Useful Information

High-performance teams are used successfully in an increasing number of organizations to solve problems, save time, and maximize production. Multi-skilled teams bring their combined talents to a task, usually with notable results.

It's not customary to think of the board of directors as a high-performance team. Boards have traditionally focused on the more defensive role of protecting shareholder interests. But the natural structure is in place to put together a team of multi-skilled individuals who can act together productively and pro-actively, not only for the good of shareholders but to add value to the organization as well. The board's highly visible role might also send a strong message to the rest of the organization about the importance of teams and teamwork to the organization's overall success.

To construct a board that is a high-performance team, consider the following:

Boards need to define which strategic competencies they must provide for their corporations. Beyond the ability to read a financial statement, various specific skills can add significantly to the board's contributions, such as the ability to interpret global trends.

Boards that become too large are unable to make decisions efficiently. Big boards share information, but their complexity makes it difficult for them to take substantive action.

Boards need clear statements of expectations from their organizations. Even the obvious expectations of preparation for and attendance at board and committee meetings often are unstated. Notice or surveys might be taken of individual directors' participation and contributions, and how well committee's function.

Boards might consider limiting service to assure that only active executives retain board seats. Some boards consider 10 years of continuous service the limit. New board members can revitalize the team, and provide the opportunity to bring on new competencies.

A high-performance board requires proper member recruitment and selection. Professional, objective executive search consultants can assure locating directors with the strategic competencies necessary to create a high performance board. Consultants can also help the board to identify likely future board members early in their executive careers.

A board of directors is already a group working together. It takes a shift of focus and vision to make this body a high-performance team, adding value to the organization and truly benefiting shareholders.

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There may be serveral openings for outside board directors if recent recommendatiions of 30 prominent executives, corporate governance experts and shareholder advocates are adopted. The group has compiled a report suggesting that corporate boards set some new, tough standards which may result in a rash of resignations from those currently serving on boards.

While shareholders and governance experts have been asking for an examination of and reforms to corporate boards for some time, it is expected that the logic of the panel's findings and the weight of the names who signed the report will cause both boards and executives to sit up and take notice. Signators include Alan J. Patricof, venture capitalist; John J. Phelan, former chairman of the New York Stock Exchange; and Richard H. Koppes, former general counsel and deputy executive officer of the powerful California Public Employees' Retirement System. The panel was assembled by the National Association of Corporate Directors and headed by Ira M. Millstein, attorney at Wel Gotshal & Manges.

One of the panel's most far-reaching suggestions is that an individual should serve on no more than six boards. Among the 7,200 directors of Fortune 1,000 companies, 207 sit on seven or more boards, according to Directorship, a Connecticut consulting firm. Serveral more directors, including many CEOs, hold four and five seats. The criticism has been that those who serve on multiple boards do not have enough time to be vigilant shareholder representatives. Since many are already CEOs of their own firms, the question is raised as to how they can devote the time to study and assess the various issues facing companies on whose boards they sit and how they can adequately protect the interests of the shareholders. Even the workaholics among them would be hard pressed to satisfy these stringent demands.

Additionally, investors claim that directors who sit on multiple boards earn sigvificant salaries and that they are less willing to challenge chief executives or to disturb the status quo. Team players may not be the kind of players who best serve either the company or the shareholders.

The report places the primary responsibility for the board's duties and culture on outside directors. It outlines the following steps for boards to take in order to improve their performance:

• Select only directors who have financial literacy.
• Select outside directors who do not have interlocking board relationships, significant consulting contracts, or other commercial ties.
• Establish a process to evaluate the individual directors and the board as a whole and disclose the process and the selection criteria to shareholders.
• Consider term limits of 10 to 15 years.

The report also asks that the board room balance of power be shifted by taking these actions:

• Create a nominating or governance committee to monitor board performance goals, assigning only outsiders to it and to the compensation and audit panels.
• Appoint a separate chairman or lead director with the responsibility for setting the board's agenda with the CEO, organizing regular meetings of outside directors, and leading a formal evaluation of the CEO.
• Hire professional advisers if necessary.

Several other standards were reiterated, including that there be a majority of outside directors, that they be paid at least partly in stock, and that they be required to own shares. It is hoped that enacting these measures will place more direct responsibility on boards of directors to see that their companies pay scrupulous attention to performance and to the interests of investors.

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The call for corporate boards to be more independent, more active, more involved in the oversight of the organization's management and direction has been widely applauded by everyone from shareholders to big institutional investors and the press.

But all this new energy might require some trade-offs as we give up the yes-people in exchange for independent thinkers and activism. Ralph Ward, speaker and author of 21st Century Corporate Board (John Wiley & Sons) and editor of "The Corporate Board" magazine, cautions that some corporations are beginning to look "less like a panel of solons and more like the gang that couldn't shoot straight."

Some board rooms are finding their chairs are filling with those representing factions, each group entrenched in its own special interests. The results are powerful, vocal boards but ones that might be unable to agree on a shared strategy, much less give their CEOs a straight vote of confidence.

Members of corporate governance who support splitting the positions of chief executive and chairman are surprised and dismayed by the ensuing chaos. Infighting can be the result, and these boards are as unable to contribute positively to their organizations as were their predecessors.

Ralph Ward says, "Many so-called board reforms are only making matters worse. (Even with) a split in the chairman and chief executive positions, a strong board with broad membership that includes labor and a majority of outside members, and effective channels of communication between directors and other levels of management, things can go wrong."

In spite of such growing pains, Ward says that across America, "directors are proving ever more effective as guardians of shareholder value, as strategists and assets to management. Boards have started to truly matter in the leadership of corporations, and as with any other source of growing corporate power, a tug of war has started over control."

Ward suggests initiating the following reforms so that corporate boards can use their new powers for good.

• Write strong, effective board charters. Replace the old formalities with working documents that spell out how a board's actions will contribute to shareholder value. Define the relationships and powers. Make sure that the various board factions are all working toward the same goal. Review these charters regularly.
• Evaluate the board. The board and committees should review their own performances at least once a year. Have they met priorities? Has the chief executive found the board an asset? Are all members pulling their weight?
• Choose directors for their strategic skills. Directors serve on the board to do more than represent their particular faction; they are there to build shareholder value. Directors should be picked based on what they can do rather than for whom they speak.

Wards adds, "In order for new board members to do their jobs, they need training and orientation. Often they simply don't know enough about the organization and need background information on markets, competition, products, etc. The board's nominating committee might appoint someone responsible for training the new member, a senior mentor of sorts to bring the new member up to speed as soon as possible. Unless board members know everything about the organization and its operation, they can't be productive or do an effective, responsible job."

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In spite of the glow in the economy, corporate boardrooms remain bastions sorely in need of reform. While organizations such as Calpers (The California Public Employees' Retirement System), as well as newspapers and magazine articles, have been telling the public for some time that corporate boards need fixing, it seems that even more pressure is needed to get things moving.

Albert Dunlap, chairman and CEO of Sunbeam, in an article in The New York Times says," it is the very way that boards are organized and compensated that can hold back a company. Directors are traditionally given no incentive to demand financial performance, and that is dangerous to America's health."

While Calpers and others have stressed the importance of independent directors, corporate America has been slow to come around. Dunlap says that only two company executives should be board members --the chief executive and the chief financial officer.

Dunlap cautions that more attention must be paid to the quality of the independent directors. No rejects here, please. No failed CEOs or retired CEOs looking for jobs. Active executives with specific skills and proven performance records should head the list of board member candidates. Individuals with global experience and ones with marketing skills are among those who can provide the resources needed by the company, its executives, and shareholders.

How directors are compensated needs examination. Calpers suggests directors receive only cash or stock, but no extra benefits like retirement plans. Dunlap pushes the envelope even further, saying: "Directors should be paid only in stock, and they should be required to buy stock in the companies on whose boards they sit. If they are unwilling to own stock, what message does that send to the shareholders?"

Dunlap and Calpers share the belief in term limits for directors, with Dunlap opting for five years. The call for strong, independent and committed boards is gaining momentum. The shape of corporate boards has a far-reaching impact affecting the economic health of the country. The issues of corporate board reform should be of concern to everyone.

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Some would rather go fishing when not working hard at their jobs; others favor time with their families. Whatever the activity of choice, record numbers of chief executives are turning away from corporate board service as a place to delegate precious time. While sitting on numerous outside boards was once expected of a CEO, today's most senior officers have neither the time nor the inclination to assume that traditional task.

A survey conducted by the National Association of Corporate Directors found that nearly half of the CEOs of over 1,000 major U.S. businesses don't sit on outside company boards.

This finding most likely reflects executive fear of takeover threats as well as shareholder concerns. Reacting to criticism that directors who assume multiple board positions can neither adequately monitor their own business's performance nor give adequate service to the boards on which they serve, CEOs are busy minding their own stores and fixing their own internal problems. The prevalence of hostile takeover attempts requires that today's senior executives work diligently in their own shops to make sure their organizations are profitable and are not candidates for takeover.

Shareholder interests have also dictated more active participation of all board members. Far from a passive activity, a corporate board directorship is an undertaking with serious responsibilities. Doing the job properly requires time and effort, both of which today's chief executives may find in short supply.

Some new executives are waiting a few years before accepting outside directorships and then choosing those directorships with care. Boards and stockholders expect speedy results from their new senior executives, leaving little time to serve on outside boards. A growing number of CEOs indicate that the crush of their own work is so intense that they would rather spend any extra time they have doing something of their own choosing to create better balance in their lives.

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Traditionally those nearing, or at, retirement looked to board service as an ideal venue for their expertise as well as a way to maintain their interests and contacts in the business world. But rather than waiting until the time is ripe to be of service, for many of today's executives the right time is now, and for them the role of board director is both a career move and a route to social status. A symbol of achievement and an avenue by which to promote business, board service for many has the same impact, and often the same results, as a game of golf with business associates and prospects.

Today's corporate boards are demanding, and only the most ambitious and energetic should apply. As Ralph Ward warns in his Boardroom Insider (www.nethawk.com), time is a key ingredient, and if aspiring directors will be unable to devote the required energy to the board, they will be weak members who have to leave, proving costly to both reputation and career. Making the time commitment should be the first consideration for anyone seeking a director's seat.

In large cities, executives find that serving on boards of prominent arts institutions is very high profile and puts them in the company of the movers and shakers of the political, business and social worlds. These contacts can prove extremely valuable as potential business prospects. In addition to the time commitment, such non-profit boards also expect money, lots of it. While it may not be necessary to empty one's own pockets, one should have the time and the contacts to raise money from others.

Non-profit boards, including those of social services as well as the arts, can satisfy one's sense of social responsibility. Aside from the requisite financial donations, these boards also require expertise and business acumen in such areas as planning, finance and market development. Giving of oneself to such boards might create the balance in an executive life that otherwise seems entirely focused on productivity and profit.

Ward points out that a board seat can help prevent career boredom and burnout. The new contacts and boardroom work can be a source of new ideas to bring back to the director's "day job."

Getting on a board needs to be as carefully structured as any career move. One might begin by assessing one's own experience for specific skills that may be desirable in the boardroom, such as talents in strategic planning or developing overseas markets, and financial skills.

Non-profit or arts institution boards, in addition, seek highly visible individuals who not only will work and bring specific expertise to the board room, but will attract others to contribute and become involved in the institution. Often the road to the most prestigious boards in town starts with serving on boards of smaller institutions and making contributions of work or cash that receive public notice.

Writing articles or speaking at conferences can bring your name to the attention of corporate boards seeking new directors. It is also a good idea to make your boardroom interests known to professional search consultants, since increasingly, corporate board searches are conducted by professionals.

For both corporate and not-for-profit boards, personal contacts and networking remain an obvious way to make your ambitions known. As with any career move, the successful route to the boardroom requires careful planning and strategy and the awareness of, and willingness to give, the hard work, time and sometimes money entailed.

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Ralph Ward's on-line newsletter Boardroom Insider continues to offer useful bits on boardroom advice. Recently Insider drew from an interview with John Scully, who discussed the startup of Live Picture and how the board was used to find CEO talent.

First, allow plenty of time. Scully served as an interim chief at Live Picture, taking the edge off the search. Under pressure, mistakes and wrong choices can be made.

Second, expect "two-way selling." A top-flight candidate may need to be sold on the company and its future, If the prospective CEO hasn't done his or her due diligence as thoroughly as the board, consider it a red flag.

