[FOUNTAIN]The deceptive charms of the outsider CEO

The chief executive officer is crucial to a company, as its future often depends on his competence. According to the management philosopher Peter Drucker, charismatic leaders were best suited for the conventional industrial period, but in the New Economy, which treats knowledge as a source of authority, a leader who knows how to effectively use an existing system is more successful than a charismatic one.
A typical charismatic leader would be defined as having undying energy, intimidating confidence, superb thinking, a charming personality, superiority and special skills. A charismatic leader makes his own rules instead of honoring the existing regulations. But Mr. Drucker said that such a leader is likely to fail, because he has too much confidence in his perfection, and stubbornly resists change.
Times have changed, and CEOs are now treated like products. Just like the rest of the staff, CEOs are scouted and bought. But the firms on the business magazine Fortune’s latest list of the world’s 10 most respected companies are headed by insiders who have put in more than 20 years at their companies. It could be said that it’s those companies that have problems that are likely to look outside for CEOs.
The British weekly The Economist recently wrote that companies usually look for charisma when seeking leaders from outside. They figure that strong leadership is necessary to command an organization in jeopardy. But research on the performances of CEOs brought in from outside, conducted by Chuck Lucier of Booz Allen Hamilton, found that they were likely to thrive in the early days, but often ruined the organization as time went on. CEOs from outside are good at overcoming crises with drastic measures, such as restructuring, but were less skilled at creating an organization fit for long-term growth. Of course, there are exceptions; Louis Gerstner, a CEO brought in from outside, is considered to have successfully reinvented IBM.
Korean companies are increasingly bringing in outsiders as CEOs. Following the unprecedented appointment of Kim Jung-tae to head Kookmin Bank, Woori Financial Group recently named Hwang Young-key, the former Samsung Securities president, as its chairman. Mr. Lucier’s research suggests that these men’s grades will be determined in the later days of their terms.

by Lee Se-jung

The writer is an editorial writer of the JoongAng Ilbo.