Brian Ruder is a Partner with Francisco Partners, and focuses primarily on investments in the software and services sectors. Mr. Ruder serves on the board of directors of Foundation 9 Entertainment, GXS, Mincom and Primavera. Recently, he had lunch with Ben Anderson and shared his ideas on the “leading indicators” of successful first time CEO’s in Private Equity backed companies.

We talked about the glut of CEO candidates in some areas that means Private Equity investors are forced to hire “first time” CEO’s. There is risk in all hiring, but when an executive is untested and unproven, the assessment prior to hire is important. I asked Brian what he does to manage the hiring risk and if he has a “leading indicator” list.

Brian does believe that there are leading indicators that over time and formed a pattern in successful hires. Brian’s mentor, Warren Hellman, (Mr. Hellman co-founded Hellman & Friedman in 1984, is the Firm’s Chairman) the “Warren Hellman gut check”. Six weeks after the hiring of a CEO or senior executive, Mr. Hellman would make a gut check – a quick analysis of the executive’s strengths and weaknesses at that point. Brian says that this is usually a long enough period for themes to emerge and a short enough period to do something about the gaps. He believes in confronting the issues head on and quickly is healthy for all parties.

Here is Brian’s leading indicator list:

  • The best communicate well – internally and externally
  • They come to the Board with solutions rather than naked  problems
  • They are well prepared – always have the detail and analysis to support decisions
  • They are able to engage the Board  in advice and support – there is no need for the Board to manage the executive
  • They lead vs. manage – they tend towards influencing people and focus on vision, inspiration, motivation, relationships, teamwork and listening
  • They are open to feedback and engage in real authentic conversations