18 September 2007

Are you really qualified to be the CEO?

There is no degree that you can get to become qualified to become a Chief Executive Officer. Brain surgeons go to medical school and then spend years as a resident, apprenticing for the job. And, after passing the appropriate exams to gain certification, they regularly attend informative and educational sessions to stay current with the latest developments in their fields. Securities lawyers attend law school and then take an intense exam proving their merit before being awarded with their certification. They too have annual continuing education courses to ensure they stay abreast of the latest developments in the law. CPAs undergo a similar rigorous indoctrination and also are required to stay current on changes in laws and regulations.

But what about CEOs? The top office, perhaps the most critical position within entities who themselves control more wealth than some nations, need pass through no such process. There is no continuing requirement for CEOs to stay current on what is going on in business, in their industries, or on how to become better CEOs. Sure, there is business school. But, to our knowledge, there is not even one course given at Harvard Business School that pertains to how to do the job of CEO.

So how do you qualify to become a CEO? Are you just anointed? Is it your family connections? Or did you do it yourself?

Certainly there are many CEOs who become just that by founding the companies that they run. Often, as these companies grow, the founders find that the job has outgrown them. Whether this occurs voluntarily or is forced upon them by their investors, it becomes clear to many of these founders that perhaps they are not the right people for the job.

There are more family run companies than public companies in the United States. So your chances of becoming CEO as a birth right are much higher than climbing the corporate ladder. But here too the CEO job can become a perilous perch.

Other CEOs come from climbing the corporate ladder. They are either good at their prior jobs, show promise in leadership and decision making, or perhaps are just good at the game of office politics. They get appointed by their boards into the job.

But are any of these CEOs really qualified for the job?

What we have found from the years that we have spent working with some of the best (and in some cases some of the not so good) CEOs, is that how they came about capturing the job had little to do with their capabilities. There are some good CEOs who were simply the next generation of their families. There are some that founded companies. And there are some that climbed the corporate ladder. The characteristics of the good ones all seemed to coalesce around a similar set of habits and characteristics.

Our hope is that if you aspire to the role of CEO or already are one today, you probably should consider how you can get good (or better) in that role. The difference between a mediocre CEO and a great one can be the difference between literally tens or hundreds of millions, or even billons of dollars of stakeholder wealth. While we don’t believe that CEOs alone are what causes companies to succeed or fail. It is clear that without a good CEO, a company is clearly hindered in its ability to succeed.

02 September 2007

Straightening out Employee Reviews

I've spent several hours complaining about Business Week's coverage of a number of issues. I thought it only fair to try to be balanced in my comments. This week's issue (September 10, 2007) includes an article in the UpFront section that talks about how to improve employee reviews. Courage it says is necessary to overcome reluctance to conduct such a fundamental business interaction. That kind of courage is obviously sorely lacking in our culture today. That's probably why 90% of managers thing they are among the top 10%. Kudos to Business Week this time and for their balanced inclusion of Dr. Kerry Sulkowicz's viewpoint. If our CEOs don't pay closer attention to this concept surely many of us will be leading what amounts to be a ticking time bomb of a company with a quite out of touch employee base.