Basic Training for CEOs
Gary C. Wendt, prepare to be scared straight. On June 21, the Conseco Inc. (CNC ) chief and 19 other recently crowned CEOs will subject themselves to a one-day immersion course administered by a parade of corporate critics and longtime chief executives. Those instructors are convinced they might be the only thing standing between the newbie leaders and career disaster. Open only to CEOs who have held the post for less than three years, the course will be taught by professors from elite business schools, top professionals, and such executive suite veterans as Merck's Raymond V. Gilmartin (MRK ), Tyco International's Dennis Kozlowski (TYC ), and Larry Bossidy, former head of AlliedSignal. "It's a boot camp for recently appointed CEOs," quips Rajiv L. Gupta, CEO of Rohm & Haas since 1999, who leapt at the chance to enlist.
To be sure, the CEO Academy is more than just a novel experiment in executive education--it may be the poshest, most expensive boot camp ever. The brainchild of an innovative CEO roundtable, the academy was conceived as a way for recently anointed CEOs to learn the perils of life in the corner office and for old-timers to discuss the trials and tribulations of CEO life before a receptive audience. It will be held in the august Harold Pratt mansion on New York City's Upper East Side. Tuition for the one-day course is a cool $10,000. But the lessons--dealing with the land mines that can bring an early end to a CEO's career--will be just as biting as the bark of any drill sergeant.
Newly minted CEOs expecting a lovefest are in for a rude awakening. The session on shareholder relations will be led in part by Nell Minow, a corporate governance agitator who has helped build bonfires under boards reluctant to deal with poor-performing CEOs. "My goal is to teach them what they need to do to avoid hearing from people like me in real life," says Minow, who will urge the CEOs to adopt performance-based pay plans, preferred by shareholders. Says Minow: "If they are responsive [to shareholders] in good times, they will have a better chance of keeping them on their side in a downturn."
BOARD APPROVAL. If Minow's lecture reminds the new CEOs of one set of bosses, the presentation by superlawyer Ira M. Millstein, the dean of corporate governance, will urge them to pay heed to another: their board members. Millstein believes most new CEOs "would be just as happy not to have a board at all," and give it a low priority. To snap them out of that delusion, he'll warn: "There is nothing more important than getting to know the people who can fire you."
But the highlight of the CEO Academy will no doubt occur when veteran CEOs are asked to share their experiences. G. Richard Thoman, who was fired as Xerox Corp. (XRX ) CEO last May, will talk about the lessons he learned at both Xerox and IBM. Gilmartin, an outsider who reinvigorated Merck & Co., will discuss the special challenges facing CEOs who are brought in from the outside. And in an era when more than half of all mergers founder--often bringing down the CEOs who attempted them --Tyco's Kozlowski will discuss "the dark side of acquisitions." His advice to the rookie CEOs: Once a deal closes, "you have a very short window to create change, so speed is of the essence."
Most of the "students" can't wait to get started. "We're most able to learn when we're new in a job," says Amgen Inc. (AMGN ) CEO Kevin W. Sharer, who got the top job a year ago and expects to benefit from people like Bossidy who have years of experience heading complex organizations. For Conseco's Wendt, who also has been at the helm for a year, the academy is "a chance to think outside of the box that you find yourself in as a leader of a business." Even Gilmartin, who long ago joined the ranks of proven CEOs, says he's looking forward to "the opportunity to listen to others talk about their experiences."
And that, say the group's founders, is the whole point. The CEO Academy is the creation of the M&A Group Inc., a CEO club formed in 1999 as a forum to discuss and facilitate mergers and acquisitions among members. The group has since evolved into something more: an arena that gives the reigning kings of Corporate America "an opportunity to talk about the things that keep them awake at night," says co-founder Dennis C. Carey, a partner at headhunter SpencerStuart Inc. The group has grown to 60 members, including such influential CEOs as Dell Computer's Michael S. Dell (DELL ) and AT&T's C. Michael Armstrong (T ). They quickly realized new CEOs needed help getting their bearings.
The reason? While these industry titans get paid a king's ransom whether they succeed or fail, job security is a thing of the past. "This is a high-risk job," says Kozlowski, the M&A Group's chairman. "Our ranks [turn over] about 20% every year." And with the honeymoon period growing ever shorter, new CEOs have little time to get up to speed. Moreover, "many new CEOs have had limited experience in running a board, or in dealing with Wall Street, the business press, and shareholders," says Carey. That's why he recruited CEOs as instructors. "I wish I'd had [the chance to attend] a forum like this when I became CEO," says Kozlowski.
Of course, the ultimate test of any boot camp is whether it reduces the casualty rate among participants. It will take years to measure the effectiveness of the academy, which the M&A Group hopes to host annually. But with more CEOs crashing and burning, it sounds like a step in the right direction.
By William C. Symonds in Boston