The Wall Street Journal recently ran an article titled Tough CEOs Often Most Successful. The article reports on a study by three University of Chicago professors who examined the assessment data of 313 CEO candidates who had been evaluated by the selection firm ghSmart on behalf of their venture capital and private equity clients.
The researchers found that 225 of the candidates were subsequently hired or promoted for the jobs in question. They contacted the hiring organizations for comment on the performance of the executives. For those considered ‘most successful’ they then examined the attributes common to all of them.
The article reported that the traits found to matter most are ‘hard skills’ such as results orientation, persistence, attention to detail, efficiency and analytical skills. Soft skills were ranked less important and thus the title of the article.
The actual study is available online. It is called Which CEO Characteristics and Abilities Matter (Kaplan, Klebanov and Sorensen, 2007). In reading it, here’s what caught my attention.
• First, the results of this study cannot easily be generalized. The study focused on private equity firms that have bought organizations, loaded them with debt and are in a big hurry to improve operating results. Their primary concern is what gets done and at what speed rather than ‘how’ it gets done. Building consensus, developing teams and other such soft skills are far less important than the results themselves (think Robert Nardelli at Chrysler). Also, having spent considerable time evaluating the firms before acquiring them, it is also likely that the private equity firms have fairly strong notions on what needs to get done and thus the ability to execute their plan is key. This translates into hiring for attributes such as ‘moves fast’, ‘industry knowledge’, ‘follows through on commitments’, ‘removes underperformers’, ‘efficiency’, and ‘sets high standards’.
• The study reveals that venture capitalists value a different set of attributes than private equity organizations. They hire for ‘integrity’, ‘aggressive but respectful’, ‘brainpower’, ‘written communications’, ‘teamwork’, ‘achieving EBIT targets’ and ‘SAT scores’. This also makes perfect sense. VCs appreciate the complexity of realizing the potential of unproven start-ups and value those attributes associated with ‘figuring it out’. It is also likely that they hired ghSmart to evaluate candidates to replace the previous CEO who, as often happens failed to figure it out. Execution is important but less so if they cannot solve the fundamental start-up puzzle.
• In examining the venture capital data, the researchers state, “one might interpret this result as indicating that the quality of the business idea is more determinative of outcomes than the initial quality of the management team in early stage companies”. This is interesting as it raises the whole issue of good CEOs in bad companies and vice versa. In the tech sector headhunting world, one-time successful CEOs are often given free-passes going forward despite valid questions about their actual contribution to the outcomes of their previous companies. Similarly, competent CEOs often pay a large career price for the myriad of factors that might have contributed to the demise of their previous employer.
• The study reports that of all of the candidates hired, 45% were considered successful, 37% were considered not successful and 18% had mixed success. Given ghSmart’s reputation as one of the premier assessment firms for the private equity and venture capital communities, these statistics minimally attest to the complexity of the hiring world in which we all play.
• The researchers conclude by stating that the results are consistent with Collins book Good to Great who suggested that Level 5 CEOs have unwavering resolve, are fanatically driven, exhibit workmanlike diligence and build strong teams. However their results do not appear to be consistent with Collins’ other findings that successful CEOs exhibit modesty, give credit to others and take blame on themselves. Given that Collins looked at the determinants of long term success, these findings may also make perfect sense.
Looking for a dynamic HR role? Stay away from the entrepreneurial tech sector.
January 1, 2012
In a recent survey of HR graduate students, the technology sector rated among the most coveted destinations to ply their trade. It is viewed as a world of innovative people, technologies and approaches where progressive talent management, OB/OD and related HR work awaits.
The Cry to Replace RIM's CEOs – A Truly Dumb Idea
October 13, 2011
Leaving aside the recent service outages, the shellacking of RIM in the press is a tad surreal to behold.
For the few Luddites not familiar with the firm, Research in Motion is the successful Canadian smart phone pioneer with revenues of $20bb per year, no debt and cash in the bank. They manufacture products that remain popular around the world and continue to boast technological innovations unmatched by any competitor. Their most recently launched smart phone devices have been well reviewed and appear to be selling well. And though the company's first version of its new tablet, the Playbook, has room for improvement, it is a promising piece of technology.