In another interview, this time from The Corporate Board, Ram Charan was asked questions relating to his new book, Boards At Work. Primarily concerned about improving board communication and responsibility, Charan says, "Communication is critical (to a strong board). You need open, exciting dialogue on meaty items, members talking among themselves, not just a CEO hub-and-spoke setup. Communication flowing through the board makes it a strategic tool."

...I'd say there should be no more than two (insiders on a board). Also, director overstretch is becoming a real problem. A sitting CEO should serve on no more than two other boards... Also, it hurts if the board isn't diverse enough.

"The most common problem is the CEO not taking initiative to get the board contributing. Concerns are not coming to the board table, Each member knows there are problems individually, but collectively the board is just not jelling.

The CEO has to be secure and self-confident to use the board. The board truly wants to contribute, that's not in doubt, but CEOs have to lead the process and seek that contribution."

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Today's board chair balances being authoritarian with being totally democratic. He or she needs to seek input from other directors. At the same time, he or she must remain the boardroom's clear leader. That includes anticipating and satisfying the needs of the directors and running efficient board meetings.

In the March 2000 Boardroom INSIDER, Ralph Ward addresses some of the attributes an effective chair should possess. Ward writes that successful board leaders:

• Set and stick to the board agenda (which should include input from other directors).
• Move beyond details. If the CEO is also the chair, he or she must disengage from the company's daily activities to speak in the more strategic, detached mindframe of other board members. The successful chair is able to think in big-picture terms, says Louise Corver, president of Corporate Learning and Development. At the same time, this chair can also get his or her hands dirty. The chair knows both the vision and how to fulfill it, says Corver.
• Build unique relationships and communications with each board member and use them to shape consensus.

Walter Wriston, the former chairman of Citicorp and a member of many corporate boards, agrees that the chair should tap the experience and strengths that each director brings to the boardroom.

At the same time, the chair should assume that the directors want (and may need) to learn more. "At Citibank, it occurred to me one day that the directors didn't really understand the bank's accounting issues. I asked the board if they'd like to come an hour early to the next board meeting for a presentation on how bank accounting works, and every one of them signed up immediately." A smart chairman does not wait for the directors to ask for help, Wriston suggests. "You can sense whether or not what you're saying makes sense to them."

The chair also needs to generate constructive discussion about new ideas. "I've never seen a proposal that went before the board that didn't come out better," says Wriston. But seeking input does not mean asking the board what you should do.

"You wouldn't bring an idea to the board if you didn't know what you wanted done. You must be able to go in saying `this is what we want to do' and why it makes sense," says Wriston. It is rare for a chair to go around the boardroom asking what he or she should do.

Ed Vick, chairman of Young & Rubicam, likens a board to a high-powered family. In one way, successful people on the board do not want to be told what to do. In another, they want to see that the chair is in control of the situation.

Vick reiterates the significance of communication. "The head of the board must be a good communicator -- able to clearly express to directors where he wants the company to go and to be persuasive." At the same time, the chair needs to possess active listening skills and the ability to have honest dialogues.

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In the March Boardroom INSIDER, Ralph Ward also outlined some of the ways in which a chair can effectively manage a board meeting. Running a meeting effectively means allowing directors the opportunity to freely discuss ideas but keeping that discussion within a disciplined flow. "It's bad leadership to put up with unpreparedness or someone repeating an idea over and over," says Ron Zall, head of the Denver-based Corporate Directors Institute.

Another way to effectively manage the board meeting is to announce the ground rules at the outset. Zall advises board chairs to get the issues out at the beginning as well. The agenda lets the chair check off what must be covered. At the same time, the upfront discussion allows the chair to lay out the meeting's major unifying theme.

Finally, the chair should lead by keeping the meeting focused and productive. The earlier in the meeting you bring up a major issue, the more attentive the board members will be.

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The July edition of Ralph Ward's Boardroom INSIDER addresses how boards are handling electronic communications technology. Ward cites the example of the Compaq board, which was putting its information mailings on an encrypted CD-ROM and issuing each board member a Compaq laptop with a software suite that included a reader for the CD.

While directors liked the ease and speed of the CD board books, they were concerned about security and postponed a decision about sending information online or walling off a board-only Web site. "We keep hoping to find a process that allows us to move files onto a secure server so directors can get in via the Internet past our firewall," says Sherry Walker, legal assistant to the vice president for compliance at Compaq.

Ward writes about another company working on a confidential intranet Web site for the directors. The site is expected to include financials, agendas, news and strategic information. The company is designing the Web site carefully to ensure security.

Another firm has a beta site on which its directors can access minutes, reference materials, the charter, bylaws, items from the directors' manual and telephone contacts. The board Web site also serves as an intranet with secure e-mail service between the directors.

Ward writes that such a strategy could offer several benefits: law firms are concerned about keeping sites safe; the board creates an electronic presence away from management; and there may be some evidentiary/discovery benefits from housing one's e-board site with counsel.

Security is a downside to the e-board. "You can build in security, but some weaknesses relate to the people who have access," says the corporate counsel for the company mentioned above. Ward notes that boards already have a problem with members who leave confidential papers behind on airplanes or in hotel rooms. E-board books may make things worse, he adds.

Many directors also are slow in making effective use of current information technology, prompting Ward to ask, "If you have techno-Luddites in your boardroom, how good a job can they do of keeping your company up to date?"

Technology has significantly changed the format of the résumé. The old résumé was meant to attract the attention of people; today's must impress the computer, and that's a whole different story. Even though today most résumés are sent by fax or e-mail, it is customary to follow up with a hard copy in the mail. While paper may not matter electronically, the heavy, elegant paper favored by experienced résumé writers still serves to set it apart from its more common colleagues once it is actually in hand.

Today's standard procedure is for résumés to be scanned into a data base. Scanning can do strange things, like garbling words that are underlined. It likes capital letters much better than highlighting, and plain designs cause fewer problems for the résumé readers of the technological age.

Old-hand résumé writers had a string of exciting action verbs at their disposal. Electronic résumés don't care for those verbs too much; instead, the emphasis is on key words. Even those who input résumé material manually into a data base search for telling key words. Key words create the match résumé data bases seek. That match is found when key words and phrases that describe the skills and background required for the position are selected, and the data base locates those words in a few résumés among the thousands in its data bank.

Resumes that use industry jargon, acronyms, terms and demonstrable skills give the computer something to work with. Computers also like the names of professional groups, alma maters, and language skills. For instance, a match is possible if the computer can find a résumé in its data base with such key words as "engineer," "Spanish fluency," and "UCLA," assuming those are requisites in the job description.

Once a match is made by the computer, the human element takes over. Only people have the ability to conduct solid, informational interviews, perform in-depth reference checks, and form judgments based on experience, knowledge, and objective evaluation. Technology is only the beginning of the process, and it remains with the professional to exercise the expertise required to conclude a job search satisfactorily and make it a long term hire.

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Most people agree that dealing with one another ethically is a golden rule with universal application. However, some people have been known to say that the principles of the Golden Rule, while right for their personal lives, have no place in the business arena.

This schizophrenic view of interactive relationships has got to be confusing at the least. For those who are able to compartmentalize their behaviors, and for others in an increasingly cynical society, the new criterion of the business place is often based on the answer to the question, "Can we be sued for this?"

George W. Fotis, author of Improving Personal Effectiveness: A Practical Guide to Nine Powerful People Skills, suggests that behavior standards... at the office or otherwise... might be better if based on the answer to the question, "Are we living up to our responsibilities?" He writes in a recent article in the Journal of The American Management Association that personal ethics establishes credibility, without which "businesses and organizations would fail, international relations would collapse, and family stability would disappear." It's not hard to argue that lack of credibility is indeed a factor behind the demise of many of these institutions.

True leaders, according to Fotis, practice the Golden Rule, and as an integral part of it, they listen and therefore communicate well. They are "tactful and highly persuasive, adapt to new situations, and are objective yet sensitive to the feelings and needs of others." The growth and complexity of today's organizations and the increased dependence on technology tend to dehumanize relationships. He continues, "While technology's task is to reach established goals for the fulfillment of basic organizational aims, it remains the personal effectiveness of an organization's human resources -- beginning at the top -- that will make the critical difference in the degree of organizational success."

Fotis explains that both managers and staff who are guided by personal ethics in their dealings are more self-assured, and because of their standards for dealing fairly in all situations, they are more effective in the fulfillment of their own job responsibilities.

While it may appear simplistic to credit the ethics of doing unto others with the success of an enterprise or an individual, on the other hand... as it is said... it certainly can't hurt. When experience proves that an individual and an organization deal ethically, their credibility quotient rises perceptibly. And, to pose a familiar question, with whom would you rather deal... those you trust or those you're not quite sure about?

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There's more to switching jobs than folding up your photographs and moving out. Marshall Loeb in Fortune magazine (November 1996) calls our attention to some protocols and caveats.

Getting the "job of your dreams" can often blind one to following through on procedures, which should be an integral part of the process. Before you accept the new position, it is a very good idea to thoroughly investigate the company and the position you are to fill. Unfortunately, in the excitement of being courted for the new position, many new hires don't do their own due-diligence. It's easy to get so caught up in the interview and negotiating process that you forget to investigate exactly what you're getting into.

To begin with, you can get a feel for the nature of the organization by checking what it says about itself on its WWW site. Ask your prospective boss for references. It's a good idea to check out the company by speaking with suppliers, customers, and former employees. Security analysts can be penetrating judges of the company's prospects and, therefore, of what you can expect for your own future. Get an organization chart and ask your prospective boss and as many peers as possible where you will fit in. Before accepting a position, ask your new boss what your growth potential is for the short as well as long-term.

Money isn't always the primary issue. If you are leaving a good job, you will want not only money, but more authority, and you want to be sure that the new position places you close to the power source. This is not always the president or CEO. In management consulting, law, and other professional services, often the power source is the clients, in which case you want to make sure that you will, in fact, be interacting with them.

Above all, the reason to accept or even consider a new position is not to use it as leverage for higher pay where you are. In most cases this ploy backfires, even if it immediately succeeds. Most bosses (and search consultants who have brought you together) resent this form of extortion and remember it. Forgiveness doesn't come easily or soon.

Assuming everything checks out and you are ready to tell your boss you're on your way, leave with grace. Give enough time for the transition. The higher your position, the more time you will need to train a successor or help recruit one. In management, two months is not unusual.

Try to finish all ongoing projects. If you are going to a competitor, it may be difficult to leave with style. More likely, your superior will want you out the door as fast as possible. In that case, make sure to take your Rolodex home beforehand, or make copies of it if you will be required to leave it behind (some companies consider your address/phone directory their property).

Go to the new job with similar grace. Don't talk about the old company, former colleagues or superiors.

Lastly, keep up good relations with your ex-employer and coworkers. In this climate of change, mergers and acquisitions, you never know when you all may be thrown together again.

Executives and managers are urged to pick up the phone even if they do not consider themselves in the job market. You never know. Cultivating relationships with executive search consultants is a sound investment, since they are the ones with the inside track on some of the most coveted positions available. Even if you are not actively engaged in a job search, it's nice to know what's out there, what the competition is doing, and what your worth is in the marketplace.

Of course, you need confidence as to the bona fide nature of the firm at the other end of the line. Dealing with a reputable executive search firm is the best way to protect your own privacy.

If you have some interest in the call, be honest about your education, experience and salary.

The best way to attract attention of search consultants is to be visible. Be active in your industry trade group, network with other executives, and distribute press releases about your activities. Circulate your achievements internally as well as to local press. Those who are doers, movers and shakers, and who make sure the world knows, get noticed by those who really count in the executive pipeline.

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Recent changes in the Fair Credit Reporting Act (FCRA) impact on how reference checking is conducted. As of now, the gathering of information regarding a person's "character, general reputation, personal characteristics or mode of being used for employment purposes" is covered.

"Employment purposes" includes any "report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee."

While in most instances the focus of the Act has been on businesses that provide information to, and access data from, credit reporting agencies, reference checking remains subject to the Act.

It is expected that further amendments in 1998 will clarify some of the language in the Act to exclude reference checks from the definition of consumer reports, which the act is intended to regulate. However, reference checking, which is a vital part of the executive search process, is currently affected by the FCRA.

