They make friends. They hire smart. They take the hits. For New York Times business columnist Joe Nocera, who has written about the Buffetts, Eisners, and Trumps of the business world for more than 25 years, a few leadership qualities stand out. In this interview, he talks with Selling Power about the road to the top – and how the best execs stay there.
Selling Power (SP): What’s the different between a good CEO and a bad CEO?
Nocera: The thing a good CEO has, more than a bad CEO has, is emotional intelligence. I know that sounds soft and squishy, but all these guys know how to deal with balance sheets and income statements. They can make the trains arrive on time. But emotional intelligence is important for a number of reasons. Number one, in a modern age, you can’t just tell people to go do something and expect them to do it. So the force of your personality – the way you try to get things done – is as important as what you are trying to get done.
The second reason is that the CEOs are on such a short leash, vis-à-vis Wall Street, these days. To me the subprime disaster is [like] every other thing that I have ever covered in my life, starting with real estate in Texas in the eighties during the oil bubble, and then on to the Massachusetts Miracle in Massachusetts, and then on to the Internet bubble and the housing bubble; they’re all the same. Basically, [the situation] starts slowly, and then people start to lose their heads and think that they can never go down, and then they start to do dumb things. Banks just lend too much money, standards get lower, and people find some technique and drive it into the ground. [These techniques] probably start as good things and wind up as bad things, which was the case with subprime mortgages, and on and on and on. These things just seem to take on a life of their own and collapse of their own volition. And that’s what’s happened here. It’s happened time and time again.
SP: So emotional intelligence can help a leader navigate through the turmoil?
Nocera: A CEO who is comfortable in his or her own skin, is likeable, and who knows how to be decisive without being rude or arrogant buys more wiggle room. He or she has more allies. The example I use on the negative side is Bob Nardelli [former CEO of The Home Depot]. The stock went down, but if you look at the numbers, almost every metric went up while he was the CEO. Yet when he missteps, he has no allies, he has no friends, and he is basically out of the company.
Emotional intelligence is a quiet charisma, the ability to lead without seeming to lead. These leaders have the ability to make a decision that may be unpopular and not piss everybody off. They listen. They aren’t afraid of criticism. They’re not overly defensive. They’re not afraid of hiring people smarter than they are. Those sorts of skills in dealing with the executives who report to them make the crucial difference between a good CEO and a bad CEO.
SP: And the bad CEOs – are they just the opposite?
Nocera: Yes, they are. When you think about the 1950s and 1960s, when American companies ruled the world, we had a generation of employees who had been through the Great Depression and World War II. They came back from the war, and all they wanted was a nice, secure job. They were organization people. The boss could tell them anything. They just wanted to know how high to jump. So you could be more high-handed and dictatorial.
Today, employees don’t have the same loyalty to corporations. They have a lot more options. They don’t expect the company to protect them for the rest of their lives. They don’t expect to be at the company for the rest of their lives. I remember Fortune used to do a cover story called, “The Meanest Bosses in America.” And those guys were really well-known figures in business, like Bob Crandall at American Airlines. You could be that kind of boss back then, but you can’t be that kind of boss today because you’ll just get washed out. Today, the paradigmatic great boss is somebody like Herb Kelleher, who really cares a lot about his employees and is completely beloved and is also [the head of a company that is] on record as the only airline to make a profit.
SP: Do you think there’s a difference in the way that the public or employees judge their leaders and what they expect from them?
Nocera: I think there’s a huge difference. I think employees want to be passionate about their jobs. They want their job to feel that it has some larger moral value. And that is why so many companies are getting into the environment or doing corporate social responsibility stuff. Employees want to feel like they’re different thinkers. They don’t want to feel like cogs in a machine. They want someone to listen to them – maybe not the CEO, but certainly the immediate superior. So you have to have a culture of trust, a culture that respects the employees. Employees want to know that, when things are bad, the leader is taking a hit along with everyone else and not gorging himself or herself on options and salary when everybody else is suffering – that there is some sense of shared sacrifice.
SP: What do you think the job description of a leader is going to look like down the road?
Nocera: That’s a tough one. We’re in this era now when the baby boomers are preparing to retire. We’re going to get a whole new generation of middle and upper management that is younger and maybe has a different set of values from baby boomers. It’s hard for me to say what kind of leadership will command its respect. The next generation of CEOs is going to have to be people who can adapt to those new expectations.