Three ethical questions to ask before hiring a CEO

Having spent the last decade serving on the boards of various large global organizations, I can attest that one of a director's most important - and most difficult - jobs is the hiring and firing of chief executives. I have also come to a crucial realization: The process needs an ethical upgrade.

Traditionally, in considering potential CEOs, boards have focused on a conventional array of qualities. What's the candidate's track record for delivering growth and profits? Appetite for risk? Ability to seek opportunity? Operational history, including any safety issues? Capacity to lead in a crisis, such as a recession or pandemic? Leadership style, including commitment to teamwork, to motivating the workforce, to earning the respect of shareholders, and to engaging with stakeholders such as regulators and the wider community?

These questions remain valid. Yet in recent years, in at least half of the occasions that I have had to reprimand, punish or even fire a CEO, none of them have mattered. Rather, the problem was the executives' moral or ethical behaviour. And my experience is not unusual. By one estimate, the #MeToo movement alone prompted the ouster of more than 400 high-profile executives and employees, across different industries, over a period of just 18 months. Inarguably, corporations are moving into an environment where ethics and morality must carry greater weight in choosing CEOs.

What does this mean in practice? To bring ethical vetting into to the hiring process, boards must be prepared to ask some tough questions. For a start, here are three that I believe would be useful.

Will you attest to your past behaviour? The formal materials that boards consider, such as references, aren't likely to surface any potentially problematic history. Hence, requiring a declaration or testament can make sense. Already in the UK, as a matter of course, political parties explicitly ask candidates for public office if there is anything from their past that could cause the party embarrassment if it came to light. This is about protecting the organization's reputation by providing the opportunity to declare any significant issues.

What is the worst thing you have ever done to another human being? Unlike metrics-based questions, this delves into the choices people make, and the reasoning they use, when confronted with ethical quandaries. It also helps ensure that the candidate has thought carefully about the past.

How would you navigate a specific moral dilemma? Present the candidate with a situation that entails a difficult trade-off touching on an important topic, such as the environment, diversity or shareholder voting. For example, how does a candidate think about whether being socially responsible is at odds with investing in China? In such case studies, there's no right answer, just an opportunity to gain insight into a person's motivations and reasoning. As opposed to exposing or avoiding bad behaviour, the purpose here should be to assess a candidate's ability to embody and in still positive values as a representative of the institution. (Bloomberg)