When it comes to hiring C-level executives, especially at financial institutions, former Medtronic CEO Bill George stresses substance over style.

Question: How does a board go about selecting a CEO?

Bill George:  It starts with the mission of the company. Does the leadership of the company are they committed to the mission and the values of the company?  Goldman Sachs for instance, John Wraith had written the mission and values of the company in the early 1980s, 25 years ago, and he wrote about the client’s interest always come first.  Is the leadership committed to that proposition?  We believe in teamwork over stars.  Is the leadership committed to that?  Don’t choose a leader who is not, who wants a start system.  If you believe in creating meritocracy, which Goldman is, which Medtronic is, which Exxon Mobil where I serve on the board is then you better choose someone believes in meritocracy and not pushing up a lot of his political buddies and playing a power game and that’s what you’ll see in a lot of  these failed leaders.  They’re more interested in personal power accumulation and their own personal self aggrandizement.  And by the way, I don’t even think it was money.  I think the money conveyed a certain status that they were looking for and it was a way of offsetting some internal feelings that weren’t so good and so I think we’ve chosen the wrong leaders for the wrong reason.  I mean choosing people based on their charisma instead of their character.  When choosing people based on their image instead of their integrity.  choosing people more for style and substance.  If you choose people for that, why are you surprised when don’t get people of great character and great values?  And so I think boards have failed in many, many cases.  Now the corporate boards are finally waking up and I hope the Wall Street boards are going to wake up.  The Citigroup board was totally asleep when it didn’t manage Sandy Weill and let him create the kind of instability he did and then chose Chuck Prince the lawyer to take over.

Question: Is that an argument against “too big to fail?”

Bill George:  Yes, I don’t believe in the big bank supermarket.  I don’t think you can argue its absolute size.  Like take Exxon.  It’s the world’s largest company.  I don’t think you can say Exxon is too big, let’s break it up.  Exxon is focusing on what it does well, oil and gas, okay.  Delivering it in the most efficient way to the most people and you know and doing it with the least amount of energy usage.  It’s very committed to that.  And Goldman Sachs is focused on being an investment bank.  You know I’m not even sure.  I think you can’t put the genie back in the bottle, but I’m not so confident that was a good thing.  Dick Covosovich, a very successful CEO of Wells Fargo for 20 years, the most successful commercial bank.  He would never again do investment banking.  He was going to stay the course and I talked to him about Wachovia.  Why did he do Wachovia because he took a huge hit from some of their trading activities?  He said, “We wanted it for the franchise.”  And that’s what they’ll get.  You watch.  They’ll have that east of the Mississippi franchise with the west of the Mississippi.  They’re be a great commercial bank is what they’ll be, but they understand their mission.  They didn’t try to be all things to all people and I think that was the failing of Sandy Weill at Citigroup.

Recorded on October 9, 2009