Context: When Companies Confuse Start-up Experience for Start-up Experience
October 7, 2011
I had the occasion this week to chat with an entrepreneur still licking his wounds from a stalled startup venture. His tale is a reminder of how easily companies misunderstand organizational context when hiring. For startups, such a misunderstanding can be fatal.
The CEO Hiring Practices at HP
October 3, 2011
The press tells us that Hewlett Packard is the largest technology company in the world with revenues of $126bb. Impressive as those numbers may appear, they do not seem to impress HP's Board of Directors. You see they do not believe that any of the firm's 324,600 employees are capable of leading it. Not one person. Not this year or last year when CEO changes were made. In fact they were apparently not capable six years ago or even eleven years ago when CEO changes were also made. But before summarily indicting the firm's succession planning/leadership development programs, it is useful to consider the track record of the external candidates who were considered better choices than the firm's internal candidates. This analysis decidedly shifts the spotlight to the competence of Hewlett Packard's Board of Directors.
The Folly of Believing What You Read
September 19, 2011
Some time ago we posted a blog titled ‘So you REALLY want to be a CEO?' which looked at the human costs of climbing the upper rungs of the management ladder. The blog was based on a series of articles immediately following the ‘resignation' of Pfizer CEO Jeff Kindler. All of these articles presented a cautionary tale of life in the fast lane, the long hours, the extensive global travel, and the shareholder pressures that accompany an uncooperative stock price. They also spoke poignantly of the physical and emotional toll that such unrelenting pressure took on the Pfizer CEO who eventually resigned in order to attend to his family and health. As it turns out however, much of this narrative may not have been true
Before sending us your resume (and then getting frustrated with us) ask who we work for
July 25, 2011
A friend of mine is a trustee in bankruptcy. As his title suggests, he and his firm serves those contemplating the ‘cleansing' process of personal bankruptcy. Potential customers compare service providers, select one, and then pay the chosen firm a fee to initiate and manage the ensuing process on their behalf. However, as soon as the relief-seeking customer signs on the dotted line, the trustee's allegiance shifts to the creditors for whom they then seek to maximize debt recovery. This shift in who works for whom must be a tad unsettling for people who already have a heap of problems and stress on their hands.
What Dating Services Can Teach Companies About Hiring
June 1, 2011
Executive-level hiring is a decidedly aspirational endeavor. Organizations idealize their workplace cultures, select for attributes that will fit into those romanticized environments, and then immerse unsuspecting hires into their ice-cold reality of their works-in-progress.
How to Survive a Startup - by Jill Ram
April 20, 2011
If you're an executive and you're thinking of joining a start-up, know what stage of a start-up to join. If the company is in its first year or so, don't expect to make significant changes. If you join after the company is somewhat established and mistakes have been made and learned from, you'll likely be more successful from the outset. If the founder has stepped aside, well, by then, the company is likely not considered a start-up anymore. It won't be functioning like a big company yet, and it won't have all the structure in place that it needs, but it will be run with more practicality and with less emotion. Timing is everything so choose it well.
Good News for the Old, Overqualified and Overlooked
March 18, 2011
It is expected that a significant percentage of the baby boomer generation will drive right past the Freedom 55 highway exit. For many the goal of early retirement will have proven to be unattainable hype, while for others the ups and downs of working will appear more attractive than the prospects of working up and down the local lawn bowling leadership board.
Pressed for time? Blame those Benedictine Monks.
February 24, 2011
It is among the principal reasons candidates tell us they are open to consider a change in employers. They are tethered to it, yet somehow it still flees. It is time, the most precious of resources, and for many harried executives they want some of it back.
Though their relationship with time may be strained, it is worth pointing out that it was not always this way. In his fascinating book Time Wars, Jeremy Rifkin chronicles the evolution of our modern relationship with time. He points out that in traditional agrarian and pastoral cultures, time was a very naturalistic notion maintained in cyclical, repetitive, biological and even sacred terms. The ‘passing of time' was cued via the changing seasons, biological lifecycles and lunar patterns and thus, the cadence and tempo of those societies were finely tuned to the cyclical rhythms of their physical environments. As he states, "Our early ancestors coveted the circle, perceiving time as eternal return, a ceaseless repetition of an endless cycle of birth, life, death, and rebirth". Since these cyclical rhythms could neither be accelerated, nor altered, the cadence of these societies' was natural and harmonious.
New CEO Data on Hard Skills vs Soft
February 1, 2009