Under its current language, reference checks are excluded from the definition of "consumer reports" as long as the following requirements are met:

• Consent is obtained from a candidate before a reference check is conducted and before information obtained in a reference check is conveyed to a third party, such as a prospective employer.
• If the consent is oral, written confirmation must be given to the candidate within three business days, verifying that the candidate has granted permission to the executive search consultant to conduct a reference check.
• The candidate is informed in writing of his/her rights to learn the "nature and substance" of the information compiled, but there is no obligation to disclose the sources of the information.
• Disclosure in writing must be made of the nature and substance of the information file within five days of any candidate's request.

Assuming the conditions listed above are met, reference checking will have been performed in accordance with the regulations set out by the FCRA.

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Most interviewers know the "good" questions to ask that will reveal the most about the candidate. A favorite is, "Tell me about something you tried to do and that didn't work out." Here is a guideline that helps rate the responses. (Excerpted from Executive Recruiter News)

Generalization: Stronger candidates have specific knowledge and don't generalize very much.

Texture of learning: Weaker candidates tend toward extremes. They may give bland or socially acceptable answers...stronger candidates are candid. ;

Complexity: Weaker candidates have a simpler view of people and jobs. They describe fewer nuances.

Why things happened: Weaker candidates focus more on what happened and less on why it happened.

Curiosity: Stronger candidates ask many questions about the content of the job and their future in it.

Analytical honesty: Stronger candidates are more willing to admit their role (in failures).

Self-awareness: Stronger candidates are more interested in developing and deploying strengths and compensating for weaknesses. Weaker candidates are often unaware of their limits.

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Having reached a decision, sometimes painfully, to leave a position, often a plan can go awry when a counteroffer is made. Of course, those offers that are meant and presented only for inducement or to reinforce an employee's worth are not in this category. A counteroffer is a serious problem when an employee has announced his or her resignation and has already decided to quit and move on.

The counteroffer is usually a very bad idea on all counts. Probably coming at a nasty time (there's rarely a good time unless a pink slip is already in preparation) for the boss, a counteroffer is most often made so that the boss can save face and maintain the status quo. Most superiors construe a resignation as a negative reflecting on them and their administrative skills. A counteroffer will keep things under control until, at least, they are ready to let the employee go...and once an employee has resigned, even if the counteroffer is accepted, the relationship will never be the same. Questions of loyalty dominate every aspect of the employee and his or her performance and the role as a "team player" will have been irrevocably damaged.

In effect, the counteroffer gives the employer time to find a replacement. Most often, the reasons leading to the decision to quit will continue to exist and to impact on the employee's attitudes and performance. While money or promotion may alleviate the situation for the short term, both the lure of what's out there and dissatisfaction with the here and now will not have been erased.

Most well-managed companies don't make counteroffers, refusing to submit to the common perception of "black-mail." Employees are generally urged not to accept counteroffers and employers are urged not to make them. For both, the results are most often counterproductive and, at best, a stall for the inevitable.

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For some, it's hardly more than an afterthought. Pack up and go. Having successfully negotiated the package and given notice, executives would do well to realize that there are good, better, best, and especially safer ways to leave. A recent article in Forbes magazine identified a few key points which are well to remember in an increasingly litigious society.

• Leave as soon as possible after making the decision to resign.
• Talk about leaving only to those who absolutely need to know. Customers do not have this need.
• Be candid with your superiors about your new job.
• Do nothing to disrupt the current employer's business. Do not disparage your employer, nor solicit other employees to go with you.
• Leave all documents and computer data with you ex-employer.
• Be scrupulous about the paper and electronic trail that results when you resign. Telephone, fax records, e-mail, photocopies, and credit card bills all might come under scrutiny during any post-employment litigation.
• Sign employment agreements with your new employer only after you resign.
• Start work at the new position only after your last day of work at the former employer's.
• Have the new employer indemnify you regarding judgments, settlements, and attorneys' fees incurred in connection with any litigation initiated by your former employer.
• Include a written agreement with your new employer that specifies that you will not use or disclose any trade secrets of former employers. Be careful how you use what you know from the former position in your new one.
• Look like an executive. Other than in the entertainment, software, or retailing industries which afford more latitude, an executive should look professional, even "expensive" and crisp. Posture, dress (including jewelry), and comportment should all give the aura of a person who is in charge, in control, and decisive.

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The word is out that MBAs and others on the interview circuit have more than just book-learning under their belts. Many candidates have honed their interviewing skills to such a fine edge that, in effect they are wagging the dog.

Candidates, even relative newcomers to the process, know all about the competition and are technologically facile. Compounding what each knows, they frequently share tips, market attitudes, industry hot buttons and other relevant information with others on email. They are supremely confident and, in general, are fueled by the current, pervading low regard for ethics which seems to give them permission to go to any length to mastermind the interview. Disingenuous candidates and an anything-goes climate place demands on interviewers to be smarter than those across the desk. The patterns of interviewing behavior and technique need to be revamped. The time has never been more right to rely upon, and take advantage of, the professional expertise of search consultants who can most easily cut through the facade and ascertain the realities about a candidate's experience, competence, leadership potential and overall ability.

Some of the established interview patterns create an arena that welcomes pat, prepared answers. Rather than seeking (and thereby revealing) specific competencies needed for the position, open-ended questions about past performance or a project, including the method and motivation associated with it, reveal behaviors as well as competencies that can be compared to the requirements for the position at hand.

Interviewers might also follow up a specific question with a problem related to the answer to the question. If, for instance, the answer is affirmative to "Are you quick with numbers?" throw out a quick mathematical problem and see how the candidate comes up with an answer. Such real-time competency demonstrations can keep the interviewer clearly in charge of the proceedings, and not the other way around.

Experienced interviewers have always been able to work a telephone well to discover telling details about a candidate. Reading voice and response styles are prized talents of executive search consultants. Now Susan C. Straus, a professor at Carnegie Mellon University Graduate School of Industrial Administration, asserts that interviewers can "tell a lot more from a disembodied voice than from a live-and-in-person applicant."

In a series of mock interviews, Straus found "The validity of interviewers' judgments of applicants' traits generally was higher in telephone interviews than in face-to-face or videoconference modes."

Some may object to the method and find it "distancing," others may find it difficult, but as Straus found, the telephone interview can be a valid measure of "conscientiousness, intelligence and extroversion." No matter what the technique, it depends on the questions asked, the responses and questions the candidate offers and, most important, the critical and objective assessment of the interviewer.

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As every salesperson knows, overcoming the customer's objections is essential in order to close the sale. According to Exec-U-Net, the career management information network, unemployed executives who are the victims of downsizing and mergers are finding the hiring process increasingly selective. Exec-U-Net suggests that job-seeking executives need to review their interviewing skills to succeed in the highly competitive market.

Companies have given the following as reasons why the candidates they interview don't get the job. It might be well for those hitting the interview trail to develop points that will overcome these objections.

Objection	Translation
Overqualified	Employer will have to overpay for someone with more experience than required.
Changing industry	Candidate does not have the appropriate knowledge base, however transferable the skills.
Changing function	Same as above.
Too many years with same company	Candidate knows only one way to do the things and hasn't kept up with changes in the industry.
Technology deficiency	Candidate hasn't kept up.

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While it is customary to think in terms of populations, specifically as related to color and gender, when using the word "diversity," that definition is limited. The word actually means the condition of being different. Considering the larger scope of that definitioin makes it clear that diversity has application throughout the organization, far beyond personnel issues.

As most organizations in the United States have experienced, embracing the concept of diversity is just the beginning and the easy part. Acknowledging the diversity of the customer base is only a nod to the need for, and benefit of, a diverse work force. However, awareness, lip service, and even carefully structured hiring and sensitivity training have not proven to be the solution to the task of creating a truly diverse organization. At the most basic level, moving those among a diverse work force who are qualified up through the ranks to management levels has just not happened very frequently or quickly in U.S. businesses.

Some experts have suggested that the narrow, population-based definition of diversity may be at the root of its painful development. What is needed is to value the condition of being different, rather than "fitting in," throughout the organization. The attitude of valuing diversity involves valuing differences at all levels of the organization and in all applications, including leadership styles, problem-solving techniques, and motivating and rewarding systems. The impact of implementing this larger concept is generally more positive than the results of enacting employment equality. The usual understanding of the broad term "equal employment" involves expecting the employee to acclimate and adapt to the culture. That is the very antithesis of those organizations in which the culture embraces and incorporates employee differences, including differences of style and method as well as of color and gender.

When the value and full extent of diversity goes beyond the HR office, organizations experience higher employee morale, resulting in greater productivity and loyalty. It has been found that the environment that emphasizes merit and talent is conducive to new ideas and insights, leading to new products, better service, and greater profits.

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Diversity remains a hot issue in corporate America. But it doesn't appear to be one reaching resolution with any alacrity. For several years now, women have been trying to crack the glass ceiling not only in the executive suite, where progress is ever so slowly being made, but also in the boardroom, where progress can't seem to get going.

According to a recent article in Crains Chicago, of 159 board members at the top 12 (Chicago) corporations this year, 18 are women (11.3 percent). This actually represents a slight decline from the 11.5 percent registered by the same survey last year.

Ten years earlier, the top 12 corporations had 14 women directors among a total of 178, or 7.9 percent.

If corporations are serious about seeking diversity in the boardroom, they might look beyond the top level of CEOs and presidents to fill these seats, since the number of women occupying senior slots remains painfully small. An article by Kincannon & Reed president Kelly Kincannon recently published in the Corporate Board suggests, "Given the need for diversity and the scarcity of minorities, including women, at the most senior levels, search consultants look at other venues (for corporate board directors), including government, higher education, and research centers, to find appropriate people."

The Crains survey notes that women are making some progress as vice presidents. At the same top 12 corporations, women vice presidents increased to 18.9 percent from 14.7 percent last year. In 1996 women accounted for 150 vice presidents out of a total of 1,020. In 1997, 288 women were VPs from a total of 1,520.

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In a recent article in Forbes magazine, John Rutledge, economist and chairman of Rutledge & Co., said, "Hiring the people to lead and manage a company is the second most important thing an owner ever gets to do. (The first is establishing the principles the people in the company will live by.)"

These remarks set the tone for the importance of the hiring process, which is even more significant in the current business environment of rapid change and extreme competition.

Executive search consultants have always given weight to determining the culture of a specific company in order to make a good fit with the new hire. But Rutledge cautions that it is equally important to determine the organization's needs at this particular juncture. Does the organization need someone aggressive who can handle risk or someone more conservative who can reassure investors of the future? "It is tempting to deviate from your needs and pick a person just because you like him. Don't," says Rutledge.

Sometimes those at the top lack a clear vision of the company. Sometimes they are so embroiled in the company's present condition or set of problems that they fail to formulate a concise picture of where they want to go. Since it is important that new executives share the vision of the organization, it follows that the vision must be clearly identifiable. If the vision is ill defined, the new executive may be unable to move the company into the future, no matter how much talent he or she may possess.

Rutledge continues, "Hire for where you are going, not for where you have been." Growth and change require considerable talent and energy. People with these attributes are the ones to have on board now. Small or mid-size companies often find themselves in a financial squeeze and ignore hiring adequate backups for key people. The "second strings" should be strong and more than competent. They should be able to step into the shoes of a superb manager and do his or her job.

How do you know when you meet with candidates which ones have the talents you require? Or even which ones are truly executive material? Experience and past performance count and are starting points. But some of the small things that professional executive search consultants always take into account can be key indicators of the candidate's ability and aptitude to do the job.

Does the candidate you are considering:

• Look like an executive. Other than in the entertainment, software, or retailing industries which afford more latitude, an executive should look professional, even "expensive" and crisp. Posture, dress (including jewelry), and comportment should all give the aura of a person who is in charge, in control, and decisive.
• Exhibit stature or poise.Does the candidate make the first move to shake hands? Does he or she engage easily in introductory small talk and appear well-organized? Such minor social graces should be second nature to those who will occupy the executive suite.
• Appear focused. Executives who must balance a multitude of demands, pressures and issues develop the ability to totally focus their attention at any given time. They listen acutely and completely.
• Speak articulately. Successful executives communicate their ideas (and directions) well. Their speech is concise and clear. They are able to explain a complex issue or communicate an abstract idea or request simply and without hesitation.
• Think creatively. Many companies today are looking for "change agents." However, what is really needed are executives who can effect change but not threaten the whole organization. This requires an executive who can accomplish what needs to be done while minimizing the discomforts which often go with it. (A successful change agent in describing her vision for the direction of the company asked her staff to fold their hands in their laps. She then asked them to cross their thumbs in the opposite way. She pointed out to them that while what they did may have been slightly "different," it wasn't really uncomfortable and did not, in fact, appear to radically change the fact that their hands were folded as before. It was, however, different from what they were used to. It was change. It was also a creative way of telling them to "chill out" about what was coming down the pike.)
• Share the vision. To successfully function in an organization, the candidate must be a good cultural fit, sharing values, behaviors and attitudes that emanate from the top. When this occurs, the new executive will be able to make the leader's vision a reality for the organization.

