How Directors Can Mentor Potential CEOs
Virtually every director we speak to strongly affirms that CEO succession planning is their boardâs number one priority. And most subscribe to the view that under ordinary circumstances promoting from within is preferable to bringing in an outsider â too much is at stake to risk a cultural mismatch.
Beyond risk reduction, internal promotions reveal much about the companyâs health and sustainability. According to Glenn Hutchins, co-founder of Silver Lake Partners and director at Nasdaq OMX, âThe best organizations are those that promote CEOs from within. It shows that you are a company that attracts and develops its own talent. This is motivating because your best people see that they can aspire to the top levels of the organization.â
Less appreciated in boardrooms, however, is the notion that promoting an internal superstar can be risky when board members lack a deep understanding of their executivesâ leadership potential. When an internally promoted CEO doesnât work out, the reasons can seem mysterious. But most of the time it happens because boards do not fully understand their internal candidatesâ character nuances and leadership potential and, as a result, cannot predict how they will actually perform when in-role.
Itâs the Soft Skills
Truly understanding an executiveâs leadership potential to serve in the CEO role can be challenging. How does one distinguish between equally qualified high performers? How does one compare the stellar CFO to the top performing executive vice president of sales? As former Agilent Technologies CEO and current eBay director Ned Barnholt observes, âWhen you get to the point of interviewing candidates for the CEO role, they all have a pretty high baseline of technical and strategic competence. At that point, the key differentiators are the soft skills.â
But properly assessing an executiveâs soft skills and potential is an almost impossible task when directors have exposure to internal candidates that is limited to the cursory once-a-year dinner or golf outing. And even more importantly, executives that could be great never get the proper development opportunities if the skill gap was never identified in the first place.
This tough issue can be solved by breaking down the traditional barriers between directors and high potentials. To strengthen the leadership pipeline and minimize CEO succession risk, smart organizations facilitate relationships between high-potential executives and corporate directors. Well before an actual succession event, corporate directors are paired with rising stars in formal mentoring relationships. The pairing results in a mutually advantageous relationship that leads to better corporate performance. The directors better equip themselves for their CEO succession duties by gaining an intimate knowledge of internal high-potential talent, and the high-potentials receive invaluable mentoring from seasoned corporate leaders.
A Framework for Conversation
Many boards do use occasions like dinners or golf outings to get directors together with rising stars, and such socializing and informal contact is certainly worthwhile. But to contribute most fully to CEO succession planning discussions, directors need to have ongoing, substantive, one-on-one conversations with internal leaders. In this highly interactive process, board members and high-potential candidates develop formal relationships that last a year or more.
To ensure that these discussions are in fact substantive, we have found that three critical dimensions of potential, which we apply in our leadership consulting work, can provide directors with a frame of reference over the course of the mentoring relationship. In ongoing discussions with the mentee, the director simultaneously addresses all three of these dimensions, not as a checklist but as strands of the conversation to be woven in as appropriate, with the aim of helping the mentee expand the soft skills of leadership critical for success in the top job. These three dimensions of potential include:
â¢ Self-awareness â the ability to understand oneself in terms of strengths, weaknesses, and motives, as well as an ability to regulate emotions and to understand the ways other people affect your behavior. A mentee will likely have some idea of her motives before the relationship commences. Beneath instrumental motives like desire for advancement or financial reward are many possible deeper motives: desire for achievement, intrinsic love of the work, desire to make a meaningful contribution to a greater good, and countless others. The mentorâs goal in this strand of the conversation is not to tell the mentee what motives she should have, but to help her draw on the energy supplied by the deepest motives she does have.
In the course of the companyâs development program, mentees should have gained some prior awareness of their strengths and weaknesses. The mentor can help the mentee explore those strengths and weaknesses in the context of the menteeâs current role and how those traits are likely to play out in different roles and different business situations. As this suggests, self-awareness and the behaviors it results in do not take place in a vacuum â they are intertwined with situational and social awareness, which is precisely why the conversation proceeds on all three levels simultaneously.
