What to Look for When Hiring a CEO
May 1 2004 by Betsy S. Atkins
As a three-time CEO and now director on a number of boards, I can attest that directors have learned a lot in recent years about hiring chief executives. For one thing, they’re trying harder to promote from within, rather than hiring charismatic, but untested CEOs from the outside. But sometimes an external search is necessary, and boards have to try to build a consensus on the specifications being sought. While there are many quantitative measurements, such as stock price history or background experience, the attributes that may have the greatest impact on a candidate’s potential success are softer, qualitative ones. That’s why directors need to be able to assess a candidate’s passion and strength of convictions, as well as his or her ability to lead.
I should acknowledge that I am by no means perfect in this regard. Case in point: I sat briefly on the HealthSouth board. Although CEO Richard Scrushy was impressive and forceful, there was something about him that raised my antennae, but I never pinpointed what it was. I now understand that the charismatic “star” CEO leadership style is inconsistent with developing an open environment and an empowered management team.
We did a better job of paying attention to the softer skills at Lucent Technologies, where I was also a board member, when we decided to recruit Pat Russo. Knowing that Lucent was going through significant upheaval and needed a high-integrity, inspiring team builder to stabilize and rebuild, we emphasized those soft values of leadership. And that’s what they have now in Russo, as CEO.
Wiser for these experiences, I’m convinced that one absolute key in assessing a candidate is the social interaction that directors have with him or her. It’s a mistake to hire a CEO solely on the basis of formal presentations and discussions. After all, leadership is a collection of personal behaviors, political and people skills and judgment-and much of that is typically suppressed in formal settings.
In social interactions, it’s easier to ask open-ended questions such as, What are you proudest of in your career? or What was the most difficult challenge you ever faced? A director with a well-trained ear can then discover whether the candidate thinks in terms of building teams to accomplish objectives or is a lone ranger.
I also think it is crucial for directors to conduct some background checks themselves, rather than relying entirely on others. These sorts of conversations often produce new insight into a candidate’s personality. You can hear the nuances in pregnant pauses that aren’t always apparent in a preference write-up. It’s not that I don’t trust the executive search firms that typically handle this work. It’s just that they obviously have an incentive to close the transaction through a hiring decision, rather than prolong the debate.
By having both formal and informal contact with a candidate and being directly involved in checking references, directors stand a much better chance of understanding the skills he or she offers. Consider what leadership means: To inspire people to follow you, you have to demonstrate they can trust and believe in you, that the values you communicate are ones they can and should believe in, and that you have integrity and judgment. There’s no way to analyze those qualities on a spreadsheet.
Here are some questions to consider when measuring these “softer” characteristics:
- Has the candidate demonstrated the ability to lead and develop talent?
- Can this leader energize others? Is he or she comfortable delegating power?
- Does this leader hold his or her team accountable for delivering on promises and specific performance?
- Does this leader share information, resources, praise and credit?
Going into a search, the board must have a shared view of leadership, and directors must agree on how much change they want; a search can be crippled from the start if some directors fear the new leader will change things too drastically. But if directors can agree, and if they are sensitive to the softer attributes, they can make a decision that will benefit the company for years to come.
Betsy S. Atkins, cofounder of Ascend Communications, is CEO of Baja Corp., a venture capital firm in Coral Gables, Fla.