Keys to Spotting a Flawed CEO -- Before It's Too Late

I got the following article from Phil Cooke's blog. I thought that it was really good and though as Phil says it might not deal with the spiritual side of things it does deal with many traps that I could fall into.


By TERRY LEAP - December 1, 2007

It's easy to spot a bad chief executive once the damage is done -- a plunge in company earnings, a failed product line, a corruption scandal. But how do you spot the flaws before it's too late, before that person is given the job of leading the company?

Here are some warning signs that board members and search committees can look for in a prospective CEO's character, and measures they can take to reduce the likelihood of hiring a dysfunctional CEO.

The Warning Signs
• An overt zeal for prestige, power and wealth. A manager's tendency to put his or her own success ahead of the company's often is evident long before that person is ready to assume the CEO post.

• A reputation for shameless self-promotion. Executives who constantly seek publicity, are always looking for a better job or trumpet their successes while quickly distancing themselves from setbacks are sending strong signals that their egotistical ways may eventually cause major problems.

• A proclivity for developing grandiose strategies with little thought toward their implementation. These executives may assume that others at lower levels will magically turn strategy into reality.

• A fondness for rules and numbers that overshadows or ignores a broader vision. This is the flip side of the preceding problem.

• A reputation for implementing major strategic changes unilaterally or for forcing programs down the throats of reluctant managers. CEOs have to be consensus builders.

• An impulsive, flippant decision-making style. CEOs who approach decision-making with clever one-liners rather than with balanced, thoughtful and informed analyses can expect to encounter difficulty.

• A penchant for inconsiderate acts. Individuals who exhibit rude behavior are apt to alienate the wrong person at the wrong time.

• A love of monologues coupled with poor listening skills. Bad listeners rarely profit from the wisdom of their associates.

• A tendency to display contempt for the ideas of others. Hypercritical executives often have few stellar accomplishments of their own.

• A history of emphasizing activity, like hours worked or meetings attended, over accomplishment. Energy without objective rarely leads to improved organizational performance.

• A career marked by numerous misunderstandings. There are two sides to every story, but frequent interpersonal problems shouldn't be overlooked.

• A superb ability to compartmentalize and/or rationalize. Some executives have learned to separate, in their own minds, their bad behavior from their better qualities, so that their misdeeds don't diminish their opinions of themselves. An important internal check is missing. Others are always ready to cite a higher purpose to justify their bad decisions.


Hiring Tips
• Don't assume that past success is a predictor of future success. As CEO, an executive will face a whole new set of personalities and conditions, especially when switching companies.

• Investigate a candidate's integrity and interpersonal skills as part of a thorough background check. Conduct extensive and confidential discussions with former associates.

• In interviews, ask candidates how they have handled setbacks and challenges in the past, as well as personal interactions. Let them know that the search committee will check the veracity of their answers.

• In examining the course of a candidate's promotions, pay close attention to how the candidate reacted when given new responsibilities that significantly increased his or her power.

• Determine how much of an executive's career success has been based on favorable economic and industry conditions and the support of colleagues, and how much has been based on the executive's individual efforts. Pay close attention to how candidates performed when industry conditions were bad, when controversies arose or when difficult decisions had to be made.

• Each finalist for the CEO position should be provided with a detailed job preview. The preview should highlight the differences between the candidate's current position and the CEO position.

• Be clear about ethics. Provide as much information as possible to finalists about how the board expects shareholders, prospective investors, customers, employees, financial institutions, auditors, regulators, political figures and other stakeholders to be treated.

• Offer the new CEO a reasonable, but not extravagant, compensation package. Once the CEO has demonstrated a high level of competency and integrity, the compensation package can be improved.


--Dr. Leap is a professor of management at Clemson University. He can be reached at reports@wsj.com7.
URL for this article:
http://online.wsj.com/article/SB119620217240705721.html

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