November 27, 2014 – He is the ultimate Kingmaker. Gerry Roche, clearly one of the most recognizable names in the long history of executive search, has placed hundreds of top CEOs, board members and other senior executives over his long career. He has also changed business history. His 1983 recruitment of John Sculley from PepsiCo to the CEO post at Apple helped coin a new phrase in business management, “transferability of management talent,” and established a new standard: that skills honed in one industry can adapt, and even thrive, in another. Kodak, Goodyear, Chubb, AT&T, Coca-Cola and Walt Disney are just some of the world’s marquee companies that have relied on Gerry’s talents to find new chief executives – and with them, new direction and enhanced competitive advantage. Even the National Football League tapped him to find its new commissioner. Now, at age 83, when most professionals have long since retired, Gerry Roche is still going strong.
In the following special interview, Gerry reflects on his 50 years in search which started in 1964 when Gardner Heidrick needed someone to lead the firm’s fledgling New York office. Gerry reluctantly agreed. He talks openly about his first big breaks, including finding four presidents for CBS where he worked with, and under the heavy thumb of, its larger than life CEO, Bill Paley. Gerry also discusses his well-known rivalry with Spencer Stuart’s Tom Neff, with whom he worked to tap IBM’s new chief in 1993 in a well-publicized search. Gerry reflects on his long- time friendship and professional relationship with Jack Welch, the legendary CEO of GE, and he provides a rare glimpse into the unique style and approach that catapulted him to the top of the industry.
Prior to entering the search business, Gerry worked for Kordite, a plastics manufacturer and, from 1978 through 1981, he served as Heidrick & Struggles’ president and CEO. In 1999 Gerry was named “Recruiter of the Century” in a poll by Hunt Scanlon Media of several thousand of his industry peers. He is a former director of Gulfstream Aerospace. A graduate of the University of Scranton, Gerry earned an MBA from New York University.
ESR: This year you celebrated your 50th year in executive search. In that time what do you consider the two biggest changes to the industry?
Roche: First off I would say it’s been the general acceptance of our function, then and now. I think back when I started at Heidrick & Struggles the firm was doing $5 million a year in revenue worldwide. Now we are running at a rate of $500 million per year. And what’s largely fueled that growth has been a general acceptance of our firm, and the entire industry, which has changed dramatically. Today, I don’t know any company or association in the top 100 organizations that is not using executive search. And, of course it’s far broader than that – thousands of companies use search today. That was not the case 50 years ago primarily because it was not viewed as being the high-end business it is today. The second biggest change has been the industry’s gravitation into leadership consulting. It’s taking the core business of search and broadening the function to include leadership consulting as well as culture shaping, management succession, team development, or what is now a much wider functional and full HR service. We play right into the needs of the boardroom and the boardroom’s No. 1 responsibility is to see that good management is in place.
ESR: How large do you think leadership consulting and the other ancillary services you mention will become at some point?
Roche: In all honesty I don’t know. We are relatively new at it. Others have made predictions that were way off the mark so I am hesitant to give another prediction. I will tell you that leadership consulting is a “must have” for Heidrick because clients want and need these services. Time is a great predictor of things and, with these new types of services playing such a key role with our clients, I would not be surprised if we see this segment growing quite substantially in the near future. Our industry is quickly moving from identifying leaders to predicting leadership success. There’s now science being put behind what we do. It’s astounding!
ESR: Gardner Heidrick, the legendary co-founder of Heidrick & Struggles, brought you into the firm in 1964. What do you think he saw in you?
Roche: That’s a fascinating question. One of the lessons that my recruiting experience has taught me is that the people I like most are the people I cannot get! The better the person the harder they are to get. The person who is always in the market is not that captivating. This is how Gardner started with me. When he approached me in 1964 I was not looking for a job. I was with Kordite which was a division of Mobil Chemical and I was the plastics marketing manager. And plastics was big at that time. If you remember the film “The Graduate” young Benjamin Braddock was being encouraged by his father’s friend to get into that industry. Well, that was me back then – plastics was the hottest thing going. Gardner and Bob Zabor, a consultant at the firm then, initially tried to recruit me to Millprint but I turned that down first. Gardner was surprised by this and called me. He said, “What’s the matter with you? This is a great opportunity.” My reply was that I did not want to leave Kordite and go to live in Wisconsin. I actually think Gardner admired my “chutzpa” for rejecting the offer and as he got to know me a bit more; he took a shine to me. He saw that I had an MBA with honors; I was a Navy lieutenant, and I had a Mobil background, all qualities which he liked. He thought subsequently that I might be good at search so he tried to recruit me to Heidrick & Struggles because he needed someone to run the New York office which he had just opened. And I turned that offer down, too. I did not want to go into search and I was happy at Kordite. Plus, I knew nothing about search and, as I mentioned earlier, it was not the most respected career endeavor. But Gardner said, “I will make a deal with you, Roche. Accept my offer and use the opportunity to find yourself another job at the same time.” He knew there was no better place to be to do that. He was also smart. He knew if he could just get me in the door and expose me to the business for a while I’d latch on to it.