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The use of technology in the job search is reaching epic proportions. Originally considered a natural for those seeking jobs (or employees) in technology, the arena is expanding daily and now includes everything from gardeners to COO's and almost all categories in-between.

Internet Web sites are becoming more specific, enabling job seekers to pin-point their postings. For instance, a service called MBA Central links MBA graduates with employers who pay a fee for a list of 10 interested MBA graduates (slightly less for 2nd year MBA students) whose qualifications match specific job descriptions. The MBA résumés are not released unless the candidate expresses interest in the position.

A myriad of other sites are out there, including Attorneys Work, job lists for accountants and finance majors as well as the major sites like The Monster Board, CareerMosaic, National Ad Search and many others. At no cost, job seekers can post a résumé on any number of these Web sites, sit back and wait for the offers to role in.

It sounds very good and in many instances it is. Federal job openings are posted, company information is easily available, and entry-level employees can get useful assistance on résumé writing, interviewing and negotiating techniques.

However, pitfalls to cyber job searching counterpoint the positives. Posting a résumé on the Internet is exposure to the max, which also means a loss of control over which and how many people see that information. A real embarrassment can result when employers spot résumés from known employees, or when employees recognize job descriptions, which too accurately indicate changes are in the wind at their companies.

Entry to middle-level positions remain the most heavily used arenas for electronic searching. Qualifications for these positions are not usually complex and initial choices can be made based on obvious presentation. The tools for presentation are the same, but differences exist in cyber-presentation. Employers who use the Internet for the employment process might also consider how well an applicant uses the new medium as an indication of a future employee's knowledge and professionalism.

Experts offer the following cyber-search tips:

• Discretion in the disclosure of information. Instead being specific about the name of the company of current employment, use generic terms: ABC Fertilizer Co. can become "a major chemical and fertilizer company."
• Discretion in use of your address. Using an e-mail address from a current place of employment could cause major embarrassment. Using an e-mail account at services is free and recommended.
• Post a résumé as plain text. Fancy fonts, highlights or other decorative devices most usually end up looking unattractive on the Web.
• Code a version of the résumé into hypertext or HTML for a crisp, clean document.
• Once a job is found, remove the résumé from all locations on the Internet. Do a search to make sure all locations are found. Often a résumé can float to an aligned site without the candidate's knowledge.

The Internet is here to stay, growing daily as a helpful resource. Without question it will continue to expand as a useful tool for job seekers and employers alike. Executive search consultants are also using technology to improve and refine their profession and the process of executive search. Technology has already helped shorten the time for completion of a search. To date, however, nothing can replace the discernment and judgment brought to a search by the consultant who is able to assess the client's needs and evaluate the subtleties of cultural fit and style, particularly to searches at the most senior levels. In dealing with the complexities and variables of personality, background, and character, only people can exercise the sensitivity and insights essential for successful hires.

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Technology is a terrific asset to all businesses. It offers the advantages of speed and easy access to information, elements highly prized in today's competitive environment. Everyone knows that information is essential to power and power is usually a component of success.

For most organizations, including executive search, speed and easy access to information equate to shorter cycle times. Shorter cycle time most often means significant dollar savings.

Quality, however, does not always automatically follow. While technology allows the efficient use of databases and automates the cumbersome tasks involved in the initial steps of the search assignment, technology cannot replace the talents that have made search consultancy unique and valued. If racing around the Web sites crowding the Internet and culling the huge amounts of information to be found there were all that it took, everybody could do search, and search consultants would be looking for another profession.

What executive search consultants do that technology cannot is take the time to learn and understand the client organization, analyze its needs and recommend solutions. No matter how much we love those wonderful electronic gadgets that have made life so easy and have put us in touch with the whole world, computers have yet to succeed at building a long-term relationship based on mutual trust and respect or understanding all the idiosyncrasies involved.

Search consultants take the data offered by technology and, through their skill and expertise, evaluate candidates, make judgments and offer opinions as to a candidate's match with the organization and its needs. This process, which may be difficult to define in scientific or absolute terms, is ultimately of the greatest value to the organization.

What technology has done for executive search is speed up the process at various stages. The access to databases and information and the ease and immediacy of communication have meant time and dollar savings to the benefit of the client organization.

But technology cannot eliminate some of the more considered steps of the search process that produce the best long-term results. Executive search is valued for its grasp of human attributes which makes it unique and from which the client benefits most. Human insights and abilities of judgment have so far defied the chip engineers.

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In the July-August 1999 issue of Management Review, Stuart Crainer and Des Dearlove, business writers from the UK, address some of the pitfalls of looking for short-term solutions to the talent shortage described in "The War for Talent."

"Fishing in foreign ponds, where the demographic effects are less dramatic, is at best a short-term solution," they write. "As shortages in the U.S. persist, there will be a ripple effect — shortages in the countries being poached from." They add that aggressive poaching will lead to soaring salary levels. Moreover, companies on the losing end of employee raids will have little incentive to invest in staff development when that investment is likely to walk out the door.

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Demographics have alerted Deloitte Consulting. In the next five years, the number of its partners over 50 years of age will double to about 230 (more than a quarter of the company's total partners). Deloitte understands that unless it works fast, many of its partners receiving pensions that vest at 50 could very well leave. As a result, the company is allowing a group of its top talent to restructure their jobs. Deloitte is just one example of many companies that are facing "age-related brain drain," reports Business Week (see "Brain Drain," Sept. 20, 1999).

As the baby boom generation nears retirement and the stock market has left many people in financial positions enabling them to leave their positions early, businesses are facing a significant talent crunch. Adding to the situation is that there is a shortage of incoming executive talent.

As a result, companies are increasingly looking at ways to keep their most knowledgeable executives. The Business Week article points out that some companies are tailoring contracts and part-time assignments to accommodate older workers. Some senior executives are being asked to mentor younger colleagues, and still others have been asked to temporarily fill "critical skill gaps."

These new roles will, in turn, create a variety of management challenges for companies. The article points out that companies will need to create and manage productive work teams made up of people of all ages, ambitions and schedules.

Business Week points out that with stock options and 401(k)s increasing in value, senior execs may walk if conditions are not ideal.

To hold on to aging talent, Deloitte is launching a Senior Leaders Program next summer. Several of the company's top senior partners will be given the opportunity to create their "dream job." This might include spending half their time mentoring younger consultants and half the time working with top clients, managing an office in another country or supervising research projects.

Some might argue that as executives age, they lose some of their edge. Recognizing this, some companies are limiting the duration of assignments. Companies also will need to improve their succession planning programs. The article points out that older workers are often loyal to the company, but illness and other problems can cause "quick departures."

The article describes ways in which different companies are working to retain their best senior talent. At the same time, the companies may recognize that greater flexibility is necessary at all stages of a career.

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If you have tried to do a reference check on a prospective employee lately, you probably received only the most basic information. A recent survey by the Society for Human Resource Management found that just 19 percent of 854 respondents (most from large companies) said they would give a reference-seeker a reason why an employee had left. Just 13 percent would mention work habits. This is because many companies fear being sued by former employees.

But this fear is not well founded, said C. Patrick Fleener in "Too Much Ado About Giving References," New York Times, by Jeffrey L. Seglin. Fleener, a management professor at Seattle University's Albers School of Business and Economics, examined federal and state court records from 1965 to 1970 and from 1985 to 1990. In all of them, he found just 16 defamation cases arising from reference checks, and plaintiffs won just four of the lawsuits.

"Part of the reason you don't see so many of these cases, from the plaintiff's perspective, is that they're quite difficult to bring. There are real problems of proof," Scott Rechtschaffen, employment lawyer for Littler Mendelson, San Francisco, was quoted as saying. Even so, he and many other employment lawyers advise companies to provide only the most basic information.

But interestingly, the article cited a case in which a school in California neglected to mention that a former vice principal had been accused of child molestation. After he was accused of molesting a girl at his new school, the California Supreme Court ruled that the referring school could be held liable for the omission.

Seglin wrote that companies can give references, both positive and negative, as long as they are truthful. "Of course, if you're malicious or retaliatory, or show bias toward a group of people protected by civil rights law, you're asking for trouble," he added.

The author also cited Pierre Mornell, a psychiatrist and author of 45 Effective Ways for Hiring Smart (Ten Speed Press). Mornell pointed out that while HR people may not get an answer from another company manager or a CEO, they may get off-the-record comments from someone at their own level whom they know.

Seglin concluded that about a dozen states are considering laws to protect employers who give accurate information on former employees.

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Speaking of finding another candidate (see above), senior managers need to be well prepared for the interviewing process. Unlike their human resources people, however, senior managers interview applicants only occasionally. So, they may need to fine-tune their interviewing skills.

A good interviewer knows how to ask questions, as well as to watch and listen to the candidate. Some take-charge executives may find it difficult to be on the listening end. But the ability to listen is a key attribute of the expert interviewer. Take-charge executives, however, have an advantage in knowing exactly the job and the qualities they seek. Moreover, they want a good fit between the individual and the company. When combined with proper preparation, these attributes will give the interviewer an edge in the interview.

Some experts recommend writing a job profile based on the job description before the interview process begins. The purpose is to translate duties and responsibilities into the personal characteristics the manager must have to do the job. For example, one of the duties of a national sales manager is to review market data to calculate sales potential and to recommend pricing policies. That duty would require analysis and managerial skills.

Then, as every duty or responsibility is identified, the senior executive should list the characteristics or qualities the candidate must possess to do the job. For analysis skills, the candidate should be able to look at internal and competitive figures and sales trends and interpret them to help salespeople capitalize on sales potential.

The human resources department can help determine the most important characteristics, since many requirements for different jobs are similar.

Some experts also recommend putting job requirements in a written interview guide. An interview guide enables the interviewer to review the candidate's experience and accomplishments for relevancy to the job requirements. It also helps the interviewer develop questions to illuminate the personal qualities sought. Finally, it can help the interviewer evaluate behavior by focusing on what the applicant did in past positions. An interview guide can help the interviewer be consistent and focused in the interview. It also keeps the interviewer in control of the conversation.

Again, careful preparation can improve the senior manager's chances of finding the best candidate for the job, and for ensuring a good fit within the company.

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Should your company use an outside source to manage your executive search, conduct employee training, host your Web site or accomplish other important tasks? Outsourcing may help improve your bottom line, but it can also lead to headaches and/or be an expensive remedy, says EmployeeMatters, Stamford, Conn., which provides employee administration-outsourcing services to small and mid-sized businesses.

To help business executives assess if outsourcing is right for them, EmployeeMatters has developed the following "10 Tips to Identify if Outsourcing Is Right for Your Business":

1. Decide what's important. If the function is not strategic to your business, consider outsourcing it to an expert provider.

2. Choose integration, not aggregation. Look for providers who can efficiently integrate your various outsourced business functions and related data.

A leader is one who knows the way,goes the way and shows the way. -John C. Maxwell

3. Assess customer care. Live and Web-based customer care and support should be offered by knowledgeable professionals with real-life experience in the functions.

4. Insist on name-brand recognition. Be sure the company you choose is partnered with best-of-class providers.

5. Find peace of mind. Your outsourcing partner should control its own infrastructure and have built-in safeguards to protect you and your employees' privacy.

6. Don't go halfway. Don't settle for stopgap technology to help you manage some aspect of your business when the more efficient solution is to outsource the entire process.

7. Expect one point of accountability. Make sure your outsource partner will support your requirements without trying to pass the buck.

8. Beware of regulations. Make sure your outsourcing partner understands and complies with all of the rules and regulations governing your industry and the workplace.

9. Embrace simplicity. Work with single-source, one-stop out-sourcers that ask you and your employees for information one time only.

10. Let technology be your friend. Don't be afraid of technology, especially if it affords you more time and money to build your bottom line.

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Finding good people and keeping them is increasingly important as the pendulum swings from the fury of downsizing that gripped the economy with such abandon only a few years ago.

Various surveys indicate that the percentage of highly skilled workers is continuing to decline while positions requiring these skills steadily increase. The American Management Association predicts that competition for "technologically competent workers will be fierce."

