Arrogance: the most lethal trait for CEOs

Overview

The difference between confidence and arrogance is often difficult to detect in CEOs during an interview process.  This unfortunate reality plagues Boards since arrogance is, in my view, the single most dangerous trait for a private equity-backed CEO.  Let’s consider all of the implications of an arrogant leader.

They usually:

  • Don’t welcome counsel and may not readily accept guidance from the Board
  • Have difficulty evolving and improving making them less adaptable
  • Exhibit artificially low levels of respect for the competition making them susceptible to market share losses
  • Underestimate the difficulty of challenges
  • Struggle with self-assessments and therefore self-improvement
  • Become susceptible to corner cutting believing their own ability can make the difference
  • Find it challenging to recruit A-players
  • Don’t respond well to setbacks
  • Hesitate to push accolades out to their teams
  • Struggle mightily with leadership

Confidence (plus Wisdom) is a Must

In my expeirence, the winning recipe involves CEOs who possess exceptionally high levels of confidence, gorunded in wisdom and humility.

Confidence drives:

  • Setting and achieving stretch goals
  • A winning and competitive culture
  • The ability to respond to setbacks

For the full power of confidence to be released it must be grounded in humility and empathy…and powered by wisdom.

Assessing the Difference

If you know the tells, arrogance can be identified during an interview process. Look for arrogant signals such as:

  • A lack of true self esteem
  • Discomfort when answering questions about mistakes and lessons learned
  • Lower levels of empathy
  • A personal career agenda rather than one focused on the greater good of the business and investors
  • An inability to articulate a personal development plan for continuous learning
  • A lack of unwavering ownership of all outcomes

Pay close attention whe referencing a CEO.  Comments from the team that reported to your CEO candidate will provide valuable insight.

Wisdom

Pay close attention to your perception of each CEO candidate’s general levels of wisdom.  Wisdom and arrogance are essentially mutually exclusive so ample wisdom is a very good thing…in more ways than one.  A private eqiuty Board’s ability to assess wisdom is often instinctual so search commitee memebers must listen to their inner voice – it will usually steer Boards in the right direction, at least in terms of evaluating wisdom.

Conclusion

Boards should veiw arrogance as a fast-lane to a hiring mistake.  Instead, Boards should prize supremely confident candidates while also assessing for humility, empathy and – most of all – wisdom.

 

 

Expectations of Private Equity Boards

Joann S. Lublin’s Wall Street Journal article  “When the CEO Reports to Private-Equity Bosses” suggests private equity-backed CEOs must be able to handle (among other issues), three key realities:

  1. “strict personal accountability”;
  2. “intense scrutiny”; and
  3. “speedy decisions”.

I’ve made a couple of recent posts on PE speed so I’ll focus my comments on accountability and scrutiny.

The Speed of Private Equity


All CEOs think they move fast, but private equity almost always moves faster.


Overview

If corporate America is the fast lane, then private equity is the autobahn.  It’s as if the term urgency doesn’t translate across asset classes. We need a new word, for private equity purposes, that loosely translates to working faster and harder than you’ve imagined, sustained over 4-5+ years.

Private Equity Still Cares About Career Stability

The following Wall Street Journal by Joann S. Lublin offers a premise that job-hopping executives no longer pay a penalty when interviewing for their next role.  http://www.wsj.com/articles/job-hopping-executives-no-longer-pay-penalty-1469545287


I couldn’t disagree more with respect to private equity.  PE standards on this issue, as with most topics, are far more rigorous than the broader corporate world.

Urgency vs Empathy for PE-Backed CEOs

OVERVIEW

A recent Harvard Business Review entry – The Mistakes PE Firms Make When They Pick CEOs for Portfolio Companies – suggests that the three most common CEO selection mistakes are:

  1. Mistaking quick thinking for systems thinking
  2. Not seeking CEOs who value talent development
  3. Believing CEOs who emphasize urgency are far better than those who stress empathy