The Return of the Caretaker CEO
October 8, 2008
There is a pattern to foul times. The press picks up the early scent and relentlessly pursues the trail of woe; nervous companies begin to see the smallest market aberration as evidence of the impending apocalypse; the VC cartel issues warnings of supply interruptions to their funding cocaine and before you know it everyone is curled in the fetal position of fear. Discretionary everything is immediately cut, the keys to the old fiscal Diefenbunker are dug out of the drawer and everyone is told to hunker down. Only the essentials will be stocked and deliberations begin on who to invite inside.
The most productive sales folks can enter as they remain critical. The engineers working on today’s core products can also come inside while those working on tomorrow’s innovations will regrettably have to go. A Director of Engineering will do instead of the Vice-President of Engineering, and as for that big bucks marketing guy, is he really needed right now?
The CFO is a no-brainer and come to think of it, perhaps it is time to upgrade the function. As for the CEO, maybe he or she is kept, maybe not. If the consensus is that the CEO is average, perhaps it is smarter to move the CFO or COO into the corner office to ride out the storm. Such a move saves one large salary and sends a clear message to the troops regarding immediate financial priorities….a new CEO can always be hired when the world gets back to some semblance of normal.
Welcome to the return of the caretaker CEO. A board favorite during inclement times, it is a role tasked with paring, slashing and dieting an organization to health. Heads-down, the caretaker CEO zealously guards the firm’s precious cash while going line by line to root out unnecessary costs. The major deliverable is to keep the business solvent until the clouds begin to dissipate.
Boards of Directors are attracted to caretakers in unkempt times. They contain, control, clean-up, put the lid on everything and keep the lights on until the world comes back. But boards vary widely on the attributes they look for in caretakers. Some view the role in pure custodial terms and thus select solely on financial and administrative qualifications. These boards often get less than they bargained for. Turbulent periods are unpredictable in length, complexity and ferocity and caretakers can occupy these roles for some time. Those who do little more than jockey spread sheets, head counts and costs leave predictable legacies. The organizational body may live but its severely emaciated state will bear different long term health costs.
Others boards take care to elevate stars or up-and-comers into these interim roles. These executives embrace such assignments as admission passes to the CEO ‘big show’ and tackle them in a decidedly enthusiastic manner. Seeking to prove themselves, they keep their heads down while also regularly looking up and outwards to contemplate and deal with the broader business. They are sufficiently self-aware to know their liabilities as first time CEOs and take steps to overcome them. Encouraged by their boards, they seek out mentors, join YPO organizations, seek knowledge and while delivering on today’s tactical demands, they demonstrate more. They are a positive force for change. Some earn the right to remain in the position while those who don’t are better and stronger for the opportunity.