Other reports caution that the situation is not limited to information technology; consulting, accounting, food chains and others across the spectrum are actively seeking ways to improve their recruiting and retention strategies. Rising salaries and hiring bonuses are now In common use as measures for retaining valued employees.

However, all that downsizing has made employees less loyal, more wary and demanding. They are more assured of their ability to move about and find positions that more closely meet their needs. Surveys indicate that employees rank pay, advancement, work/life balance, security and enjoyable work as top qualities in a position. Security is generally not defined as longevity on the job, but rather as the ability to find a job

particularly are seeking retraining and programs that ensure they will be evaluated and mentored equally with men. Many women, studies show, feel that companies only Pay lip service to the idea of equal opportunity for advancement. Women have few qualms about leaving a job in order to find organizations that are genuine in their commitment to helping them move up the ranks, that offer them flexible hours and training opportunities.

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The HBR article on approaches to CEO leadership discussed the personality aspects of leadership. The authors do not think that leadership is solely a function of personality and is a generic trait. Leaders are not, they say, "born" with all the necessary attributes. Their findings indicate that personality is just one element of effective leadership and, in fact, often is not the decisive one.

successful companies, it is evident that the CEO examines the business situation and determines what the organization requires from its leader and then chooses the approach that best meets those requirements. Sometimes that approach fits the CEO's personality, sometimes not. In fact, the research suggests that certain personality traits may need to be developed and some natural ones repressed in order to run the organization effectively.

a CEO is found who is a natural fit to the demands of the organization, but more often, true leadership is extremely complicated and involves the ability to meet the challenge, developing the style and approach necessitated by outside demands.

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A recent article in the Harvard Business Review discussed research conducted by Charles M. Farkas and Suzy Wetlaufer on the ways CEOs lead (Maximum Leadership: The World's Leading CEOs Share Their Five Strategies for Success) . Their research on 160 chief executives worldwide indicated five distinct approaches or explicit styles of management.

1. The strategy approach. The focus is on creating, testing and designing the implementation of long-term strategy. These CEOs devote about 80 percent of their time to matters external to the organization's operations (customers, competitors, technological advances, market trends) as opposed to internal matters (hiring or controls). They value employees to whom they can delegate the day-to-day Operations as well as those with analytical and planning skills.

2. The human-assets approach. The focus is on managing the growth and development of individuals. These CEOs spend the majority of their time in personnel-related activities. They wish to create a group of clone CEOs who act and make decisions reflective of the CEO. They value long-term employees who exhibit company-way behaviors.

3. The expertise approach. The focus is on selecting and disseminating an area of expertise within the organization that will be a source of competitive advantage. A majority of time is spent on the cultivation and continual improvement of the expertise (technological research, analyzing competitors' products, etc.). They tend to hire people trained in the expertise, but they also seek those flexible enough to be indoctrinated in the expertise.

. The box approach. The focus is on an explicit set of controls that ensure uniform, predictable behaviors and experiences for customers and employees. These CEOs spend time attending to the exceptions to their organization's controls (projects that miss deadlines, quarterly reports below expectations, etc.) and developing policies, procedures and rewards. They value seniority and usually promote from within.

5. The change approach. The focus is on creating an environment of continual reinvention. Change-approach CEOs spend their time motivating change. They value those who are aggressive and independent.

The research indicated that in the most effectively run organizations, the CEOs lead in a dominant style, acting decisively and boldly. Reacting to crisis, doing what is most comfortable and enjoyable, or employing bits and pieces of the five approaches can lead to confusion. Though leadership approaches can and should change during the course of a CEO's tenure, CEOs must find a style that delivers clarity, consistency and commitment to the organization.

While the authors caution that the five defined approaches are not rigid, boilerplate solutions to leadership, they do offer a framework for understanding how CEOs give structure and meaning to their jobs.

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Peter Drucker deflates many myths about leaders and leadership in his book "Leader of the Future." Right off the bat he tells us that while a few "born leaders" may exist, for the most part leadership is a trait, which can, and must, be learned.

Peter Drucker deflates many myths about leaders and leadership in his book "Leader of the Future." Right off the bat he tells us that while a few "born leaders" may exist, for the most part leadership is a trait, which can, and must, be learned.

A specific "leadership style or personality" is next on Drucker's list of myths needing to be debunked. No such thing, he says. There are as many different styles and types of leaders as there are people, with only one constant. "Most effective leaders, " he says, "have little or no charisma and little use either for the term or for what it signifies."

Drucker lists four basics common to all leaders:

1. A leader has followers. Without followers, there can be no leaders.

2. The followers of effective leaders do the right things. He says, "Popularity is not leadership. Results are."

3. Leaders are highly visible; they set examples.

4. Leadership is responsibility, not rank, privilege, title, or money.

In spite of the almost limitless diversity of leaders, most of those Drucker has observed behave in the following ways:

• They start by asking, "What needs to be done?" not "What do I want?"
• Then they ask, "What can and should I do to make a difference?" Not only must this be something that needs to be done, it must also fit the leader's strengths and the way he or she is most effective.
• They constantly ask, "What are the organization's mission and goals? What constitutes performance and brings results in this organization?"
• They are tolerant of diversity and do not look for copies of themselves. They are only intolerant of a person's performance, standards, and values.
• They are not afraid of strength in their associates.
• They stay true to the image of themselves as persons they want to be, respect and believe in. They resist the temptations to do things that are popular rather than right.

Finally, Drucker finds effective leaders are doers, not preachers. They don't stay safely at the rear of the lines. They are at the front, where the action is strongest. While they delegate many things, leaders never delegate the one thing they can do with excellence that will make a difference, set standards, and for which they will be remembered. They do it.

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The standout antithesis to companies that fail to develop leadership talent from within is GE. CEO Jack Welch is said to have several talented people prepared to step in when he retires in 2000. He also has more standing right behind them, and so on down the line. GE has kept this depth of talent even though many of its trained executives have gone to companies eager to get them.

At every level, Welch develops leaders who have the ability to make decisions and act on them quickly. He has seen to it that future leaders get the right opportunities at the right times, having designed the organization to teach and encourage leadership.

Welch spends 50 percent of his time on personnel issues, including semimonthly sessions with students at GE's Leadership Development Institute. He actively participates in annual reviews of top executives, including evaluations of how well they teach and develop other employees.

Welch's "Leadership Engine" is built on:

• A leadership pipeline. Employees have career maps leading from entry-level positions to the highest executive ranks. This assures maximum learning and growth opportunities for everyone.
• Operating mechanisms with leadership development built in. Every phase of GE's operating processes is also an opportunity for coaching. Plans are discussed and disagreements resolved. The goal is not only the specific outcomes of issues, but the continuous development of employee leadership abilities.
• Slates of candidates. Executives are encouraged to have multiple internal candidates and to look continuously for outside candidates, forcing managers to benchmark performance and to compete against the best.
• Human resource systems targeted at leadership development. By developing the leadership talent of people from the beginning of their careers, companies can create teams of strong players and avoid the succession crises that paralyze so many organizations less committed to training.

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A recent New York Times article by David A. Nadler and Donald C. Hambrick has cautioned troubled companies experiencing a range of business challenges to be extremely careful about whom they hire to solve their problems.

Often looking outside the company (since the problems are usually internal) for the white knight with all the magic, boards tend to seek a "sure bet," someone with a record of success who has handled "another company's version of whatever seems to be the most pressing problem at hand."

Sometimes that works, but not always, since every business is different and every corporate change is complex and unique.

The great value of professional executive search consultants is the objectivity they bring to such situations. It is their job to evaluate the problems of the organization and find the candidate with the abilities and talents to resolve the company's present condition and set it on the course to meet future objectives. Very often the candidate best suited to the job is one who exercises insight, and who can diagnose and analyze a complex situation and develop a course of action appropriate to its resolution.

Unfortunately, this skill may not be so well documented, and boards often opt for a choice who seems to play it safe. They go for the executive with a specific skill in another similar situation: a record of cost cutting, marketing expertise or joint venturing talent. However, these one-dimensional chiefs may eventually get the company into more trouble than it is already experiencing.

Those who hire top executives should study the records of prospective candidates and distinguish between a pattern of practice and a theory of action. The candidate who will serve the company best over the long haul is a "quick study" with, according to Nadler and Hambrick, "a high tolerance for ambiguity and the ability to diagnose change. No one-trick pony is going to pull off that show."

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CEOs don't stay in place as long as they used to. Dangers to leadership longevity seem to lurk in the corners of almost every organization, making CEO succession a high priority issue.

The National Association of Corporate Directors has created an advisory panel, the Blue Ribbon Commission on CEO Succession, which urges that independent directors take greater control of the process. The Blue Ribbon Commission also urges that boards begin the process to identify potential leaders and to develop a talent pool when a new leader takes over. While that may seem to push the envelope just a bit, the panel reflects that those boards which have the framework in place to do the ongoing work of succession are better prepared for change in the business environment and can better withstand the unexpected exit of a CEO.

The commission states, Selection of a new leader should be the result of a thorough and just process orchestrated by the corporation's board of directors in partnership with the incumbent CEO. No CEO. . . should be in charge of succession.

Ralph Ward in the Board-room Insider suggests that succession planning take a split route: the normal development process and a backup plan to handle crisis situations. Ward adds that part of succession planning must include protecting the company's culture, mission and long-term strategy. He calls attention to organizations which, having determined the need for a major turnaround, find they must deal with disaster created when the new CEO tries to make too many radical changes.

The NACD offers these check points in setting the board's role in the succession process:

• Boards should set regular sessions with the CEO and executive committee on succession planning and the process of executive development.
• A board committee should have succession oversight among its formal duties.
• The board should stay informed on, and evaluate, potential succession candidates.
• Board membership must have the skills needed to properly weigh leadership qualification.
• Board should seek outside input, including outside advice and industry talent benchmarking.

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Large organizations often look with envy upon the ability of their smaller neighbors to be nimble. The large advantage of being small is the speed with which small organizations can respond to external developments and effect internal changes. Minimizing the time to react and seizing the opportunity created by emerging markets, developing technology, or shifting global economies can put the small company at the head of the pack.

The entrepreneurial environment of the small company relies on teamwork, often crossing disciplinary lines. Communication is open and frequent. Since everybody is involved in most projects, the sense of ownership and commitment is high and success is felt and credited throughout the organization. Sharing success is more important than placing blame or displacing responsibility. The resulting high morale is good for everybody.

Downsizing and mergers have given many big companies the opportunity to act like their smaller neighbors. With more teams, more communication, fewer layers, and cross-functional interaction, many big companies are trying hard to imitate the style of their smaller counterparts.

A demand for executives who have cross-disciplinary skills and experiences and who can be effective leaders for the new entrepreneurial organization has resulted from this appreciation of the style of small. The sense of ownership and pride felt by those with experience in these organizations engenders loyalty, and they are often lured away only by the challenge of doing it again elsewhere. Creativity, focused motivation and the ability to work with others are among this leader's valued talents.

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General Electric and McKinsey & Co. have long-standing reputations for producing top-notch executives who go on to become top CEOs of other major companies. While GE and McKinsey are very different _ McKinsey recruits top graduates of the Harvard Business School and other exclusive schools while GE goes out of its way to avoid Ivy League degrees --- they are very similar when it comes to finding and developing leading executives.

In "CEO Super Bowl," Fortune magazine, Aug. 2, 1999, author Geoffrey Colvin writes that both companies have "an absolute insistence, blunt and uncompromising, on the best people _ finding them, developing them, evaluating them and getting rid of them if they don't measure up." Colvin adds that while every company says it shares those values, "very few are in GE's and McKinsey's league when it comes to living them."

The companies have particularly high recruiting standards. As it has grown, McKinsey, for example, has faced the problem of finding more employees who live up to its extremely high standards. Colvin writes that most people would expect the company to hire more people from the elite schools where it has recruited. But going after the top 10 percent rather than the top 5 percent would lower McKinsey's standards. Instead of reaching deeper into the existing talent pool, the company has widened its search into many disciplines globally for the brightest people, says Andrew Ackemann, a former director of professional personnel at McKinsey.

Both companies have formidable performance review systems. Ackemann describes McKinsey's system as "real _ not some b.s. bureaucratic exercise." Noel Tichy, who once ran GE's Crotonville management center and who is now a University of Michigan business school manager, says GE conducts "deep, honest, frequent performance reviews that are difficult and even painful."

