Hiring Leaders

June 9, 2009

Everyone has a theory on the Nortel’s descent from first to worst. Many start and end with the murderer’s row of CEOs at its helm.

I cannot even offer an opinion on the degree to which Nortel’s demise was a function of any one of a hundred different factors. But to the degree that the last three or four CEOs played a role, the board of directors has to take a shameful bow.

It is remarkable how many boards of directors lack visibility into the companies they govern. And when these firms struggle these same boards have no real insight into the issues let alone how to address them. Such inconvenient truths invariably push boards to seek solutions that are the safest and most defensible. Thus, when appointing a new CEO, they look for unassailable ‘name’ players from within their industry or from a company known for breeding great leaders. As a book I recently read stated, ‘there is a substantial incentive for boards to select the candidate with the highest reputation regardless of the match between the candidate’s abilities and the company’s needs because of the uncertainty of the outcome and the limited ability to assess fit’. By picking a ‘name’ boards bullet-proof themselves from negative repercussions should the candidate fail.

Leadership is contextual and I do not really know whether Mike Zafirowski had any real experience in the kind of turnaround situation he faced when he joined Nortel. But I do know that he worked for Motorola and GE, and as a result was a safe, unassailable choice for Nortel’s board of directors. Today, as his report card on righting the good ship Nortel reads ‘bankrupt’, he is being measured against a number of change management attributes which almost assuredly were ignored when he was hired.

The man who selected Mike Zafirowski for the CEO role is Nortel chairman, Harry J. Pearce. And while one would think that guiding Nortel in its journey to oblivion would be the defining stain on his career, it may not. You see Harry J. Pearce also served on General Motors’ Board of Directors for 8 years including five as its Vice-Chairman.