ESR: Quite a leap for Gardner.
Roche: It was but it wasn’t just plunking me down. It involved a heavy amount of interviewing. But they checked my references and we developed this great personal relationship – a personal human chemistry. I think the defining factor that caused Gardner to settle on me was that he liked the fact that I kept saying “no” to him so it became a challenge to him. Gardner was a remarkable man who possessed amazing insight and were it not for his influence on me in those early years I would not have been half as successful.
ESR: What did you think of executive search at the age of 33 back then?
Roche: About what everyone else did – not much. And as I mentioned earlier, we did not have general acceptance as an industry. Even the media were calling us “headhunters” and we were considered the low end of the totem poll in the consulting business. I know that Marvin Bower, who built McKinsey and turned it into a consulting powerhouse and with whom we shared an office, gave us a hard time because, on our door we had, “Heidrick & Struggles – Management Consultants.” And he had on his door opposite ours: “McKinsey – Management Consultants.” And I remember the day Gardner was introducing me to Marvin he said to Gardner, “God damn it, Gardner, get that sign off your door. You are not management consultants, you are headhunters!”
ESR: Is there a specific search assignment that you can point to that catapulted you to working primarily at the board and CEO level?
Roche: Yes, it was for CBS which, in those days, was known as “The Tiffany Network.” In my brashness back then I pushed my way into securing a meeting with Bill Paley who, at the time, was the legendary CEO of CBS. I was working on a lower level assignment for them but I thought it would make good sense for me to meet him. I got lucky and was then invited into his inner sanctuary. I was in my mid-30s at the time and he liked me straight off and we developed a good rapport which was not an easy task with Paley because he was a tough cookie. Not too long after he was a searching for a new president and, since he knew and trusted me, he called me back in and gave me the assignment which was the first big break in my career. And over 20 years I recruited four of his presidents. He was not easy to work for and had what I call a “broadcaster’s mentality.” If a show at 7:30 on Tuesday was not working he just got rid of it. Same with his executives. Working for Paley also taught me a lesson early on that I’ve never forgotten and that was how to evaluate people. In our first meeting together on the initial president search I asked him what he was looking for in the candidate. He stood up from behind his grand French poker trading desk and, without saying a word, walked silently to the window and looked out for a few minutes. He walked back and sat down, again silent, but he looked me straight in the eye. He then rubbed his fingers together like an old merchant feeling the clothes. And that was the answer to what he was looking for. It was the “feel” and the “touch” and something mysterious. By the way, what was interesting about the four men I put into CBS as presidents, Paley insisted that none have a broadcasting background.
ESR: Back to what Bill Paley taught you, do you have that same “fine touch” quality yourself when looking for candidates?
Roche: I am very proud to say that I do! The successful recruiters will possess these qualities: It’s their touch, their sensitivity, their drive and their imagination that makes them successful. And I think that is one of the innate qualities I was able to fashion over time. Recruiting top talent is not just about looking at someone on paper or thinking you know everything about them because you have asked them a few questions about their work history or even objectives. The secret sauce, so to speak, is taking the time to dig deep into their souls. That is really when you discover who they are as human beings. Once you understand that you can really measure how they fit into a specific role or organization.
ESR: Why was your recruitment of John Sculley from PepsiCo to Apple considered a landmark assignment for the search industry?
Roche: Sculley was, at the time, the No. 2 guy at PepsiCo. To start out, Steve Jobs’ specs were very, very specific. He wanted someone with a consumer marketing background. He did not want someone from the computer industry but he wanted somebody who understood consumer marketing because that’s where computers were going and that’s where he took them. This was a key search but it was really about the transferability of management talent – taking someone who was selling soda pop to selling computers. At a certain level those skills transfer over seamlessly and, I would argue, it is often imperative to bring in someone from a different industry because that candidate brings in a new and fresh way to look at the company and how to look at its problems and its objectives.
ESR: How were you able to convince Sculley to come over from a food and beverage company?
Roche: At first Sculley had said “no” and his wife had said “no” they didn’t want to move 3,000 miles away. And he knew nothing about technology. But one day I walked him around Central Park and I turned to him and said, “Would you rather continue selling soda pop or do you really want to make a difference and get into a company that is helping change the world?” And I told him the West Coast is where that is happening and, I said, “I am only asking you one thing, John, and that is to give these guys a chance.” Steve Jobs came to town (Sculley refused to go to Jobs so I convinced Jobs to fly to New York) and he interviewed Sculley and it was all over after that – he hit it off with Sculley straight away. And Sculley was “sold” on the opportunity right away.
