Renewing executive employment contracts and the Presidential Election

The recent article in "The Economist" touches on competency of the presidential candidates and the unknown. Really though, renewing an executive"s contract is not so different then electing a President. Fortunately, we don't have to wrestle with nuclear proliferation and weapons of mass destruction.

Business owners, insiders, directors, and angel investors must weigh a senior executive's performance and hard results against a host of soft personality traits and behavior. Assuming that they are competent, we basically want someone we can work with and who shares our values--- "a nice guy or girl." However, no matter how nice they are, we don't want someone who will drive the business into the ground either.

Sooner or later, we all have to deal with competency issues and the unknown when renewing a contract for a CEO, President, Executive Director or Chief "whatcha ma call it" of a business. Here are several points to keep in mind when doing so:

A great vision is no substitute for performance

Good leaders can articulate a vision and marshal forces to move a company's product or service forward. What separates a great leader from a good one, is that the former achieve significant results. Leaders are not afraid to delegate authority. However, they also have an eye or eyes on the situation to prevent things from going wrong. Any leader who is reluctant to delegate or wants to totally control things is a recipe for disaster.

Mistakes will be made- count on it

Any good leader will make mistakes. The key to success though is to "learn" from them, keep them to a minimum and hold subordinates accountable. Discounting mistakes is tantamount to refusing to learn. Many leaders fail to see the reality of a situation. They can't let go. Owners and directors often have a very difficult time taking such a CEO to task, especially if they are likeable.

In contrast, a CEO may be getting bad advice or someone may be painting a "rosy picture" of a situation. Again a good leader with an owner's or Board's help should be able to distinguish between business reality and what they want to hear. Good leaders are not afraid to make changes in key personnel to achieve results.

Fear of the unknown

Many businesses are afraid to confront CEOs that are not measuring up to expectations. They are afraid that the CEO will leave the firm. Nor are they anxious to evaluate other candidates for the position. So in the end they opt for the "no action" alternative.

Even if a business chooses to retain their poor performing CEO, there is no excuse for not having frank conversations on performance. No one is perfect, but good leaders are able to realize when they are wrong and can accept criticism and help in mitigating poor performance.

What do you think?

Are the U.S. Presidential Elections similar to renewing a senior executive's contract in the private sector.