What Do Chairmen Look for in Their CEOs?

Did you know that 40% of leaders assigned to new positions or overseas posts fail after only 18 months? This derailment can cost companies at least 10 times these leaders’ expensive annual salaries. Each failure also demoralizes employees and jeopardizes relationships with business partners, customers and other stakeholders.

This can be avoided!

What do prominent chairmen of multinational corporations such as Peter Brabeck of Nestle and Gregg Sherrill of Tenneco look for in their CEOs?

I asked them, “How do you select the right CEO for a global leadership assignment in a multi-cultural environment?”

Management is doing things right; leadership is doing the right things. Peter Drucker

Chairman of Nestle, Peter Brabeck-Letmathe

I interviewed Peter Brabeck-Letmathe, Chairman of the largest nutrition, health & wellness company in the world. Nestlé is the 48th largest company in the world and has 385,000 employees. Approximately 9,000 of them work in Switzerland where Nestle has its headquarters. Our conversation took place on the top floor of Nestle’s headquarters in Vevey, I tried not to be distracted by the outstanding 180 degree view from his office overlooking lake Leman on this sunny day. The bright and charismatic Peter Brabeck-Letmathe said,

“Frankly speaking, I cannot imagine a top manager at Nestlé who has not lived in several countries and who does not speak at least two or three languages. These are basic requirements.” Peter Brabeck-Letmathe

I asked him why this was so important. He answered that even though Nestle’s products and brands are global; food is adapted to the specific tastes of the regions where they are sold. Nestle’s leaders need to be aware of different cultural attitudes, mindsets and eating habits. In other words, the leader needs to have had significant experience abroad.

How did he select talents?

As my interview was coming to an end, I commented that a company as prestigious as Nestle must surely be hiring top ranking students as potential future leaders. He answered “No, not necessarily.” He went on to explain that in a few years what the best students have learned would be outdated knowledge. It is better to select the second or third in the class because s/he might be less complacent and rely less on what they have learned in school.

Chairman of Tenneco, Gregg Sherrill

I then interviewed the chairman of Tenneco, Gregg Sherrill. Tenneco produces filters and shock absorbers for cars. I also asked him the same question.

“How do you select the right CEO for a global leadership assignment in a multi-cultural environment?

“My European general manager was born in India, grew up in Saudi Arabia and was educated in the US. He is now responsible for the European market.” Gregg Sherrill

“So you selected a leader with a multicultural identity. Why was this important?” I continued. Gregg Sherrill answered that this person can understand the intricacies of smaller countries each with their specific economic and political situations. Smaller markets do not offer economies of scale. Leaders have to be able to more readily negotiate from within each country’s economic and political landscape. He went on to explain:

What do multi-cultural working groups help to do?

• avoid a US bias or single way of thinking
• get buy-in from non-US constituencies
• avoid employees feeling that management has a top-down approach. It gives everyone a say. It ensures geographical diversity.
• ensure the balance of products, customers and geographical representation.

Past Chairman of General Electric, Jack Welch

Let us now look at Jack Welch’s quote,

“The Jack Welch of the future cannot be like me. I spent my entire career in the United States. The next head of General Electric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires.”

From this quote, Jack Welch sees someone that will replace him that is not from another culture but who has been exposed to several cultures.

Leaders with one cultural identity compared to highly mobile leaders with multiple cultural identities

At a presentation of a World Reknown Trade Organisation, I had just finished describing a leader with one cultural identity and grounded in one culture with a global nomadic leader. Global Nomadic Leaders have multiple cultural identities and are highly mobile. They are defined as follows:

Who are Global Nomadic Leaders?

• Global  because they were raised in multiple cultures and grew up speaking multiple languages at a time when their personalities were being formed. This leader has also had significant experience with a host culture.
• Nomadic when they grew up being and continue to be mobile.
• Leaders because they are currently in a position of authority, working across national and corporate cultures and within a complex, multi-cultural context. If you ask global nomadic leaders where home is, they will likely say something like, “Home is everywhere and nowhere”

My assumption

My assumption was that this World Renown Trade Organization needed a mass of global nomadic leaders for such a multi-cultural institution. As a coach, I changed my assumption into an unbiased question and decided to ask what percentage of all of their leaders had one cultural identity and what percent were global nomadic leaders? To my surprise, they said they needed 50% of global nomadic leaders and 50% of leaders with a strong, single cultural identity.

World renown trade organization

I continued my research with a group of leaders from this World Renown Trade Organisation. “What qualities are you looking for in your leaders?” I asked. They answered, “Openness, adaptability and cultural sensitivity. I then asked my favorite question “Why?”

“Because our job is to enhance commerce between countries and we need people who are well-grounded and connected in the local culture.” by members of the World Renown Trade Organization.

A global nomadic leader’s response

A person in the back of the room waved his hand. “I am half Tunisian and half French. My fellow compatriots in Tunisia don’t see me as a true representative of Tunisia. They do not feel I really represent them because I am from two different cultures. I do not have the same local network as someone that has lived in Tunisia all his life.”

I thought Global Nomadic Leaders were the James Bond of our globalized world with their innate sense of adaptability, curiosity and openness. However, there are unique advantages of being grounded and to identify with only one culture.

What is one advantage of having a single cultural identity compared to multiple cultural identities?

Leaders that grow up mainly in one area have a more rooted local network. Global nomadic leaders, being highly mobile and less attached to any specific geographic area, have a more dispersed geographical reach.

Question for you?

In what situations would business or humanitarian organizations benefit most from a leader with one, strong cultural identity compared to a leader with multiple cultural identities?

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Katrina Burrus, PhD, MCC from ICF
Helps leaders and managers get from where they are to where they want to be.