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An Investor’s Least Favourite Statement – “Oops, Wrong CEO”

January 20, 2016 • Corporate Governance, LEADERSHIP, Leadership Development

By Leslie Pratch

It is possible to identify executives who are likely to act with consistently high integrity and who demonstrate sound, timely judgment when they occupy positions of power. These executives – as distinct from others who have similar backgrounds and temperaments – have specific underlying motivations and coping tendencies. Understanding ‘active coping’, as I define it and measure it, is central to predicting leadership.1 Executives can also learn how aspects of their personalities and particularly their coping styles might adversely affect how they work and use that knowledge to make themselves (and their colleagues) much more effective.

 

Effective leaders must meet challenges and resolve them productively, day after day, for many years. They must constantly adapt to the unforeseen – and must mobilise, coordinate, and direct others. But when hiring executives, how do you know which candidates possess such qualities? When they all look good on paper, how do you make a choice? Given the frequency of CEO turnover, and the frequent cases of CEO failure after long, successful careers in the same place where they became CEO (e.g., Jeffrey Immelt at GE, David Pottruck at Schwab, Doug Ivester at Coke), it’s apparently not that easy. But it can be done, by including an analysis of executives’ readiness to acquire new skills and strategies for coping with complexity and change – in other words, their active coping.



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