One on One with Gary Burnison, CEO of Korn Ferry
Wednesday, October 14, 2009
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SUSIE GHARIB: Investors are keeping a close eye on Bank of America these days. The troubled banking giant reports quarterly results on Friday which will reveal the financial health of the firm. And the B of A board is expected to name a new CEO at the end of this month, replacing Kenneth Lewis who is stepping down in the aftermath of the controversy over his purchase of Merrill Lynch. So who will lead B of A out of its messy situation? Joining us now, Gary Burnison, CEO of Korn Ferry, one of the world's largest executive search firms. Mr. Burnison, welcome to NIGHTLY BUSINESS REPORT.
GARY BURNISON, CEO, KORN/FERRY INTERNATIONAL: Good evening, Susie.
GHARIB: If you were advising Bank of America, what would you tell the board are the key characteristics in the new CEO to take over at the company?
BURNISON: Well, if you look, it's really a question of closing a chapter on the past and charting the course for tomorrow. So the person has to be well rounded. I think first and foremost, the job's got to be around restoring trust, confidence, morale. Secondly it got to be a strategist, somebody who can strategize for the new world. Third, somebody who can integrate Countrywide and Merrill Lynch, two recent acquisitions, somebody who can drive efficiency and scale and then finally, somebody who can ensure the capital adequacy of the organization.
GHARIB: Picking up on your point about trust, given everything that's happened with this financial crisis and its impact on Bank of America, are there enough top notch executives out there who can come to this job without any baggage?
BURNISON: Oh, sure, yeah. There's a pool of qualified candidates that are out there and Bank of America for all that's been written about it in the last year is a fabulous company. I can remember in 1987 in the stock market crash of '87 how it was rumored that Bank of America was going to go under. I mean, it's a dominant consumer franchise. Fifty percent of the business comes from consumer-based lending and the like.
GHARIB: There are a lot of names floating out there from Brian Moynihan who is an insider at Bank of America to the head of GMAC, an outsider. If it were up to you, who would you think are the number one or two candidates that you would be recommending?
BURNISON: Well, I haven't met those candidates. I think it comes back to the board and what is the strategic plan, where is the organization going, what has to be done? Then from that, what are the leadership characteristics that are required to get the job done. So whether it's internal or external, I think that really needs to be the starting point.
GHARIB: As you know, the American public and the government are trying to rein in on these lavish pay packages at banks and at the Wall Street firms. Will that make it more difficult to lure in an executive, especially given that B of A accepted bailout money, is that going to be an issue?
BURNISON: I don't think it's going to be an issue. It's certainly something that's a challenge, no doubt about it. But I think it's something that can be overcome. I think there's a lot of qualified people that would want the chance to take this fabulous brand and continue to grow and drive scale through the business.
GHARIB: You probably saw this, that the "Wall Street Journal" reported today a survey they did of the financial sector and they're reporting that big banks and Wall Street firms will give their employees $140 billion in compensation this year, which is a record. So it just doesn't seem like there's been any changes in compensation since this financial crisis. Is it back to business as usual?
BURNISON: Well, I don't know. Things go in cycles, businesses go in cycles, life is in cycles. That's hard to say. Certainly you're going to see more compensation. It's tied to performance. More of the bonuses are going to be tied to stock and shareholder value. I think that's where the future is going over the next three to five years.
GHARIB: But even if it's tied to stock, that means that there is a motivation to take risk and that's kind of what led us into this financial crisis. Do you think that the Obama administration's pay czar can do anything to change this?
BURNISON: I think he's probably going to be somewhat limited legally. I think it really starts in the board room. They are the representatives for shareholders. And I think that's got to be the focus. And the board responsibility, the fiduciary duties, those have to be taken more seriously and I think we'll see that in the coming months and years ahead.
GHARIB: All right, Mr. Burnison, thank you so much for coming on the program.
BURNISON: Thank you.
GHARIB: My guest tonight, Gary Burnison, CEO of Korn Ferry.