Because of their stressful effects on executives, most companies do not conduct reviews of this type. "But they are clearly one of the most significant reasons GE and McKinsey produce so many outstanding managers," writes Colvin.

Another way in which the companies are similar is in the commitment of top executives toward evaluating people. "Massive amounts of partner talent are devoted to recruiting and to management of the meritocracy," says Ackemann of McKinsey. Tichy says that at GE, evaluating people is the CEO's job.

GE and McKinsey also expose executives to many disparate businesses. "This gives them more ideas and confidence than most business people ever acquire," notes Colvin. "It's obvious how this happens at McKinsey. Spend a few years as a consultant and you'll see all kinds of companies, good and bad, rising and falling, and you'll learn prodigiously." At GE, one can transfer good ideas from one division to another. This gives every operation an advantage its single-industry competitors lack, adds Colvin.

Executives working in this type of environment know more because, managerially, they have seen the world, says Colvin. These executives build a greater base of ideas and practices than those who spend a career in a single industry. Executives in the GE and McKinsey environments also have seen ideas applied across industries, making them less afraid to try the unconventional.

As noted at the beginning, these "CEO factories" are very different when it comes to style, but they have very clear similarities when it comes to expecting (and producing) the best.

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Most leaders have the ability to handle many different tasks. However, tomorrow's ideal leader may need to handle as many as 14 leadership dimensions. A recent survey of 75 business leaders by Andersen Consulting, Chicago, suggests that the ideal leader in five to 10 years will be someone who has 14 leadership characteristics. These include:

• Create a shared vision
• Ensure customer satisfaction
• Live the values
• Build teamwork and partnerships
• Think globally
• Appreciate cultural diversity
• Develop and empower people
• Anticipate opportunity
• Achieve competitive advantage
• Embrace change
• Share leadership
• Demonstrate personal mastery
• Show technology savvy
• Encourage constructive challenge

Realistically, there will be few "super leaders" who possess all of these characteristics. Therefore, it is important that the CEO be able to build a team that incorporates these dimensions.

The need for shared or team-based leadership will continue to grow, says Alastair Robertson, an Andersen Consulting partner and coauthor of the survey report, The Evolving Role of Executive Leadership. "Central to the success of this sharing process will be the ability of CEOs to hire a team unlike themselves."

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Everybody watches the new CEO. Everybody--including employees, shareholders, customers, competitors, suppliers, analysts and the folks next door--is paying close attention to see what's going to happen.

What they don't expect to happen is the status quo. What they do expect ... the reason for the new executive ... is change. But the new CEO isn't given much latitude when it comes to having the time to learn, and the expected and anticipated change had better not be too far in the future.

Experts say if the new CEO doesn't make one or two serious, discernible changes in the first six months, he or she may never recover the critical momentum lost, or counter the general psychological disappointment.

Whether the introductory period is called the first hundred days, the honeymoon, or whatever, CEOs are expected to know where they plan to take their companies and have an action plan in place almost immediately. Everyone may agree that if the plan is to succeed, it must be based on reality and on in-depth knowledge of every aspect of the organization, but there's little time for the learning process.

To make their plans work, CEOs must be able to rally the troops and engage their companies emotionally and intellectually so that subordinates buy into their vision.

For the necessary learning curve to take place, savvy CEOs work hard from the very first week to lay the groundwork and gather the essential information they need. Because the advent of new senior management offers the opportunity for a clean slate to the entire organization, now is the time when everyone can contribute ideas. CEOs will do well to:

• Ask questions and really listen. Talk to a lot of people, but have a focus and be sensitive to commonalties and direction. Discover what is good, as well as bad, about the organization.
• Observe people in action. Assess the capabilities of your staff, which may be quite different from what they say.
• Determine who will be most affected by change, who will be most receptive and who most resistant. Align those who are receptive, and find ways to ease and overcome resistance.

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Everybody knows that one thing leads to another. This old adage can lead to productive time management when applied to the complexities of problem solving.

When one is faced with a particular problem or issue, it is not uncommon for any number of related problems to come to mind. Organizational experts tell us to use this phenomenon to create a problem network. The ensuing process enables us to solve several problems in the same time frame and to quite possibly keep potential ones from developing.

For instance, a problem in product quality could relate to problems in marketing strategy, capital expenditure, the performance appraisal system and so on. Instead of focusing solely on the problem with product quality, see how expanding that problem and your own thinking might engender possible solutions in other departments. The experts caution us not to deal with problems in isolation, but to constantly ask what related issues should be considered.

There are ways to encourage thinking along these lines.

• Foster intuition as well as rational thinking. Realize that good intuition requires study and periods of concentrated thought. Give intuition credence in the problem-solving process.
• Being rational isn't always preferable. Develop the ability to act with an incomplete picture of the situation. Give time to the consideration of values, preferences and imagination in decision-making.
• Develop skills at mapping an unfamiliar territory by generalizing from facts and then testing generalities by collecting more data.
• Pay attention to simple, tested rules of thumb, and to your own style of investigating and learning. Trust your own experience and history.
• Don't be afraid to act in the absence of complete understanding, but spend time understanding the problem or issue.
• Look for connections among diverse problems and issues to determine their underlying relationships with each other. By working on one problem, and allowing other issues to interfere, you may be able to make progress on multiple issues.
• Recognize that your ability to think is a critical asset that you need to manage and develop in the same way that you manage other business assets.

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This summer Kelly Kincannon, president and CEO of Kincannon & Reed, addressed the International Agribusiness Managers Association in Jakarta, Indonesia. The following remarks are based on that speech.

Discussing the characteristics and skills needed by agribusiness managers in today's national and international marketplace, Mr. Kincannon described to the International Agribusiness Managers Association the findings of the 1995 CAFE study commissioned by Kincannon & Reed and conducted by Texas A&M University. The study, concerned primarily with North American agribusiness executives, reported that hard work, business and economic skills are significant to success, but the ability to interact well with others and to work in a participatory style is more important. The profile emerged from that study of a leader who is a results-oriented professional, who is creative and encourages creativity in others, and who is willing to take a considered risk.

In the international arena, Mr. Kincannon referred to a 1994 Harvard Business School research project undertaken with the International Association of Corporate & Professional Recruiters. While many similarities exist in the findings of the Harvard project and the CAFE report, the internationalist needs a broader perspective, greater flexibility, and cross-cultural sensitivity.

The new, borderless global economy requires multinational corporations to hire growing numbers of senior staff in a multitude of countries and from a wide array of cultures. Considering the costs of a "wrong hire," it becomes crucial to understand what traits and characteristics are most needed in the international manager.

The shift away from hierarchical organizational structures toward those that are more horizontal makes consensus building a major characteristic in the international executive. Participatory decision-making skills are also desirable and are part of the partnership style of the worldwide landscape.

Other essential attributes are vision, leadership, and experience in matrix organizations. Above all, executives in multinational agribusiness companies must be flexible with a tolerance for ambiguity, be change-adaptive, and possess language ability.

Cultural sensitivity is increasingly important as business reaches across the globe. The successful global manager must understand how other business cultures negotiate, see relationships from their perspective and understand how to structure a win-win solution with respect to the needs of all the business entities, as well as to the market, economic and political realities.

In a capsule, it seems that Asians are most diplomatic, valuing humility and cultural familiarity: Americans most broad-minded; and Europeans most collaborative, according to the Harvard project.

Concern exists for North Americans' lack of foreign language capability and expatriate experience. More expatriate training is needed if we are to develop executives for the challenges of international activity.

Today managers tend to be more loyal to their careers than to a company. Therefore, organizations must think in terms of what it will take to retain an international manager, to benefit from that experience and perspective, and to foster attractive career options for these executives. There is great demand for prior international experience, but not enough supply. Both business schools and corporations in the U.S. must factor this need into their curricula and training programs.

Finally, faced with a non-increasing amount of arable land and growing numbers of people to feed, the agribusiness executive must have vision beyond his or her career and company. This vision must be increasingly global and include a sense of responsibility in order to allow agribusiness development to be sustained through the next decade, through the next century, and beyond.

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It is possible that one of the CEO's wisest decisions is when to leave and doing so gracefully. "There is nothing more tragic than the leader who is accused of having stayed a few years too long. As cruel and unfair as it may seem to them, these leaders are remembered for their final failings rather than their lifelong achievements," write James Champy, chairman of Perot Systems consulting practice, Cambridge, Mass., and Nitin Nohria, professor of business administration at Harvard Business School, in the spring 2000 edition of Executive Talent.

By understanding what makes leaving difficult as well as what makes it possible, CEOs and boards of directors can better manage this important transition.

CEOs often make the excuse of not having a competent successor. But this situation generally results from failing to groom a successor or surrounding oneself with "yes" people.

Another excuse involves arguing that the successor is not yet ready for the job. The leader who begs for more time on the successor's behalf is likely begging for more time to continue as CEO. The authors also argue that successors are never fully ready to take over because they can only learn some things while in command.

As with most things, one generally pays for procrastination. Leaders who do not choose to leave or provide for succession may in time harm themselves or their organizations or both.

Success without honor is an unseasoned dish; it will satisfy your hunger, but it won't taste good. --Joe Paterno

The authors point out that knowing when to step aside does not always come at the end of a career either. "Impossible situations can arise that challenge even the most ambitious person. This was precisely the situation in which Robert Shapiro, the CEO of Monsanto, found himself. He had a great ambition for Monsanto: to solve the problem of world hunger. But his bio-engineering methods raised the concern of environmentalists, and Monsanto's financial performance attracted criticism from some investors. Caught in this crossfire, Shapiro resigned."

Quitting an impossible situation is not cowardice, say Champy and Nohria. Indeed, it may be the intelligent and honorable thing to do. "In addition to protecting yourself and colleagues from harm," they say, "a clear sense of when to walk away allows you to feel in control, not just a pawn of other people's ambitions."

Envisioning new goals and defining a new personal identity may make it easier for a CEO to leave the position. Making the transition to a new identity is rarely easy, but it can be done. The authors give the example of Andrew Carnegie, who went from ruling the steel business to immersing himself in philanthropy.

When is it time to move on? To discover the answer, a CEO or board of directors should confront the following questions:

• Does the executive sense the forces that will shape the future of the business?
• Does the CEO hesitate to seize the moment due to not trusting his own intuition?
• Does the CEO have the stamina to persevere and find success despite setbacks?
• Does the CEO inspire other leaders or are these leaders leaving to find better opportunities?

When an executive becomes tentative, pessimistic, or unable to inspire others, or when people start wondering when the CEO is planning to leave, it is time to leave.

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Should an executive focus most on pensions or stock options?

In the June 11 edition of The New York Times, Joseph Bachelder III, a New York-based compensation lawyer and negotiator for senior executives, says that pensions are very important in old-economy firms. CEOs move so frequently today that they don't build up pensions, says Bachelder. He advises the CEO to have the company ensure a pension and have it funded.

"At new-economy companies, one strategy is to purchase stock with a promissory note, which qualifies for long-term capital gains, and then have the note forgiven," says Bachelder. He says that stock options will allow the CEO to buy when the company is private and to cash in when it goes public.

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An article in the June 13 edition of The New York Times raises some questions about stock options, particularly when stocks stop soaring. It explains that employees pay income tax on the gain they receive when they exercise their options, while their company gets a tax deduction equal to the gain.

With stocks as good as they have been, most employees are willing to pay because the taxes are much less than the gains. But when stocks stop soaring, employees exercise fewer options and corporate tax bills rise. Gretchen Morgenson writes that as worried employees demand more of their compensation in cash, labor costs rise.

The answer may not be to issue more options, because the more options are issued, the less valuable the stock becomes. Companies also must buy back their own shares to offset the stock they have dispensed to employees at much lower prices and to avoid dilution of the stock.

The New York Times article also cites a study that will be published in the Journal of Accounting and Economics. It found that some executives manage disclosures of corporate news to increase the value of their options. Morgenson writes that stock options have become so important to executives today that "some economists say if stock prices tumble, managements interested in maximizing the value of their compensation plans would have an even greater interest in driving down their stocks' prices to guarantee future gains on options issued at rock-bottom levels."

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With thanks to Helmut Maucher "Leadership in Action"

1. Do the normal thing first. Produce marketable products; look after your management, personnel, and customers.

2. Change the criteria for selecting managers. Besides professional know-how, managers need creativity and commitment. and awareness of their responsibilities.

