Today, companies that will last understand that business is no longer about money-grabbing at any cost. Our economy is in the middle of an undeniable shift, and the corporations that will succeed need leaders who understand the necessity of collaboration.
But for boards, it’s crucial to balance concerns about sustainability with those about the bottom line. Where do the two meet, and how can you tell if a leader understands this balance? These seven questions can help you figure out whether a CEO candidate is truly right for the job.
1. Does the CEO view his position as his right or his privilege?
Here’s how John Replogle, CEO of consumer goods company Seventh Generation, illustrated the link between CEO mindset and corporate behavior to me: “Understanding how you view your position as CEO informs where you put your emphasis. I approach my role as CEO as one of privilege, responsibility and stewardship. My view leads me to emphasize actions and investments that further Seventh Generation’s mission.”
2. Is the CEO shareholder or stakeholder value-creation driven?
Most corporate mission statements fail a critical 21st-century leadership test: the purpose test. What is the purpose of the company? For most CEOs, the purpose starts and ends with shareholder value creation.
Unilever’s Paul Polman, one exemplar of the collaboration-minded CEO, believes his company must “play our part in improving lives, enabling a more sustainable way of living by consumers and providing shareholder growth. This is our purpose.”
3. Is the CEO serving as a CEO-as-activist in order to create stakeholder value?
How a CEO uses his privileged platform influences his company’s success. Consider Karl-Johan Persson, CEO of H&M. His company buys nearly $1.5 billion of ready-made garment products from Bangladesh. It is in H&M’s best interest to ensure that local workers are treated with dignity and are paid fair wages.
What makes Persson rare is that he acts on this civic-minded interest. Last year he met with Bangladesh’s prime minister to make the case for increasing worker wages. Persson’s action suggests that he understands that his platform brings with it responsibility for furthering stakeholders’ interests.
4. Does the CEO prefer to maximize her legacy or her ego?
Solving our vexing challenges requires leaders to set goals that will postdate their time in their leadership position. We will not solve our global water, energy, or food challenges in the next three to five years. Leaders need the courage to look beyond any innate desire for personal glory. Otherwise, their resolve to start in motion the wheels of long-term progress might be choked off. The 21st-century leader understands that accomplishing goals is a team effort.
5. Is the CEO staking his career on enterprise-wide collaborations with rivals, NGOs and public entities?
Few would dispute that collaboration across the private, public and civil sectors is the most likely path to securing our common future. Unilever CEO Paul Polman did well to note this view recently when he said: “Individually both governments and business have already mobilized significant resources to address the challenge of deforestation, but we all recognize that much more can be achieved if we align our efforts and work in partnership.”
6. Would you partner with your company if your career and wealth was on the line?
At best, an unethical CEO only saps employees’ energy. At worst, a great company rots from the core as employees learn that it’s okay to use their company as their personal bank account. The ethical CEO’s company is more likely to operate with little to hide. Transparent companies will find it easier to nurture and maintain a vibrant network of private, public and civil sector partners.
7. Is the CEO actively protecting the company against complacency?
Only 13 percent of the companies that appeared on the original Fortune 500 list in 1955 also appeared on the 2011 list. Coca-Cola is one of these companies. Muhtar Kent, Coca-Cola’s CEO, demystified the secrets of the company’s long-term success thusly:
"My greatest legacy at Coca-Cola could be helping our company, our system and our people remain constructively discontent. Because any time anyone begins to think they’ve got it all figured out, that’s when they get wiped out. By a competitor. A new environment. Or some other meteor, right out of the blue."
Our world, our society, and our economic system are changing. As the pressures mount on your company to adapt, one thing is clear: yesterday’s ego-driven leadership traits will not yield tomorrow’s legacy-driven success.
Image credit: CC license by DanDeChiaro/Flickr