ESR: What was it like to work for Steve Jobs?
Roche: I got to know Steve Jobs through a dear friend, Peter Crisp, who ran investments for Rockefeller because the Rockefellers were the first who put up money to invest in Apple. I subsequently went out to meet Steve and there he was in his blue jeans and his moccasins and t-shirt and his arrogance, I might add. And I was in my Park Avenue duds and my wing tips. And I said, “Steve, so much for the product, so much for the function, so much for the money, tell me what is it in the person that you want from the human side?” And he looked at me – we were sitting right opposite each other with no barrier between us – and he said, “First of all, Gerry, don’t bring me anyone here who wears wing tips!” So that was my start with Steve Jobs! And he didn’t mean it as a joke.
ESR: Your rivalry with Tom Neff of Spencer Stuart has been well-documented – you were actually retained to work with Tom in 1993. What was it like to work with your chief rival and why was this done at the time?
Roche: The reason we were asked to work together was that the chairman of the search committee, Jim Burke of Johnson & Johnson, was smart enough to know that the universe of candidates for IBM was limited. Burke did not want any candidates out of bounds or not reachable because this was such a critical hire. Initially I told Burke we can do it alone; there are enough candidates out there and I can be effective with this. But Burke said, “No, no, I want to do it this way.” So he brought in Tom Neff and the bottom line is that it worked. It was an unusual arrangement and the press wrote extensively about it at the time but it was also a landmark search that ended with a spectacular choice in Lou Gerstner.
ESR: The pundits accused IBM side-stepping off-limits arrangements.
Roche: Yes, that’s partly true. And at first we turned down the idea so Burke said, “Ok then, we’ll go to Tom to see if he’ll do this and then get another firm to work with him.” So I agreed but I only signed onto the arrangement so long as it was structured where we were not hurting any current client.
ESR: Who’s candidate was Gerstner?
Roche: Gerstner was a very visible guy and I knew him personally when he worked for McKinsey during the period Heidrick & Struggles was located on the same floor. He was the youngest partner ever at McKinsey then and had a big career at American Express before he went over to Nabisco. But the thing Jim Burke insisted on was that Tom and I be partners. He said, “As far as I am concerned you are the ‘Tom and Gerry Show.’ And I don’t want you guys competing with each other, I want you to serve this client and that is me.” So Tom and I drew up a list of candidates and we then divided who could contact each one. But when it came to Lou, Tom said he couldn’t contact Lou. So I said I can so I went after him. But I did all of the work on Lou. I contacted him and mentored him through the process and so on. Interesting side point. When I presented the name of Lou Gerstner to Jim Burke, he did not have a clue who Lou was so I presented Lou’s background – McKinsey, American Express, and he’s running Nabisco for Henry Kravis. And Burke’s reply was, “You are presenting a guy to us who has no experience in the computer industry; he’s a cookie salesman for Kravis. And you want to put a cookie salesman into a computer company? You must be crazy!” But this was a major brick in the concept of the transferability of management talent.
ESR: Getting back to you and Tom, how well did you work together from a “style” standpoint?
Roche: The styles were very different but they were complimentary. We did not try and outdo each other and I still like him today because he listens and I talk! Tom has remained a good friend and I kid him often and say, “You’ve got potential.” I asked him once recently, “When are you going to retire?” And he said, “The day after you do!”
ESR: How imperative is it for you to spend time inside a client company and with the hiring executives (CEO/board directors) to gain an understanding of its culture and a feel for the position you have been asked to fill?
Roche: It’s about getting inside their head; getting inside their soul; getting inside their skin which is critical. It’s about looking at someone in the eye and knowing what’s in their heart and soul and what motivates them as opposed to what they say in their interview, for example. But to your point, it’s not just meeting the CEO or a board member but it’s visiting with some of the other executives and getting a feel from their perspective. Getting to know the culture is imperative and knowing how a particular candidate fits with that culture is the most important thing. Even more important than what’s on his or her resume.
ESR: What attributes do you possess that prompted the client to call you in to handle a marquee assignment versus search consultants at other firms?
Roche: There are two answers to this. I was in with a client on a pitch for a major, major situation. We were last in that day and the person heading the search committee interviewing said, “Your rival firms that were in before you used up most of your time. They each took two hours instead of and an hour and a half so you have little time to present.” My reply was, “Relax. We have a presentation right here today that tells you all you need to know about us but here’s another presentation that tells you what we have done. What we have done speaks so loudly you cannot hear what we say. We have a list here of searches we have done that fit with your industry. Here are the phone numbers of the clients we have served and why don’t you call them and ask them how good we are? Don’t listen to our pitch.” That did the job and we got the search in 20 minutes. My second point is understanding the deeper points about someone. Peters and Waterman wrote a book and it was to identify the characteristics that made the best companies in the world successful. And their conclusion was this: “We went in looking for programs, practices and procedures. But we came out looking for pride, perseverance and passion.” And that is how I like to approach an assignment. Looking at the intangibles and digging deeply into the soul of a candidate. And, I might add, I use references to the ultimate.
