2013

Issue 15

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BoardWorks International
Issue 15, 2013

Finding a Chief Executive who is a 'Real Leader'

I recently observed the unedifying spectacle of a board chair being openly disrespectful to her chief executive. This was at a board meeting in front of members of the senior management team, other staff, and an outsider, me. I wondered how this could happen not least because the situation involved a relatively recently appointed chief executive handpicked by the same chair. I was surprised that other board members let this happen. None of them made any effort to intervene with the chair in support of their chief executive. The chair's brazen undermining (apparently part of a pattern) was clearly impacting on the chief executive's confidence and probably her performance.

The situation raised a number of issues for me not least about the chair's own competence. It also reminded me of a comment made some years ago by two writers one of whom was Warren Bennis widely regarded as a pioneer in the field of leadership studies. Bennis and his colleague, James O'Toole said: ‘Boards have no-one to blame but themselves if their CEOs disappoint them' (1).

Bennis and O'Toole explored the reasons why this statement might be true in an article published more than a dozen years ago. They contended that boards often make poor choices of chief executive due to underlying board shortcomings and because they pay no heed to real leadership as the selection criterion. Their observations about why many boards pick the wrong chief executives remain just as valid today.

Bennis and O'Toole define real leadership as a combination of personal behaviours that allow an individual to enlist dedicated followers and to create other leaders in the process. Good leaders, they say, demonstrate integrity, provide meaning, generate trust and communicate values. In doing so, they energise their followers, push people - but humanely - to meet challenging business goals, and all the while develop leadership skills in others. To Bennis and O'Toole real leaders are those who ‘move the human heart'.

Therein lies the challenge for many boards. The ability to move the human heart is, as Bennis and O'Toole admit, ‘nebulous and squishy'. It is tough to quantify. Even boards that understand and value ‘soft' leadership abilities tend to shy away from an assessment of them. Boards are more likely to go looking for chief executive candidates with a track record of delivering measurable results (e.g. a big decrease in operating costs or staffing levels) and for proof of technical skills.

When they do that, as Bennis and O'Toole illustrate, boards often get it wrong. In one example they referred to the appointment of a chief executive who had been an indisputably successful number two. He was a ‘number cruncher supreme' but not ‘a people person'. In the chief executive role he proved to be ‘emotionally inept'. Subsequent accounts of his follies may have surprised external stakeholders but not the people who had worked closely with him. They knew full well that he lacked the human touch, that his political skills were underdeveloped, and that he was a one-man band who seldom involved others in big decisions. Had the board bothered to ask it would have easily discovered that this now failing chief executive's colleagues considered him an excellent chief financial officer but not ever likely to be a leader.

To give a contrasting example Bennis and O'Toole referred to a very successful chief executive who had extraordinary drive and technical knowhow but also something far beyond that. He demonstrated passion and a love for his work and his people. His direct reports spoke of his warmth, empathy and inclusiveness.

To greatly increase the chances of a board appointing the right chief executive Bennis and O'Toole suggested the following actions be taken ahead of the hiring decision.

  1. Come to a shared definition of leadership
    A board should generate a shared definition of what leadership means in the context of current organisational challenges before it goes out to recruit a new chief executive. It must do this even before it engages the services of outside executive recruiters.

  2. Resolve strategic and political conflicts
    Premature chief executive turnover can be directly linked to unresolved conflict within boards. Bennis and O'Toole acknowledged that board members often have hidden agendas, differing world views, and unspoken disagreements about corporate purpose and strategy. In our experience these differences are not always that ‘hidden' or ‘unspoken' either. They are so visible as to be a real distraction.

    A new chief executive who is often expected to lead the organisation in a fresh direction should not have to deal with inadequate support from her board for whatever direction she wishes to chart. All chief executives deserve clarity of purpose and consistency about this from their boards. Bennis and O'Toole suggest that boards can solve this problem by engaging in the same kind of teambuilding often prescribed for top management. For example, boards should routinely meet ‘off site' in order to build informal relationships and nurture trust. Even if honest differences remain, a board must learn how to identify and acknowledge disagreements and deal with them in productive and non-disruptive ways.

    Failing that a way must be found to replace board members (even board chairs) whose personal agendas are at odds with the good of the organisation. It should not be expected that a new chief executive can come in and put the board's own house in order.

  3. Actively measure the soft qualities in chief executive candidates
    Bennis and O'Toole suggest that most board members know how to measure financial results, market share and so forth but are simply not comfortable assessing factors such as integrity, the ability to provide meaning, and the talent for creating other leaders. However, they were optimistic there are techniques and approaches for measuring such qualities, particularly through interviews. They offered suggestions on the types of questions that might be asked in chief executive interviews.

  4. Be wary of candidates who act like chief executives
    Bennis and O'Toole also suggested that boards are often seduced by candidates who are little more than articulate, glamorous and charismatic dreamers. As they say - appearances are often deceiving. You cannot tell a leader by what he or she looks like, or by what they say, in ‘staged encounters'. They quoted Peter Drucker's view that the one sure way to spot a leader is by the presence of willing followers. It is important, therefore, to find out whether candidates have a track record of creating followers and other leaders.

  5. Recognise that real leaders are threatening
    Real leaders Bennis and O'Toole suggest, are threatening to those intent on preserving the status quo. Without realising it, many boards are averse to outsiders who threaten to shake things up. It is almost always possible to find a sufficient amount of dirt, gossip, and speculation to undercut any truly exciting (or threatening) candidate. Someone who can motivate people to make changes is by definition, a destabilising force. Bennis and O'Toole contended that small, insider-dominated boards are particularly resistant to what they called ‘the contagion of leadership'.

  6. Be conscious that heirs inside the organisation usually aren't apparent
    Bennis and O'Toole expressed the strong view that no one should inherit a chief executive position. Organisations should be meritocracies not monarchies. Boards should, therefore, give ‘Crown Princes' the same vetting treatment as ‘Commoners'. On the basis of this analysis particular scrutiny should be given to internal candidates if they are to follow highly successful predecessors.

  7. Don't rush to judgement
    Boards can sometimes mistakenly select a candidate who comes with a detailed plan to ‘turn things around'. Bennis and O'Toole suggested that such a candidate is seductive but dangerous. What boards should be looking for, they said, is a candidate who has a broad (and long-term) perspective, a set of convictions about the organisation's strategic direction, a clearly thought out managerial philosophy, and an understanding of how to galvanise the entire organisation towards change. Throughout the selection process boards should remind themselves of the truth of the oft-quoted bromide that effective leadership entails getting things done through other people.

Several years ago my colleagues and I conducted a close review of a sample of consulting assignments we had been involved in which involved actual or perceived chief executive failure. In every case we could trace the origins of the problem back to a shortcoming on the part of the board involved. Our analysis provided compelling support for Bennis and O'Toole's primary thesis. Boards have no one to blame but themselves if their chief executives disappoint them.


Notes
(1) Warren Bennis and James O'Toole: ‘Don't Hire the Wrong CEO'. Harvard Business Review, May-June 2000, pp. 171-176.

 

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