Leadership Advice from an Investment Analyst

Posted 12.17.2008

Wall Street investment analysts have a front row seat for observing executive presence in action when they participate in quarterly earnings calls with corporate CEO’s and CFO’s or attend investor presentations.  The recommendations they make based on these executive performances can swing a company’s market value hundreds of millions of dollars in either direction.

In the current issue of Chief Executive magazine, long time Wall Street analyst Stephen McClellan offers his advice on what he’s learned in 32 years of listening to and watching senior executives.  Reading through his article, I’ve boiled it down to three leadership traits that can create economic value:

Fairness:  McClellan notes that analysts really resent favored treatment for those that “cooperate” with the company and the blacklisting of those that are critical.  As he writes, “Impartial, evenhanded executive treatment of all analysts indicates outstanding management quality and character.”

Accountability:  Executives who dodge accountability for poor performance by blaming the “headwinds” of the economy do not win points with analysts. McClellan writes that the subprime lending crisis is the current excuse du jour for poor performance. 

Humility:  Executives who take personal credit for every success while avoiding the blame for failures drive analysts crazy.  Visible ego indulgences such as heavy media coverage, excessive compensation packages and corporate jets tend to lose the analysts as well.  (Along with everyone else lately.  Why do you think we’re still hearing about the auto execs flying their corporate jets to Washington for the first round of bailout hearings?)

So, what strikes you about this list?  I’ll tell you what lands with me.  If these characteristics were more common, we perhaps wouldn’t be in the middle of an enormous economic crisis.  Things didn’t just happen.  The current crisis is a result of a series of poor leadership decisions that stemmed, in part, from a lack of fairness, accountability and humility.

What’s your take?  What would you add to the list?