies share a supplier. New applications are rarely accepted, as the emphasis is on maintaining a chemistry between the existing members.

And it’s interesting chemistry. There are clear parallels between Villency’s forum and 12-step programs such as Alcoholics Anonymous. Participants are strictly prohibited from divulging the identity of any of the other group members. His particular group maintains such a low profile that Villency was unable to even reveal its name or where it meets. But this very anonymity is what makes the group invaluable to Villency. “You feel very safe being vulnerable there,” says Villency, who runs a high-end furniture store chain that his father founded in 1932.

“When you speak, get ready to duck,” he adds. “We learn from each other’s problems. You also discover that you don’t know what trouble is. We’ve had problems dumped on the table that are monumental-family problems, imminent bankruptcy, you name it, you hear it.” Villency says he doesn’t think he’s missed a single meeting in 20 years.

Other CEOs described memberships to similar forums as helpful-though few can boast the secrecy and discretion of Villency’s forum. Wes Cantrell, CEO of Atlanta-based Lanier, a copier, fax, and dictation equipment business that was recently acquired by Ricoh, belongs to an organization called The Executive Committee, headquartered in San Diego.

The CEO-CEO confidante model is especially applicable for young CEOs, who are often comfortable opening up to older, more seasoned CEOs. The dotcom revolution-and all the greenhorn CEOs that it has spawned-has made this model more prevalent.

A few years ago, David Steinberg, the 31-year-old CEO of Washington, DC-based InPhonic, attended a conference in which John Sculley, the former CEO of both Pepsico and Apple, was the keynote speaker. Afterwards, Steinberg, whose company provides proprietary services to cell phone users, approached Sculley and asked him for some pointers. “It was,” he says, “like a baseball player walking up to Reggie Jackson and asking, ‘Can you help me with my swing?”‘

But Steinberg and Sculley hit it off. In fact, Sculley later made a substantial investment in InPhonic and the two now talk on the telephone nearly every day. Sculley even accompanied Steinberg on a trip to the West Coast to drum up new clients. At their first meeting, Sculley let Steinberg do all the talking and the young CEO struck out big time. Afterwards, over pizza, Sculley offered Steinberg some pointers. “Let’s put it this way,” says Steinberg. “The advice or help he offers is never sugarcoated.”

Sculley explained that presentations are done differently on the West Coast, where less of a hard-sell is necessary. Steinberg walked away empty-handed from his next business meeting as well. But then he closed six deals in a row.

“David has incredible ideas,” Sculley says. “But he needs to be able to use people like me as mentors to open doors and provide opportunities from a business-development standpoint.”

The Spouse Patrol

While peers, consultants, and other business contacts are valuable listeners, it’s spouses who are by far the most common recipients of CEO confidences. During a typical CEO’s long climb to the top, it’s the spouse who has been privy to all the attendant trials and tribulations. In fact, a spouse may be the only person who gets to see a CEO’s personal side. Like everyone else, CEOs have their work faces and their home faces. And just like everyone else, CEOs bring work concerns home. Rivalries, petty jealousies, insecurities are all fodder for discussions over breakfast, in the car, late at night. Before hiring, firing, or promoting someone, CEOs will often discuss the matter with their partners.

“I share everything with my wife,” says Genmar’s Jacobs. Married 38 years, he relies on his wife as a sounding board, and finds post-business dinner insights valuable. “She may tell me afterwards to be careful about trusting a particular person,” he says. “She has great instincts about people. It’s uncanny.”

The spouse-as-sounding board model has become increasingly common with the blurring of traditional gender roles. “My wife received an MBA from American University,” notes Steinberg of In-Phonic. “She works for Price Waterhouse, helping to reengineer government agencies. She’s an incredible person for me to bounce things off.”

For many couples, the workday debriefing has become a daily ritual, particularly for those in dual-career households. Stephanie Khurana is CEO of Surebridge, a Lexington, MA, company that aids clients in selecting and configuring business application software. Her husband, Rakesh Khurana, is an assistant professor at Harvard Business School. “He sees which characteristics define successful high-growth tech companies,” she says. “He can bring best practices and case studies home from Harvard.

“There’s also a convenience factor,” adds Khurana. “It’s hard to make time for a confidante. But I go home every night and spend several hours with my husband. He knows me inside and out, my strengths and weaknesses. Sometimes I hear things from him that would be hard to hear from other people.”

Obviously, the best confidantes are people with whom a high degree of intimacy already exists. Spouses are a natural here, but so are old friends. Matt Coffin is CEO of LowerMyBills.com, an L.A.-based service that helps people manage debt. Once a month, he holds a discussion with two old business school friends. “They don’t have an agenda,” Coffin says. “There are no ulterior motives-just plain reality.”

Lanier’s Cantrell relies on a minister named Bill Gothard. A few years back, a group of Lanier’s distributors was threatening a class-action lawsuit. Cantrell got the company lawyered up and ready to fight. But Reverend Gothard urged Cantrell instead to simply visit each distributor personally to discuss. That appeased the distributors and the class action suit was dropped. “I really depend on him,” says Cantrell of Gothard. “He gets right to the heart of matters.”

Confidantes are a more precious commodity than ever, in part because the CEO position has become a revolving door. Last year, there was a change at the top at 40 Fortune 200 companies. New CEOs increasingly arrive from outside of an organization, which complicates the confidante issue, as Tobias found when he accepted the CEO job at Lilly in 1993 after 30 years at AT&T. “I think you have to work harder at it these days,” he says. “You have to discover who you can depend on.”

In this high-tech era, the pressures are further exacerbated by the warp-speed pace of business. Shareholders want results and they want them yesterday-miss the quarterly numbers and the fireworks begin. Meanwhile, new competitors poised to gobble up entire industries crop up overnight. CEOs are forced to make blink-of-an-eye decisions, often with severely limited information.

“CEOs are in a terrible position today,” asserts Dilenschneider. “They need the best advice they can possibly get. Yet many are fully aware of the perils of confiding in the wrong person. As a consequence, many don’t place much trust in anyone, and wind up making decisions with insufficient data.”

Now, more than ever, a good confidante is hard to find.

Justin Martin is a New York City writer whose work has appeared in Fortune, Newsweek, and Worth. He’s the author of a biography of Alan Greenspan.