What is this thing called CEO leadership? Whether it's a public company or a private equity-run business, both need leaders who embody these 10 crucial characteristics.

• Author: Kraemer, Harry M. Jansen, Jr.
• Position: LEADERSHIP

GIVEN THE SIGNIFICANT GROWTH of the private equity industry in the past several years, it is clearly understandable why the industry is receiving an enormous amount of press coverage.

Having spent 25 years working in publicly traded companies (including the positions of CFO, president, CEO and chairman of Baxter International) and the last three years as an executive partner at the private equity firm of Madison Dearborn, I find it interesting to see the similarities and differences between companies that are publicly traded and those owned by private equity firms.

One of the areas that is actually very similar in both the private equity and public company environments is the selection of the CEO. Private equity investors and publicly traded company boards are both trying to determine the answer to one key question in selecting a CEO--is the person truly a leader? In essence, I believe there are 10 key leadership components that investors must focus on to answer this crucial question for CEO selection.

1. Does the leader have "true self-confidence"?

   I describe this key leadership component as "true self-confidence" for a very specific reason. This component is not about the ability to act self-confident or simply play a role. It comes from focused self-reflection and self-assessment that enables the leader to openly and honestly understand what they know--and what they don't know. The true self-confident leader does not need to be right. Instead, the leader is fanatically focused on making sure they do the right thing. The leader clearly and openly states their values and is proud to set the example for appropriate behavior in the organization. They realize there are many people brighter, quicker, and more articulate than they are. However, they are okay with this reality because they are "okay" in their own skin.

2. Does the leader demonstrate "genuine humility"?

   It is critical for the leader to balance "true self confidence" and "genuine humility." People will only follow people that they believe they can relate to. Team members constantly look to the leader to see if the leader is approachable and truly cares about them as individuals. The team members ask themselves very specific questions: Does our boss realize that everyone on the team is important? Do they keep their egos in check? Do they remember where they came from? Do they admit it when they make a mistake? Do they give others the credit when things go well, and take the blame when things fail?

   As anyone who has ever been in a leadership position knows, balance is critical to almost every aspect of the job. My experience has been that there are at least two sides to every issue. My grandfather used to say, "Life is much simpler when you understand only one side of the story."

   In the real world, virtually every decision one makes has implications for multiple constituencies, and the leader must be capable of understanding this fact of life. Are we managing this business for the short term or the long term? Usually, the answer is yes. Are we focusing on growth or returns? Again, the answer is often yes. The leader needs to be capable of balancing each of these trade-offs. I find that few people in leadership positions are capable of understanding this fine balance, keeping it simple, and clearly communicating it to the team.

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3. Does the leader possess solid values and focus on setting an example of those values for the entire organization?

   The leader is responsible for setting the values, culture and expectations for the entire organization. The leader must clearly articulate what is acceptable behavior and what is unacceptable behavior.

   It must be clear to every person...