3. Realize the importance of the lowest levels of management. Focus on people and products rather than on systems.

4. Remember it's better to take the long view than to seize short-term advantage. Timing is important and it is necessary to make rapid, though not always perfect, decisions. Keep in mind:

• Recognize what is needed early, then...
• Accelerate the decision-making process, and...
• Implement the decisions quickly.

5. Implement a new style of management and new kinds of relations with employees: strive for management commitment and employee involvement.

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Effective succession planning can make the difference between panic and confidence when the health of the chief executive becomes an issue.

Without even addressing the right of privacy that should be afforded to all individuals, the illness of a corporate chief can be a nightmare both for the organization and for its public and investor relations advisers. Whether or not to reveal that a health situation exists is one issue. Revealing the extent or gravity of the situation is another, even thornier, problem.

Some public relations advisers would keep things quiet, appearing to maintain the status quo.

The issue of health is complicated by the Securities and Exchange Commission's requirement that companies disclose a variety of events and conditions that might affect a company's fortunes. However, specific rules regarding disclosure of executives' health problems do not exist.

Some management legal advisers say that a business should make a public announcement when the ailing individual controls the business's success and when the illness immediately endangers life or will require a lengthy absence. Obviously, an objective decision will be difficult to reach and depends on the ability and willingness of the board to face the reality of the CEO's illness and impending loss of power.

Recently, Coca-Cola's Roberto C. Goizueta died of complications of lung cancer. The company revealed that Mr. Goizueta had entered the hospital but hastened to add that all would be well.

AT&T kept very quiet about Chairman Robert E. Allen's plans to undergo major heart surgery until after the operation had been completed.

W. R. Grace released the information about Albert J. Costello's heart attack immediately and subsequently followed with frequent releases about the bypass surgery and his expected recovery.

Until Steven Ross, chairman and CEO of Time Warner, died after a year of illness, the word was that he was running the show.

It is apparent that, empathy aside, when the focus is shareholders' interests, the health of the organization supersedes the health of the individual, especially that of the chief. The continued momentum of the organization can be ensured if succession plans are in place and if the board has planned for the possibility that the chief could become ill and unable to function in the day-to-day operations of the business.

Whether a temporary replacement during the illness and recovery of an executive or a more permanent replacement necessitated by death, the organization needs to have its plans and people in place and ready. Healthy companies, with well-developed plans for succession, need have no fears about revealing the state of health of their chiefs. Investors and shareholders can be confident that, though the loss of a chief executive may be deeply felt, the organization remains sound and will continue to move forward with the reins of leadership in competent and excellent hands.

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Having trouble deciding what's ethical? Norman Augustine, chairman and CEO of Lockheed Martin, has a simple checklist.

1. Is it legal?

2. If someone else did "this" to you, would you think it was fair?

3. Would you be content if this were to appear on the front page of your hometown newspaper?

4. Would you like your mother/wife-father/husband to see you do this?

If you can answer, "yes" to all four questions, it's most likely the issue you are considering is ethical and that you have a green light.

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Who would expect tips on employer-employee relations from a Victorian book on household management?

Well, add another book to that pile on re-engineering, hands-on, or heads-off techniques from the vast multitude of management how-to books being written and avidly read by executives eager to get it right.

A recent article by William Storck in C&EN recommends Mrs. Beeton's Book of Household Management which, although written for "mistress and servant," offers, with some imagination, valuable and relevant insights into creating a productive and dedicated workforce.

Mrs. Beeton starts off as follows: "As with the commander of an army, or the leader of any enterprise, so it is with the mistress (substitute 'manager') of a house. Her spirit will be seen through the whole establishment: Just in proportion as she performs her duties intelligently and thoroughly, so will her domestics (substitute 'employees') follow in her path."

Mrs. Beeton's book, written when she was 23 in about 1860, became a best seller and was a fixture in English households for many years.

While the book contains advice on all aspects of running a household, consider this when struggling to find the optimum way to establish good working relationships with staff: "The sensible master and the kind mistress know that if servants depend on them for their means of living, in their turn they are dependent on their servants for many of the comforts of life; and that, with a proper care in choosing servants, and treating them like reasonable beings, and making slight excuses for the short-comings of human nature, they will, save in some exceptional cases, be tolerable well served, and in most instances surround themselves with attached domestics."

Mrs. Beeton's credo is to lead by example. She advocates, "early rising" (get to the office early) to set the example for an orderly and well-managed household. She also cautions, "Good temper should be cultivated by every mistress, as upon it the welfare of the household may be said to turn . . . Every head of a household should . . . never fail to show a deep interest in all that appertains to the well-being of those who claim the protection of her roof."

Mrs. Beeton's book is out of print, and while Storck says that much of the material is dated and pedantic, "it is a good reminder that employees should be treated with respect, understanding, dignity, and intelligence."

For those who can find a copy, as an added bonus, the book has more than 1,350 recipes.

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Theories on the whys and wherefores of business management abound. Perhaps because we like things neat, it is particularly compelling and gratifying to examine, sort, clarify – to try to see the trees as well as the forest. There is comfort when names are applied, as they sum up our understanding and make it possible to communicate sometimes complex observations. Giving name to corporate philosophies and methods seems to give us a way to understand why things are or are not happening.

In this vein, we have experienced re-engineering, breaking the box, re-structuring, new paradigms, TQM, and assorted other "isms." New theories appear in books, newspapers and journals with regularity, and for those looking for the magic that will make the difference in today's ever-changing and competitive marketplace, such articles are the reading matter of choice. Danah Zohar, teacher, writer and consultant, has written a book, ReWiring the Corporate Brain (Berrett-Koehler Publishers Inc., 1997). As discussed in an article in American Management Association International (March 1998), Ms. Zohar applies the concepts of quantum physics to management, identifying two types of thinking, rational or rule-bound, and associative or habit-bound. Ms. Zohar says that a third type — quantum thinking — is the level at which creativity and change occurs. She maintains that in order for organizations to experience transformation or change for the better, they must get in touch with the "spiritual level of the company ...the level of meaning, vision and value. What is the company about? What is it we are really trying to do? What drives us in the morning? Why did the founder found it?" She continues that leaders must engage in quantum thinking which, in spite of the challenges, will lead to the "quantum organization," which will:

• have infrastructures that encourage and build on all relationships, including those between leaders and employees, divisions and functional groups, etc.
• be aware of its environmental context.
• be flexible and responsive, at the edge "between order and chaos."
• be bottom-up, self-orienting and emerging.
• thrive on diversity, engaging in shared vision, opportunity and responsibility.
• be playful, inventive, seemingly leaderless and open.
• be vision-centered and value-driven.

The theory bears a striking resemblance to Maslow's theory of personality development and the hierarchical system of values, with the ultimate being self-realization. Ms. Zohar seems to suggest that the business organization has evolved to that level of self-realization and that to move the organization up the hierarchy, the rules of quantum physics should be applied.

Other aspects of quantum physics, not discussed in the A.M.A. International article, have relative value in applying the theory to understanding the organization.

For instance, "quantum" indicates that small particles (even the tiniest, like electrons) may behave by different rules than large particles, and this can be analogous to the behavior of individuals in organizations. Consider the phenomenon of "tunneling" in which tiny particles, which don't have enough energy to get over a barrier can get through it by tunneling. Think how individuals deal with the unexpected in the business environment: Unable to apply the known rules when dealing with the unexpected, they tunnel through by adapting and changing the rules to succeed, similar, for instance, to finding ways to get the job done on fewer resources.

"Quantum" also tells us that by observing a situation, we can change it and therefore cannot accurately measure it (it is difficult to measure flux or predict outcomes). Corporate translation: When the boss is in the room, nobody is going to act normally!

Fundamentally, "quantum" means "small" — a tiny fraction of something or something at its smallest aspect. A "quantum leap" is not a huge vault, but one that involves change, often in unexpected ways. While Ms. Zohar may be offering up the new buzz on a platter, the phrase "quantum corporation" does give one pause.

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Speaking of small, a column by Donald Winkler in the New York Times champions "small," saying, "The fervid search for the big idea distracts too many people from recognizing that organizations are transformed more deeply and continuously by the relentless pursuit of small ideas."

Mr. Winkler suggests employees can be valuable resources who can identify and implement the "continuing sequence of small changes that add value, enhance efficiency, build competitive leadership, reduce costs and increase profits." He points out the importance of listening to employees who are not coming from left field when they offer suggestions; they want their company to succeed because such success is the source of more opportunities, greater job security and more money.

If such small evidences of change haven't come to the attention of management, the following could be why:

• Employees don't think that small improvements matter because no supervisor has ever been receptive to suggestions or acted upon them.
• Such employees may feel unimportant and that their work is trivial;
• Employees have no forum for expressing their ideas and concerns;
• Employees have no authority to take risks, to fix a problem or satisfy a customer;
• Employees have no mission or sense of shared purpose. They aren't clear on why their company is different from its competitors.

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Succession planning continues to demand the attention of both boards and CEOs. One company, Ralston-Purina, went so far as to force the hand of CEO William Stiriz by giving him millions of dollars worth of options contingent upon his developing a succession plan. Additionally, it froze his salary and cut back certain bonuses as a further incentive to make him cooperate. (Stiriz has since named two long-time Ralston-Purina executives as co-CEOs.)

Succession plans have assumed new immediacy as the CEO turnover rate accelerates. Whether chief executives stay fewer years at the helm due to accidents, illness or increasingly vigilant boards, the tenures of those in the most senior office have been severely diminished. Most experts agree that CEOs lack the objectivity to choose their successors. Cloning may be an option, but not usually a viable one. Even if the current CEO has been extremely successful, planning for the future must take into account a shifting economic environment and industry changes, all of which may require skills quite different from those of the current or outgoing chief.

Choosing the successor is clearly the job of the board and one that should concern that body as an ongoing task. Defining the organization's long-term strategic plans will dictate the talents required in the next chief. However, even the board may lack the objectivity and in-depth industry knowledge needed to get the job done properly. Professional search consultants can bring to the board required objectivity and wide knowledge of available outside talent. They can also evaluate inside talent and make appropriate recommendations to the board for further grooming.

Grooming the second in command is a complicated business. Several large industries designate a team of replacements. The Ralston-Purina decision seems to fit this model.

Such a team might require extensive executive development, often resulting in a fertile source of executives to run other companies. They may be called someplace else before the slot opens at home. Additionally, ambitious future executives may not have the patience to wait to move up.

The catch 22 is that the organization cannot ignore the issue, and at the risk of developing talent for someone else, it must continue to plan and groom for its own needs. According to a recent Harvard Business School paper, one-third of current CEOs at major companies come from the outside, a substantial increase from the 1960s when the figure was closer to 7 percent.]

It is clear that for the organization to continue to thrive, a plan for succession needs to be in place. More important, once in place, it can't be put on a shelf. It needs to be taken out and reexamined frequently in order for the organization to meet the demands of today's warp-speed business environment.

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Today's board chair balances being authoritarian with being totally democratic. He or she needs to seek input from other directors. At the same time, he or she must remain the boardroom's clear leader. That includes anticipating and satisfying the needs of the directors and running efficient board meetings.

In the March 2000 Boardroom INSIDER, Ralph Ward addresses some of the attributes an effective chair should possess. Ward writes that successful board leaders:

• Set and stick to the board agenda (which should include input from other directors).
• Move beyond details. If the CEO is also the chair, he or she must disengage from the company's daily activities to speak in the more strategic, detached mindframe of other board members. The successful chair is able to think in big-picture terms, says Louise Corver, president of Corporate Learning and Development. At the same time, this chair can also get his or her hands dirty. The chair knows both the vision and how to fulfill it, says Corver.
• Build unique relationships and communications with each board member and use them to shape consensus.

Walter Wriston, the former chairman of Citicorp and a member of many corporate boards, agrees that the chair should tap the experience and strengths that each director brings to the boardroom.

At the same time, the chair should assume that the directors want (and may need) to learn more. "At Citibank, it occurred to me one day that the directors didn't really understand the bank's accounting issues. I asked the board if they'd like to come an hour early to the next board meeting for a presentation on how bank accounting works, and every one of them signed up immediately." A smart chairman does not wait for the directors to ask for help, Wriston suggests. "You can sense whether or not what you're saying makes sense to them."

The chair also needs to generate constructive discussion about new ideas. "I've never seen a proposal that went before the board that didn't come out better," says Wriston. But seeking input does not mean asking the board what you should do.

