Job Hunting

CEO Due Diligence

Researching Your Boss
Alix StuartJuly 1, 2001

Having come from Cendant Corp.–which he joined as finance chief in 1998, after fraud was discovered at the conglomerate–David Johnson took special care when he began looking for a new job this year. You want to “join a team of people you can trust, and who do business the same way you do,” he says.

That starts at the top, of course. “The relationship with the CEO is probably the single most important issue,” says Johnson. “And it’s a risk that’s difficult to diversify.” So when he began to focus on the CFO slot at The Hartford Financial Services Group, he extensively researched its CEO, Ramani Ayer, before making the decision to join the big Connecticut financial services and insurance firm last May.

Such a policy–performing what amounts to due diligence on your prospective boss–should be adopted by more CFOs, says Stephen R. Scroggins of Russell Reynolds Associates. Indeed, recruiters often see seasoned CFOs poison their careers by signing on with the wrong boss. “A CFO being recruited by a firm can get caught up in the romance, and miss roadblocks around the curve,” says Scroggins.

But how to ensure that CEOs will live up to their billing? While there’s no reliable equation for predicting integrity, ability, and compatibility, some steps can improve your chances of finding the right “partner” when you leap.


For Johnson, due diligence involved grilling people, within Hartford and without. Former Cendant colleagues who had worked at Hartford when it was part of ITT Corp. provided “a critical mass of people I trusted.” The same contacts, along with several securities analysts, also helped him decipher how the firm crafted its strategies, and how he might fit into the process–an important ingredient, since Johnson was a newcomer to the industry, while CEO Ayer was a 28-year Hartford veteran.

Other job-hunters use formal networking groups or databases. But be careful to find knowledgeable, unbiased sources. And don’t rely on the recruiter for a complete picture, warns Scroggins. “I’ll tell you everything I know about the CEO, but I may have spent only an hour and a half with him beforehand.” Outside auditors, bankers, and analysts, too, may have little real knowledge, or could be unwilling to risk a relationship by sharing sensitive information.

Outside board members gave Yon Yoon Jorden a bum steer as she analyzed an Informix Corp. CFO opening in spring 2000. The former Oxford Health Plans Inc. finance chief probed their assessments of CEO Jean-Yves Dexmier, and they “assured me they had full confidence in the CEO and would do anything to support him,” she says. Yet less than two months later, the CEO was out, and Jorden had resigned. “I believe they were telling me the truth at the time, but they just got taken by surprise with a missed quarter,” she says. Jorden is more cautious now, having turned down three job offers since then. To her list of questions for directors she has added: “Is one quarter of missed earnings grounds for firing the CEO?”


When consulting a CEO’s underlings, candid appraisals are rare, but good questions can elicit important insights. And “you can learn a lot from body language. You can tell how someone answers the question, and what they focus on,” says Lowell Robinson, CFO of He interviewed Hotjobs finance managers and other executives to assess CEO Richard Johnson last year. From them, he learned that the CEO was “very sales-and-marketing-oriented, but not strong on process”–a good match for Robinson, who likes bringing structure to high-growth situations.

The interview process itself can reveal how much value a CEO will place on a CFO’s contributions. In talking with Zoe Foods president Tori Stuart, Dan Jacques gauged his opportunities at the small natural- foods firm, in Newton, Massachusetts, by how much proprietary data she was willing to share with him. After weeks of discussions, he was won over by Stuart’s openness, and a list of CFO projects, ranging from establishing accounting systems to participating in a new business plan. “I knew what I was getting into,” says Jacques, “for better or worse.” — Alix Nyberg


How to scrutinize a CEO.

Ask the CEO such questions as, “What was your relationship like with your previous CFO?” and “How do you react to bad news from finance?”

Ask managers and board members about the CEO’s strengths, weaknesses, and work habits. While you won’t get the whole story, patterns may emerge.

Locate employees, bankers, consultants, or others who once worked directly with the CEO, but who are detached enough to offer unvarnished opinions.

Source: Various recruiters