When hiring a CEO, what do Boards look for?
August 14th 2022
I heard this podcast this week (based on an HBR article from Aiyesha Dey, an associate professor at Harvard Business School) and was really impressed with some of the research findings. The basic aim of the study was to try and find out whether most Boards, when hiring a CEO, would scrutinize their past “observable off-the-job indicators”. The researcher has investigated executives’ past criminal records (from speeding tickets to sexual harassment), looked at the cost of their homes and automobiles to understand their pursuit of materiality and concluded that boards and other hiring bodies should pay more attention to personal “off-the-job” behaviour when picking organizational leaders.
They certainly should, here’s one of the most basic conclusions of the study: Companies who have been involved in fraudulent activities, have CEOs with a significant higher number of speeding tickets. As simple as that. The psychological argument: if you do not respect small rules, you are more likely to infringe the big ones...
This all boils down to the notion of Responsible Leadership. If you want your company to be recognised as a Responsible Business, everything starts with the hiring of the CEO – which processes does an investor follow to recruit? Which are the traits they look for? Do they only look at their previous performance in terms of shareholder return or do they really want to understand how good he has been in stakeholder management? Did he achieve the results due to short term actions or has he been long enough in a job to achieve long term robust financial performance based on the respect for People & Planet?
Nuno Moreira da Cruz
Center for Responsible Business & Leadership