Simultaneously, outside candidates can provide an interesting perspective; they’re able to come in with an objective point of view and make tough decisions because they don’t have any ingrained relationships and haven’t yet invested any political capital in the game.
There comes a critical time that demands the managerial courage to make the right call. Is your internal candidate truly ready? Are you willing to take a chance? Bad decisions—making a bad hire or promoting the wrong person—will come back to haunt you. Hiring is a very high-stakes situation, and you must do everything you can to mitigate failure, as the costs can be dramatic.
In the end, you should examine where you are as a company, where you’re going and what you need right now.
Talk more about managerial courage. What do you mean by that in this context?
We’ve all been in organizations where everyone is saying, “When are they going to terminate that guy?” Everyone sees it, but when you’re the person who has to make that decision, it’s a very tough call. I’ve heard leaders say, “I could go along like this, or I could make a decision.” Those with managerial courage say, “I’ve got to figure this out, because this is not acceptable. I see it, I know it and I’ve got to make a decision.”
This is all linked to succession planning because if you accept mediocrity with a current leader, succession will be a problem. Managerial courage is saying: “I don’t know what I’m going to get, but I know I can do better. I know I can raise the bar.” It’s about continuously raising the bar, and it’s never done. You might have a plan, but I can’t tell you how much that might change. Your criteria might change in one or two years. You must be able to predict what you’ll be looking for down the road.
How much can a board influence culture, and how do they do that?
You don’t want your board to be running your company every day. The board has to delegate to the CEO the [responsibility for] the organizational culture the company is trying to build. With some of the highly publicized cases, you think, “Where were the boards?” Fortunately, that’s getting better. It’s a difficult choice when you have a questionable leader, but the company is making a lot of money. That’s really tough. That’s when managerial courage comes into play.
The board must be very clear—not only on what type of people you bring into the organization but also who you allow to stay. Not being honest about what you need to work on is a problem, and when you transition to a new leader, you must be very transparent about what he or she will face. Be rigorous on the front end to ensure that it is a fit and that expectations are clear. Then, it’s a matter of assimilation—the first 90 days are important. The transition should be as smooth as possible, especially if the leader is coming from the outside.