No company has a stronger incentive to find great CEOs than Blackstone, the world’s largest private equity firm.
It owns all or part of more than 200 portfolio companies, each of which must have a CEO who would be willing to double or triple Blackstone’s equity in just three to six years—a heavy lift. It’s no surprise that Blackstone takes extraordinary measures to evaluate CEO candidates through structured interviews, psychometric testing, simulations, and more. For decades, PE firms used a specific and seemingly logical formula to choose a portfolio company’s CEO: Find someone who has the hard skills — administrative, financial, sometimes technical — with the impeccable ability to deliver results. With the record, whatever it takes. But Courtney Della Cava, who oversees talent for Blackstone’s portfolio companies, says an emphasis on experiences and outcomes, with less focus on how they were achieved, fosters empathy, humility, and self-confidence. There is a hunger for qualities like awareness.
“We are realizing that success and failure largely depend on these skills,” explains Della Cava. Luck, “The bitter truth is that there is nothing soft about soft skills.”
Blackstone is not alone. In today’s environment of an uncertain economy, geopolitical crisis, and a stock market that has gone nowhere in two years, it is time to stop hiring CEOs who criticize and take names. Still it is not so. experts told Luck In publicly traded companies as well as in the PE world, the appreciation of more compassionate skills is only growing.
Succession expert Kathy Antarsian, CEO of Spencer Stuart executive search firm, believes it’s these soft skill qualities that separate the best from the rest. “What will set apart great, strong CEOs will depend on their humility and awareness of understanding the more complex context of their role,” she says.
self aware ceo
The trend of hiring leaders with deep human skills was already underway when the pandemic hit and disrupted it.
Until then, the CEO should still be confident, informed, prepared and firmly in charge. Then, suddenly, employees looked to their leaders for answers that no one else had. Workers were concerned not only about their livelihoods but also about their lives, requiring CEOs to connect in an emotional way that many were unprepared for. Laxman Narasimhan, then CEO of Reckitt Benckiser Group and now CEO of Starbucks, said Luck At the time: “I found that the magic in an organization is to be down to earth, to let people see you for who you are, with all the vulnerabilities you face.” Rose Gailey, a consultant at the Hedrick & Struggles executive search firm, explained this change: “Humanity came to the fore.”
Like other societal changes like increased e-commerce and remote work in the pandemic, this one isn’t going away. Self-awareness is at the foundation of today’s CEO ideal. It’s “really about, are you self-reflective?” says Jeffrey Hull, who trains officers and oversees the coaching institute at McLean Hospital in Belmont, Massachusetts. “Do you believe there are different perceptions of who you are and what you stand for?” Leaders who can answer “yes” are more likely to know, among other things, when they are talking too much and listening too little. With increased self-awareness, they listen more and even listen differently. “There’s a hierarchy,” says expert Dick Patton, CEO of the Russell Reynolds search firm. “Many CEOs listen to win. As they become more comfortable and more successful leaders, they listen to what needs to be done. And the highest form of listening is learning.”
Deep introspection is not always easy for hard-working CEOs. That’s why more CEOs are hiring personal trainers, which is a remarkable change. “When I started coaching 20 years ago, it was largely a didactic activity,” says Hull. “Most of my early work was for rowdies. They were responsible for rain, but were also poisonous. “It has fundamentally changed.” For today’s self-aware, humble, vulnerable CEO, it seems logical to have a coach.
To skeptics, all such talk may seem not only warm and fuzzy, but also soft and corny. For decades, CEOs and the boards of directors who hired them valued cruelty above all else. (Fortune even ran articles about “America’s Toughest Bosses.”) But a recent paper supports today’s CEO ideal. Researchers at the University of Pennsylvania, the University of Waterloo (Canada) and Wake Forest University who studied “intellectual humility” found that the more people can recognize the limitations of their beliefs and knowledge, the more likely they are to Will find. Good decisions. Specifically, they are “better able to distinguish between strong and weak arguments, even when those arguments go against their initial beliefs,” the study found. They are more likely to investigate misinformation. They are more motivated to learn, and they learn more. His followers appreciate it too: “Leaders who are high in intellectual humility are also high in emotional intelligence and receive higher satisfaction ratings from their followers.”
Companies are now trying to identify potential CEOs who have extremely valuable soft skills, but it is not easy. “I’m like an anthropologist who’s really trying to understand humans,” Della Cava says. “Humans are complex.”
She takes CEO candidates through structured interviews – not loosely based on telling me about themselves – and gives them tests to measure their knowledge, personality or cognitive skills. She uses “forensic referencing”, checking with a wide range of people who know the candidate. The final interview is a working session with the board of directors of the portfolio company for which the candidate may become CEO. The candidate is given detailed information and may be expected to talk about strategy, approaches or risks. “We learn more about them in 90 minutes or two hours than we do in all those cumulative hours spent on other assessment tools,” Della Cava says. Together, those tools reveal the skills of self-awareness, humility, and empathy, painting a rounded picture of the candidate.
The system is “highly predictable and extremely valuable,” she says, but “doesn’t scale.” Perhaps AI will someday streamline the process. At the moment, assessing potential CEOs is slow and expensive.
Satya Nadella vs Steve Jobs
It is worth remembering that although leadership principles may be eternal, the importance of each principle may change over time.
Consider two tech CEOs: Steve Jobs and Satya Nadella. As CEO of Microsoft for nearly 10 years, Nadella has been astonishingly successful, increasing the company’s market value from $314 billion to $2.8 trillion. Antaresyan has cited him as an exceptional example of a CEO who, like most CEOs, has substantial ego, but who also displays humility and self-awareness.
As co-founder and longtime CEO of Apple, Jobs was one of the greatest entrepreneurs and innovators of all time, but no one would have called him humble. Some of his biggest fans will admit that he can be an egomaniac (and they might use a harsher word). His greatness is beyond dispute. But he died 12 years ago and worked his magic in a different world.
“It’s not considered as cool anymore to be a Steve Jobs-type character,” says Hull. “It used to be who you wanted to be, but now it’s lost its identity.”