ESR: Your close friend, Jack Welch, for whom you also worked from time to time at GE, is an example of someone who retired, walked away and did not walk back through the doors of GE when he retired. How often are you faced with succession issues where a CEO does not want to retire but the board wants a change?
Roche: First off I admire Jack for having made the decision to leave when he did and, as was and remains the case, he’s not injected himself into the decision-making process at GE or interfered with Immelt’s vision. When Jack’s tenure was over he moved on and allowed the next generation to place their stamp on the company. But to your point, I have been brought into very sensitive situations where the sitting CEO is not ready to go but the board and other senior management want a change. Usually each situation is different and, careful, undivided transitioning is the key. Jack, as usual, set the model for this.
ESR: Can you identify a CEO assignment or two where the board wanted a specific candidate but you insisted on someone else?
Roche: First off you never take your client on point blank. If he has a suggestion about somebody, even if you don’t think it’s a good idea, you must very carefully interview that person and give them a chance and give them objective and straight feedback. I end up giving different opinions, different options and so on. But what I might say is, “Let’s consider this or look at a different path.” The danger of arguing with your client, especially a board member who is suggesting someone, is that he’s the one deciding on your candidates in the end.
ESR: How often do candidates that the CEO or board suggest end up being the choice?
Roche: Often. My commandment is, “Inside is better than outside, all things being equal.” Our job as recruiters is to get you the best person possible.
ESR: How often is the internal candidate on a CEO search hired? In these instances, where there are other inside candidates, how often do they move onto other companies to take on the CEO post there?
Roche: Very often. I would say a third of the searches that I’ve done have us look at the internal candidate. As I said earlier, all things be equal, inside is better than outside. There are three reasons for this. First, the surprise element is gone and you don’t have to worry about how they will fit in because they are already there. They know the company, the culture and the people. Second, we have found that the inside candidate’s internal colleagues prefer that one of theirs gets the job. It improves the internal spirit. Three, it costs a lot more to go outside for the simple reason that our fee is a lot more if we have to look externally. Here’s why. For an internal candidate we barely have to increase the compensation because we don’t have to convince them to take the job. They are already interested. On an external hire we invariably have to kick up the compensation to entice that candidate to leave their current position. In some instances the company has to offer the candidate a lot more to make the opportunity more attractive. So our fee is more because that third is higher as a result.
ESR: There was a well-known situation with a Fortune 50 company about 10-15 years ago that was a perfect example because the successful CEO candidate was an insider and was selected. But you then helped the two No. 2’s that were not selected to go elsewhere. How do you handle No. 2’s that don’t get the CEO job?
Roche: For confidentiality reasons I will not name names but I will say this: we have had experience working with those who do not get the job at the request of the client because the client will say, “Look, we are going to put one of three candidates into the role and the two who don’t get it aren’t going to be happy and, second, they are exceptionally good and are good enough to run any other company and we want you to help place them.” In a well-known case, I did. The same month that the successful candidate was selected I was able to announce that the two “losers,” so to speak, were put into two other companies as CEO. This was done at the pleasure of the initial client. But I was brought in initially to evaluate all three candidates so, after the selection was made, I was then in a great position to help them move on.
ESR: Not all of your hires have been for clients. Very often you have brought key people into Heidrick & Struggles.
Roche: Believe it or not it has been my No. 1 responsibility. Marvin Bower did the same at McKinsey. He spent much of his time bringing in great people and I learned from his example. Ann Lim-O’Brien and Ted Jadick are two examples and are giants in this industry today. I was the main person who attracted both of them. The future of our firm depends on those people so it’s imperative we keep the talent pipeline full. In situations where I am not the lead on this I have always made myself available to speak to potential candidates to our firm. A talent and leadership firm survives on the talents of good professionals so it is incumbent upon me and other leaders in the firm to help that process along.
ESR: At age 83 you seem to be as busy as ever. What has kept you so engaged and energized in this business?
Roche: You know I am working possibly on one of the most important assignments of my career right now. I cannot say who the client is but it will take us another two years to complete it. I’m also on the board of the Safe Water Network headed by John Whitehead, former co-chairman and senior partner at Goldman Sachs. Our mission is to get clean water into the third world which liter- ally saves tens of thousands of lives, a top of the world priority. So, yes, I am busy and I love this business and that is what has kept me so energized. I am as excited today as I was in 1964 or 1984 or 2004.