â¢ Situational awareness â the ability to read and understand contextual clues about the dynamics in a situation and to be able to react accordingly. Executives with a high degree of situational awareness are able to discern issues that others miss. They can also frame problems so that others can understand the situation and help develop actionable solutions.
Achieving situational awareness often requires diagnostics that are appropriate to the state of affairs. In business there are innumerable diagnostics: quantitative and qualitative analytical techniques, business frameworks, third-party assessments, gut-feel, experience, and many more. Mentors can encourage mentees to expand their repertoire, to consider many possible angles of approach and, as they seek contextual clues to the real situation, to be wary of falling into the scores of cognitive biases that researchers like Nobel prizewinner Daniel Kahneman have so vividly warned against.
Confirmation bias, for example, is the tendency to overvalue evidence that confirms a favored belief, or the failure to impartially seek evidence. Champion bias is the tendency to evaluate a proposal on the basis of the track record of the person proposing it, rather than on the facts. Loss aversion is the tendency to feel losses more acutely than gains of the same amount, leading to unnecessary risk- aversion. In addition, the mentor should stress the necessity of clear framing of a situation in a way that others can understand, even if it is highly nuanced and multi-dimensional.
â¢ Social awareness â the ability to understand oneâs impact on others, to manage oneâs reputation, and to strategically flex oneâs leadership style to best suit the needs of various audiences. The mentor should explore the menteeâs understanding of which people, audiences, and stakeholders in the organization are critical for success and how best to influence them. They should also explore the different leadership styles likely to be most effective with different audiences, as well as how to develop leadership styles that may not come naturally. Most directors have gotten where they are through finely honed leadership ability, and few people are better placed to explore the nuances of leadership with rising stars.
The Real Goal
Throughout these intertwined conversations, the objective is to expand the executiveâs awareness along all three dimensions. The goal is not to solve a particular business problem, though these conversations might greatly help the executive in such endeavors. If the goal were to solve a business problem, then the director would be acting less as a mentor and more as a superior, devising metrics for the candidateâs progress and setting performance targets. Further, some high potentials, thrust into a stretch assignment, may in some sense fail or otherwise fall short. Even so, the mentoring should have laid the groundwork for success in future roles.
If solving a business problem is not the goal, how then do you gauge whether the mentorship is proceeding well? There are three telltale signs: First, the mentee begins interacting with you more like a peer than like someone involved in an extended job interview. Second, you begin to realize that the mentee is expanding your own awareness in unforeseen ways. Third, the mentee begins to cascade mentorship downward in the organization, multiplying the benefits of your effort.
A Win All Around
Putting substantive and systematic mentoring into practice is not easy, nor is it a short-term ad hoc solution. It requires commitment from the board, buy-in and support from the CEO, and careful pairing of board members with rising stars. It requires time, patience and honesty from both directors and executives.
Together, both parties in a mentoring relationship produce results neither could achieve on their own. In fact, itâs a win-win-win: for the organization, the mentee, and the mentor. With all directors having a more robust understanding of internal talent and the companyâs strategic challenges, the board can have rich succession planning discussions that strengthen the entire organization, create a more robust leadership pipeline, and reduce risk. High-potential mentees get the opportunity to further develop the soft skills they will need to be considered a serious CEO candidate.
And, as we have found, delighted directors often get to say, âI got as much out of it as my mentee did!â
John T. Thompson is a vice chairman with Heidrick & Struggles and is recognized as one of the most respected advisors to boards and CEOs in the nation.
Karen R. West, Ph.D., is a partner with Heidrick & Struggles and a member of the global Leadership Consulting Practice where she is renowned for high-speed development of executive and board-level talent.
Natalia Rodriguez and Elliott Stixrud, associates with the firm, assisted in the preparation of this article.