"You wouldn't bring an idea to the board if you didn't know what you wanted done. You must be able to go in saying `this is what we want to do' and why it makes sense," says Wriston. It is rare for a chair to go around the boardroom asking what he or she should do.

Ed Vick, chairman of Young & Rubicam, likens a board to a high-powered family. In one way, successful people on the board do not want to be told what to do. In another, they want to see that the chair is in control of the situation.

Vick reiterates the significance of communication. "The head of the board must be a good communicator -- able to clearly express to directors where he wants the company to go and to be persuasive." At the same time, the chair needs to possess active listening skills and the ability to have honest dialogues.

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In the March Boardroom INSIDER, Ralph Ward also outlined some of the ways in which a chair can effectively manage a board meeting. Running a meeting effectively means allowing directors the opportunity to freely discuss ideas but keeping that discussion within a disciplined flow. "It's bad leadership to put up with unpreparedness or someone repeating an idea over and over," says Ron Zall, head of the Denver-based Corporate Directors Institute.

Another way to effectively manage the board meeting is to announce the ground rules at the outset. Zall advises board chairs to get the issues out at the beginning as well. The agenda lets the chair check off what must be covered. At the same time, the upfront discussion allows the chair to lay out the meeting's major unifying theme.

Finally, the chair should lead by keeping the meeting focused and productive. The earlier in the meeting you bring up a major issue, the more attentive the board members will be.

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If you have tried to do a reference check on a prospective employee lately, you probably received only the most basic information. A recent survey by the Society for Human Resource Management found that just 19 percent of 854 respondents (most from large companies) said they would give a reference-seeker a reason why an employee had left. Just 13 percent would mention work habits. This is because many companies fear being sued by former employees.

But this fear is not well founded, said C. Patrick Fleener in "Too Much Ado About Giving References," New York Times, by Jeffrey L. Seglin. Fleener, a management professor at Seattle University's Albers School of Business and Economics, examined federal and state court records from 1965 to 1970 and from 1985 to 1990. In all of them, he found just 16 defamation cases arising from reference checks, and plaintiffs won just four of the lawsuits.

"Part of the reason you don't see so many of these cases, from the plaintiff's perspective, is that they're quite difficult to bring. There are real problems of proof," Scott Rechtschaffen, employment lawyer for Littler Mendelson, San Francisco, was quoted as saying. Even so, he and many other employment lawyers advise companies to provide only the most basic information.

But interestingly, the article cited a case in which a school in California neglected to mention that a former vice principal had been accused of child molestation. After he was accused of molesting a girl at his new school, the California Supreme Court ruled that the referring school could be held liable for the omission.

Seglin wrote that companies can give references, both positive and negative, as long as they are truthful. "Of course, if you're malicious or retaliatory, or show bias toward a group of people protected by civil rights law, you're asking for trouble," he added.

The author also cited Pierre Mornell, a psychiatrist and author of 45 Effective Ways for Hiring Smart (Ten Speed Press). Mornell pointed out that while HR people may not get an answer from another company manager or a CEO, they may get off-the-record comments from someone at their own level whom they know.

Seglin concluded that about a dozen states are considering laws to protect employers who give accurate information on former employees.

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Succession plans are valuable in case unforeseen circumstances should arise, such as the accidental death of a senior executive. But a succession plan also should be viewed as a means to achieve a smooth transition of power when a CEO retires or when other events take place within a company.

Many companies, however, have no formal succession plans or have had ones that did not work. A good succession plan requires work.

Roger G. Ackerman, who took over as the CEO of Corning, Inc., in 1996, told Management Review that Corning had worked on a succession plan for years, which helped make a smooth transition when Jamie Houghton, the former CEO, retired.

In addition to the CEO post, Corning went so far as to evaluate a list of candidates for its top 35 positions two to three times annually. Also, the board chair held annual meetings to discuss succession plans for himself and for those who reported directly to him. The company's written succession plan included three categories of candidates for succession: people ready to immediately assume leadership, those who would be ready in three to five years and the "long shots."

Developing executive talent is also part of a good succession plan. And like a good succession plan, a good development program takes work. It requires management's commitment to groom an individual over several years. One CEO recommends letting the "heir apparent" take on added responsibilities without watching over his or her shoulder. "Get out of the way," he says. "But be there to help."

At the same time, companies need to think strategically. They need to consider the kind of environment in which future leaders will operate. Margarethe Wiersema, associate professor of strategic management at the University of California-Irvine, observed that when global markets and international experience gained importance in the 1980s, few American companies had senior executives with the international business acumen necessary to operate. This is because the companies had traditionally been focused on domestic issues and markets.

After evaluating their strategic position, companies may decide to hire a potential successor from outside the company or even the industry to help change their direction. General Electric's Jack Welch, for example, came from marketing rather than a traditional finance background.

Finally, succession planning takes time in addition to effort. Some industry experts suggest that succession planning be initiated several years prior to a planned retirement. This gives the company time to identify and evaluate executive talent. If the candidate does not meet expectations, the company has time to find and develop another.

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Companies that are considering business process reengineering (BPR) may be interested in a new study from ProSci Research & Publishing Company (www.prosci), Loveland, Colo. This study highlights the practices that 248 companies from 44 countries used in BPR and process design. Both successful and unsuccessful practices are discussed.

The top reasons why companies undertook BPR were the need to cut costs, competitive pressures, and the need to improve customer satisfaction. Customer service was the most frequently redesigned process, followed by production/ manufacturing and financial service processes.

One of the most important contributors to successful BPR, said participants was engaging top management at the outset. "Overall, teams that had top-management support and that were driven from the top down were more likely to meet or exceed their project objectives," the study stated. More than 90 percent of the respondents said top-management support was critical to the project's success. They also noted that BPR teams should reach agreement on scope and goals with top managers and involve those managers throughout the project.

Project teams also indicated that frequent and open communication with all members of the organization was essential to BPR success.

Among the greatest mistakes that senior managers or executive sponsors made were failure to provide visible support, failure to "role-model" changes, and failure to reinforce change with other managers. Project teams also cited problems when senior officials did not take time to understand current business processes and how business process reengineering works.

More than 65 percent of the study participants hired a consultant for BPR. And of those, 70 percent would use a consultant again. The respondents indicated that consultants provide experience and the necessary skills to ensure a success. Consultants also provide an objective, outside perspective, the respondents suggested. Eleven percent would not use a consultant again due to cost and the opinion that the consultant did not add enough value. The remainder were divided about hiring a consultant again, sometimes because it was too early in the process to make a decision. Respondents were in various stages of their projects, with about half the projects completed or in the implementation stage.

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When it comes to the "how to's" of corporate governance, most literature and attention focus on what the boards of Fortune 500 companies are doing. This is curious since some of the most effective boardrooms are found among smaller, younger companies, says Ralph Ward in the November 2000 edition of Boardroom INSIDER. Ward points out that there is quite a difference between how the boards of smaller companies and corporate giants deal with company policies and talent.

Boards of younger companies are more likely to mentor. "The board's role is more hands on and results oriented," says Ward, adding that directors of these company boards are often expected to help raise funding, attract talent and actively "mentor" the founders.

Kincannon & Reed's president, Kelly Kincannon, says that small, young companies can often move quickly and reach quicker decisions than their larger, more established counterparts. However, young companies are often made up of young people who do not have a great deal of real-world experience and need a seasoned view on what and what not to do. They need more structure from a seasoned board, says Kincannon.

The boards of Fortune 500 level companies take on more of a monitoring role. They oversee financials, strategy and management and serve as independent shareholder fiduciaries.

The mentoring and monitoring descriptions are generalizations, but they do sum up the major roles fulfilled by boards, says Ward. "The monitor aspect ... gets most of the attention, but the mentoring role is the one that actually puts food on the corporate table," he adds.

Ward believes that the mentoring concept demands more study and support but says, "It is still not the be-all and end-all of corporate governance." He says that while mentoring helps grow the company, that company must eventually outgrow such a board. Fortune 500 companies, of course, have less need for boards who can attract funding, "but they definitely require some of the independent, objective oversight a monitoring board can deliver." He adds that no company totally outgrows the mentoring talent of its board. "The ideal corporate board should retain elements of both models," he says.

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Before last spring when many of their stocks began faltering, dot-coms were exciting places. A dot-com was the kind of place for which a top executive might leave a more conventional company. While fewer executives might leave for a dot-com today, there still are a variety of start-ups whose opportunities may lure.

To prevent talented people from leaving, there are some things more traditional companies can do. One of them may mean recreating "social contracts" that informally bind, says John Sviokla, a partner with Diamond Technology Partners and a former associate professor at the Harvard Business School. Chicago-based Diamond Technology Partners is an e-business services firm that combines business strategies with information technology to create innovative digital strategies.

In an article titled "Retaining Talent in a Dot-Com World" (Executive Talent, Spring 2000), Sviokla suggests that companies should do more than focus on salary and rewards for length of service. The new start-up corporate model puts less emphasis on salary and more focus on increasing opportunity for fast wealth.

Executives spent most of the last two decades watching corporate America "destroy the old social contract, and its implicit promise of lifetime employment, through mergers and downsizing," says Sviokla. It is no surprise, then, that for some, a fast-moving contract makes sense.

If companies are committed to retaining top talent and continuing to attract it, they may need to rework their social contract to incorporate more competitive currency, accelerated innovation and a challenging atmosphere, says Sviokla. (In this article, we will focus only on the currency issue.)

Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion. -- Jack Welch, CEO, General Electric

Sviokla acknowledges that money alone does not motivate top talent. However, he adds, "It's naive to think that you can get by with an old-fashioned salary-based compensation plan.

"You must address the discrepancy between what businesses traditionally offer senior executives and the start-ups' seduction of them with instant wealth. You need a currency that is market-based," says Sviokla.

This could mean taking the entire company private or spinning off the company's fastest-growing division. These options allow managers to create their own currency and gain a new focus.

Another approach is breaking out the top division's financial performance and creating a tracking stock specifically for it. This helps smaller, innovative divisions to be evaluated on their own merits rather than being "lumped in" with larger, less dynamic lines of business, says Sviokla.

(In a recent interview with Wall Street Journal reporters, Jack Welch, CEO, General Electric, noted that he compares GE's top executives against their competition. "We have one plan where half the reward an executive gets is for the performance of his business and half for the performance of the whole company. But if the company doesn't make it and the business has a greater performance, the bonus is zero -- because no boats get to the shore if the Titanic sinks.")

A third strategy that Sviokla brings up is an innovative compensation program. If a company was transforming an existing line of business into an e-enterprise, for example, it might not earn dividends for the first few years. In this case, the company may let the senior managers participate in the stock market's valuation of similar enterprises. "Create a compensation system based on a basket of stocks for companies that compete with your emerging enterprise," suggests Sviokla.

If the managers have met their year-end performance goals, the company could offer them the option of investing with their own company or in another basket of stocks, says Sviokla.

This approach acknowledges that the market is willing to give start-ups inflated valuations that it will not afford to established company efforts, says Sviokla. It also makes a statement to your employees about your confidence in the future of their new venture, he says. Finally, this approach means that top executives must still meet their year-end numbers to qualify for the plan.

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Investors and corporate boards disappointed with poor financial performance are increasingly letting their CEOs go, but as a recent article in The New York Times (Nov. 16, 2000) pointed out, there is a dramatic shortage of replacements.

The shortage will likely force boards to "reach out more broadly for candidates than they have in the past," says the article. This could mean more opportunities for females and minorities.

"There are a number of women with very substantial titles, ergo experience, and a certain degree of readiness," said Sheila Wellington, president of New York-based Catalyst, a non-profit advisory group that studies women in business. But the article also cites Catalyst's findings that only 28.6 percent of women in Fortune 500 companies had the type of responsibilities that made them viable candidates for the CEO post. This compared to nearly twice that percentage of males having responsibilities for profits or a direct relationship with clients.

Companies may also need to rethink how they groom future executives. But, as the article points out, many companies also wrestle with investing in executive development because managers are now unlikely to spend their careers at any one company.

Solutions are not easy. But some experts are providing suggestions. For example, James O'Toole, a business professor at the University of Southern California and adviser to Booz-Allen & Hamilton, a management consulting firm, suggests that directors search for someone who can create an environment where there is an abundance of managers who can move up. The article points out that Kenneth Lay, CEO at Enron, has made an effort to recruit managers and give them substantial responsibilities. O'Toole says that while some of these people will fail or leave for another position, the company will benefit overall.

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