A new rulebook
The Obama effect being felt on Wall Street
“DURING GOOD TIMES it’s easy to find leaders; during a crisis – such as the one we’re experiencing now – it’s much more difficult.” That’s the view of Dale E Jones, vicechairman and partner of the CEO and Board Practice in the Americas of Heidrick & Struggles, a leading global recruitment company. Jones serves as an adviser to boards and CEOs on issues such as leadership, recruiting, succession planning, corporate governance, compensation and enterprise risk. Jones is also currently co-leading Heidrick & Struggles’ advisory efforts to assist US President Barack Obama’s administration about talent and leadership.
We live in ambiguous times and the world needs those who can lead in a crisis, says Jones. “The reset button has been hit on Wall Street – but things are far from clear. We now have to find banking CEOs able to function with government intervention. Before, a CEO of a bank didn’t have to figure in government (among many stakeholders) as well.
“The debate about how to balance shareholder expectations and the public trust has also intensified. Before shareholder expectations were paramount to the CEO. It had to be met almost at all cost. Now shareholder expectations have to be matched with the public trust.”
Jones gives the example of Chrysler, where the car company’s pension fund creditors were arguing that the interests of their members were being prejudiced versus those currently being employed by the firm. It basically pitted retirees versus employees. (The funds were only briefly able to block the bankruptcy proceedings through a US Supreme Court ruling.)
There’s also reluctance among prospective candidates to commit to filling senior executive positions. “We’re certainly not out of the crisis yet and the uncertainty with regard to regulation, greater oversight and just how Wall Street will function in the future is making appointments difficult. The question is being asked much more frequently: Who would want to be a CEO? Especially of a listed entity.”
Much greater transparency, curbed pay expectations, a new approach to risk management and changes in board assessments are other factors CEOs are now forced to deal with. Many of the new proposals go some way beyond Sarbanes-Oxley rules and the King recommendations on corporate governance.
The reluctance among some senior executives to take on such daunting positions is also apparent from anecdotal evidence. Jones tells of one call he made to a possible CEO candidate for a large financial institution that’s now a ward of the US Federal government. The first words from the prospective CEO were: “I wasn’t exactly looking forward to this call.” Even 18 months ago the possibility of heading an institution so vital to the US’s economic system would certainly not have elicited such a response. Jones says candidates now have to look beyond jobs and a career – it has to be a calling.
Jones also finds evidence of the so-called “Obama effect” beyond the boardroom. “Obama has from the outset emphasised values-based, ethical and principled leadership and stood against the influence of special interests. I think it has enormous implications for other leaders, including in Africa. The world needs moral leadership. I think 2010 is a great platform for South African leaders to show to the world and the rest of the continent it leads for the good of the people and not simply acting out of self-interest.”
Based in Washington, Jones sits on a number of corporate boards and joined Heidrick & Struggles in 1999. After a stint as CEO of PlayPumps International, a non-profit organisation that provides clean drinking water to villages in sub-Saharan Africa, Jones returned to Heidrick & Struggles at the beginning of this year.
“I got the best of both worlds. I returned to Heidrick because I believed the firm’s duty is to make the country a better place. And I also convinced the firm to invest in PlayPumps. In the end I didn’t have to choose between being the NGO guy or the business guy,” says Jones. PlayPumps use a system where a merry-goround a children’s playground also pumps water to the local community. The goal is to install 4 000 of those systems, with 1 500 already operational.
NGO and business guy. Dale Jones