The Bear Market’s Happiest Man

Tom Neff explains what companies from Lucent to Yahoo! are looking for in their new leaders. Hint: Internet-startup experience is not enough.

We are eating a hearty lunch at a New York steakhouse. My lunch partner is expounding on what a great year he’s having, how terrific business is, how rosy the future looks. We’re not sipping champagne, but we might as well be. It’s that kind of meal.


Did I somehow fall into The Matrix? Funny, last I checked, it was 2001– the year of doom and gloom, layoffs and belt tightening, ground chuck instead of sirloin. The bad news continues to roll in like a series of tidal waves, and whether you’re a venture capitalist or a sanitation engineer, your job insecurity has gone way, way up. No one has escaped the tsunami that broke last April, right?

Actually, there is one group that’s doing okay, and my lunch date, Tom Neff, chairman in the United States for executive-search firm Spencer Stuart, is the premier representative of that class. He’s a high-end headhunter whose business exploded with the birth of thousands of new companies and continues to grow as missed earnings and plunging stock prices mean that one chief executive after another gets the boot. “I’m busier than I have ever been,” smiles Neff. “For candidates at the CEO level, I have not seen any downturn.” Indeed, research done by Spencer Stuart shows that these days, the median tenure of CEOs in the largest 700 companies is 5 years, down from 7 in 1980.

An affable blue-blood type who golfs with Jack Welch and belongs to all the right clubs, Neff became a bit out of fashion in the foosball-focused dotcom days. Sure, he had plenty of searches to do, but they were primarily replacements for senior executives who had bolted for new-economy jobs. Many of the best and brightest weren’t interested in anything but a small startup. Business was good for Neff, but it was a little bit like playing Whack-A-Mole: As soon as one slot was filled, three more opened up.

Now, however, Neff has just as many shoes to fill — and many more excellent candidates begging to fill them. As virtually every company deals with a depressed stock price and a lowered demand for its products, the skills they require of their leaders are changing too. Neff recently pulled three candidates out of Philip Morris’s Nabisco unit for CEO positions at Hershey Foods Corp., Campbell Soup Co., and the Gillette Co. He’s charged with finding someone — anyone? — to take the top slot at Lucent Technologies. And while he’s not personally handling the search to replace Tim Koogle at Yahoo! Inc., his colleague Jim Citrin is.

Sure, CEO tenure is shrinking, says Neff, but one thing — the desire for excellent, motivating leadership — is stronger than ever. “There’s more turnover than ever,” he says. “But not everyone will be welcomed back to traditional companies.” Neff may be old-school, but what he says is somewhat chilling for young Internet CEOs who are hoping to make the transition to a bigger, older company. “Those people are not going to be CEO of anything right now unless they create a new Internet company on their own,” he says. Instead, they should “enhance their experience base” with a lower-level job.

As someone who’s been in the business for nearly 30 years, Neff has plenty of insight on what companies are asking for — and what CEO candidates want — in this crueler new world. Here’s his take on the skills a good CEO needs to make it today.


Think Strategically, Think Fast

Suddenly, boards are desperate for leaders who can bound into a near-crisis situation, quickly assess the business, and create an action plan. “People are either strategic or not,” says Neff. “I like to see circumstances in candidates’ pasts when a redirection was required and they came up with a vision — situations when they needed to assess a business quickly to find out if it was on the right track, situations when they didn’t have the luxury of six months to solve a problem.” Sure, many executives learn to operate on Internet time, but this is something different — the need to make tough, sometimes painful decisions just as quickly. “At a time like this, you like to have people who have operated through good times and bad. If they’ve never navigated a recession, this is going to be a scary time for them,” he says.

Know Your Numbers

At the height of the bull market, many companies were focused on their brand. But these days, broad marketing skills are not in demand as much as they once were. He says, “Now it’s more about blocking and tackling.” At a time when cost cutting is quickly becoming part of every CEO toolkit, boards want candidates with real financial skills. According to Neff, there are two sides to this: “One relates to fixing the balance sheet; another relates to managing for cash. When markets are tight and it’s hard to raise new capital, you have to generate cash internally. CEOs need to be able to determine where the fat is and where the assets are. They need to be hands-on operationally.” Focus and control is hot. Delegating is not.

Understand Tech As a Productivity Booster

These high-level positions don’t require the know-how to set up an e-commerce business anymore. A comfort level with technology is still extremely important for any CEO, but having specific Internet experience is not quite as valuable as someone who can look at the existing technology and figure out how to improve what’s already there. Neff says that companies are asking for people who have demonstrated that they know how to use technology in the service of business. Translation: Know your stuff, and know how to wring more dollars in savings out of it.

Be the Great Communicator

Last year, says Neff, hype was the rule rather than the exception. But with employee morale down, a dismal stock market, and tough decisions in store, one of the key qualities companies are looking for in CEO candidates is the ability to speak clearly and honestly. “There’s much more of a premium on being able to communicate,” he says. “The worst mistake for CEOs is to miss earnings guidance. And they need to be able to deal effectively with the board. There should be no surprises.”

Even more critical is being able to talk to employees, who may be insecure and demoralized. “Particularly if you’re asking people to go through a period of sacrifice,” says Neff, “employees need to know why and they need to know what the expected outcome will be. You can’t ignore the internal constituency when you’re managing in a period of transition.”

Manage for the Team

These days, Neff is spending a lot of time making sure his CEO candidates have proved that they can keep a team together. In these times, it’s downright critical. When checking references, he makes sure that he talks to people who have worked for the candidates and asks them about the candidates’ ability to attract good people and to motivate, challenge — and ultimately — retain those good people. “Was the candidate the first to congratulate you when you did something, or was his door always shut?” asks Neff. “Chief executives have to keep employees together, to put an arm around them. Employees have to understand what’s mission-critical, and they need to be motivated and reassured.”


Jennifer Reingold ( is a Fast Company senior writer. Contact Tom Neff by email (