How to assess director and CEO candidates – regarding values, morals, and ethics.

There have been numerous corporate scandals, with questions as to “where were the directors”.

This tool focuses on possible behavioural questions (i.e. can be confirmed via reference checking) to ask director and CEO candidates.  The nomination committee/board should have a discussion on each question and document:

  • What might be good, OK or unacceptable answers
  • What answers would eliminate the candidate from further consideration.

This document does not address skills or functional competencies.

It is up to each board to determine what they mean by values, morals, and ethics.

Many would advocate that the one single decision which has the greatest impact on long term corporate value is the appointment (or termination) of the CEO.  Let’s first consider some possible questions to ask each director candidate who would have to vote on CEO appointment or termination.

  • What is the most senior level of person you have terminated?
    1. Why? Performance (i.e. impact on profit or value creation & preservation)? Non-compliance with laws, regulations or company policies? Ethics or values?
  • Looking back in your career what’s an example of person you decided not to hire or promote, due to ethics or values?
    1. What were the ethics and values issues?
  • What is the most senior level of person you either appointed or recommended for appointment?
    1. What were the 3 most important reasons you did that?
  • As you look back over the people you have appointed or recommended for appointment, what was your greatest “mistake”? How did you determine it was a mistake?  What have you done differently since then, when appointing people or recommending appointments?

Now let’s look at the values, morals, and ethics questions that could ask of both director and CEO candidates.

  • What is the most courageous business action you’ve taken and what was the impact on company profits, your career and your family’s financial situation?
  • What was the most difficult ethical business decision you have made and what was the impact on company profit? What definition of ethics did you have in this situation?
  • What has been the greatest crisis you have had to resolve? What was your role?
  • When dealing with an issue, what is an example of how your probed deeper into the company to understand the causes of the issue?
  • What is the biggest issue or problem you’ve encountered where you wished you’d informed the board earlier?
  • What was the most significant issue (ethics and values) which a subordinate or colleague brought to your attention? How did you deal with it?