Author: Bruce Weinstein

—

Your company might make the coolest products and provide the most valuable services in the world, but if you hire the following four kinds of leaders, you’ll eventually be immersed in a scandal–and you may not be able to regain your reputation.

In spite of what some PR firms would have you believe, there is such a thing as bad publicity. United, Mylan, Wells Fargo, and Takata are just a few companies that saw their market capitalization plummet, their reputations take a beating, and/or their leaders being shown the door after poor decisions from the top created scandals that became international news.

If you want to avoid being next in line, your board must deliberately avoid hiring the following four kinds of CEOs.

1.    The Dishonest Leader

No board would actively seek to hire a liar. Why, then, don’t boards make honesty one of the criteria for selecting a CEO?

You cannot assume that leaders are honest unless they prove otherwise. There is too much at stake in your company. You may be uncomfortable discussing honesty with a candidate, but this is an essential duty of being a member of the board of directors.

The most frequent objection I hear when I consult with companies is, “It’s not possible to evaluate honesty.” This is demonstrably false. Consider the following question:

Can you talk about a time when you had to tell the truth to someone when the stakes were high? 

Honest people love the truth and cannot tolerate lies or liars. Honesty is first and foremost, a feeling, an emotion, a deep personal connection to what is true.  Ask the above question, listen carefully to the answer, and pay special attention to how you feel when the candidate tells the story.

2.    The Unaccountable Leader

Accountable people keep their promises, they consider the consequences of their actions, they take responsibility for their mistakes, and they make amends for those mistakes.

In earlier columns, I described how Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg consistently demonstrate accountability. A board of directors would do well to post the following question to their CEO candidates:

Describe a situation in which you took responsibility for a mistake you made. What were the consequences to you for doing so?

You can evaluate both the person’s level of accountability and his or her courage by the response.

3.    The Cowardly Leader

The ultimate test of a good leader is how he or she responds to fear. To evaluate a potential CEO’s level of courage, consider the following question, courtesy of Bill Treasurer, author of Courage Goes to Work:

Describe a time when you had to disagree with someone in authority and stand up for what you believed was right.  How did the other person react? What did you do?

Treasurer told me that a fully authentic response will include a reference to vulnerability. Both courageous and cowardly leaders experience fear, sometimes intensely so. But only brave leaders are willing to act in spite of their fear.

4.    The Unfair Leader

Fair people give to others their due. This is right for its own sake, but it has some terrific side benefits. Fair leaders command loyalty in the company, they earn praise in the business press, and clients want to work with them.

Arthur T. Demoulas is a striking example of how one fair CEO inspired a level of loyalty unheard of in corporate America. Demoulas was the head of New England grocery store chain called Market Basket and had a history of standing up for everyone who worked there. When he decided to give more of the company’s revenue to employees and less to stockholders, however, the board fired him. In response, the employees left in protest. All 20,000 of them.

Even customers got into the act and boycotted stores, resulting in a loss of $1 million per day. The board had no choice but to bring Demoulas back.

Evaluating loyalty in a CEO candidate isn’t as simple as checking to see how long he or she has remained with a company. The litmus test is how direct reports thought and felt about the person’s leadership, with evidence to back this up.

Take a look at how Market Basket employees reacted after Demoulas was fired:

The best way to increase the chances that your next CEO is honest, accountable, courageous and fair is to deliberately evaluate candidates for these four qualities. They’re an essential component of high-character and financially successful leadership.

—

Bruce Weinstein is the CEO of the New York-based Institute for High-Character Leadership. Through the Institute’s high-content and engaging training programs for C-suite executives, hiring managers, and employers, Bruce and his team inspire people to do the right thing every time, everywhere. More information about Bruce and his services can be found at www.theethicsguy.com or he can be reached at 646.649.4501.