It's tough hiring a CEO: I went in search of breakthrough secrets. Here's what I found.

AuthorSutton, Gary
PositionChief executive officer

IN 1989 I RECRUITED and hired CEOs for an aerospace manufacturer and a retail chain, plus the chancellor for a private college. As the departing turnaround manager, I held some shares in each of these outfits. My hopes for the selected CEOs' success ran high.

Of these three businesses, two worked out fine and one failed. Not a bad year, but short of wonderful.

This process of recruiting CEOs is critical, and I've never been sure I'm getting any better at it--nor do I see big evidence that other boards have uncovered any breakthrough secrets. So way back then I decided to dig deeper. I sent survey letters to 500 directors across the United States, randomly selecting from a list. Each served on four or more boards.

Thinking these folks might be as jumpy as I was about the process, I offered them a copy of the survey results if they'd respond with their thoughts.

One hundred and fifty two of these busy folks answered, revealing that professional directors were just as nervous about CEO selection back then as I remain today.

But I did trick them a bit. To get closer to the truths, I asked them to first write down, for themselves only, the names of the best and worst CEOs they'd ever worked with. This seemed likely to eliminate bias about the specific questions to follow. Old directors might list experience as being the most important factor, scientists might list technical backgrounds as critical for CEO success, etc., etc.

I then asked them to send me answers about the backgrounds of this best and worst CEO, without divulging names. They could, however, make editorial comments about these CEOs, and almost all did.

What did I learn?

Candidates with prior general management experience were the most likely to succeed. Profit-and-loss experience is the best CEO training there is.

Being a VP of marketing or R & D carries the biggest risk of failure. (As a retired CEO whose prior backgrounds were marketing mostly and R & D a little, you are now assured these results were not biased by your surveyor.)

Operations folks did better, engineers did well, and finance types did okay.

Hardly any of the bad CEOs were fired for lack of energy or limited skills. The losers became greedy, abusive, stubborn, or secretive. Downfall was almost always due to a character failure.

Paying high bases with low incentives was another disaster factor.

The praised CEOs were described with words like "integrity ... supportive ... good with people ... communicators." Profits...

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