Search for Technically Competent CEO?

With the sudden retirement of California utility PG&E CEO Peter Darbee, the “President of the California Public Utilities Commission suggested that PG&E ‘return to its roots by hiring the most technically competent person, someone with a long standing history of performance in the energy industry.’”
(PG&E CEO Darbee to Step Down, WSJ, April 21, 2011).

When an executive is seen as a fallen leader, California Public Utilities Commission President Michael Peevy’s response is not an uncommon one. This is especially the case when the CEO is seen as an industry “outsider”. When an “outsider” fails in a senior leadership role, many quickly determine it was the lack of industry experience, a failure to grasp industry basics, or a limited appreciation for the culture as the root cause for the leadership problems. With this logic, “technical competence and industry experience” become the most important selection criteria.

In this case, though, Darbee was not a complete “outsider”. He joined PG&E in 1999 and was promoted in 2005 to President and CEO. It would seem the PG&E board weighed a number of criteria in making their decision as to who would lead the organization going forward. Could it be that it was not so much a lack of industry experience or technical competence that caused trouble for the utility, but Darbee’s poor quality decisions, a lack of effective change management, or other key leadership qualities? Rather than a lack of technical competence or industry background, as Michael Peevy seems to imply with his suggestion, could it have been a less than effective selection decision by the board?

At the time the board selected Darbee, they may have been too preoccupied with improving financials or innovating with new technologies or some other overriding priority. If so, they, the employees, shareholders, and customers, might have been bettered served had they more thoroughly assessed Darbee’s perspective, sense of responsibility, discipline, or ability to adapt among other key competencies. Had these competencies been areas of strength for Darbee, perhaps PG&E might not have lost public confidence and he would still be at the helm, even if he were still considered to be an “outsider”.

Whatever the case here, those in a position to influence a senior executive selection decision or ultimately accountable for the decision itself should avoid defaulting to industry experience as the overriding candidate selection criteria. While it certainly may be a factor in evaluating candidates, it is ultimately a whole person that “shows up” for work. Only a thorough assessment of the complex web of leadership qualities we call competencies will yield an improved likelihood of choosing the right leader for the job.


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