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The board of directors faced a difficult task. It needed to fill Joseph Nacchio's rather large shoes. After leading Qwest Communications International Inc. through a period of rapid and massive growth, the high-flying and flamboyant chief executive officer was taking his leave.

How did the board replace "Macho" Nacchio's drive and abrasive charisma? It promptly went out and hired the anti-Nacchio.

Why? Because the big growth kick had propelled Denver-based Qwest to enormous losses, a staggering debt load and allegations of accounting irregularities that had, in fact, contributed to the departure of the man who was at the helm.

Montreal-born Richard Notebaert is 54, only a year older than his predecessor, but there the similarities end. He is low-key and has a reputation for building consensus within an organization. Most important, he is a veteran, having not only run a major telephone company but also presided over its successful sale to another firm.

The story at Vivendi Universal SA is remarkably similar. Jean-Marie Messier, a brash investment banker in his 40s, led the former French water-and-sewer utility on a dizzying series of takeovers that transformed it into a global media giant. These adventures also led to a flood of red ink, angry investors and, finally, Mr. Messier's ouster this month.

His successor, Jean-René Fourtou, is 63 - 18 years older than Mr. Messier, and has a track record of quietly turning around basket cases. Rather than a visionary, "he's a CEO who gets his hands dirty," a French business observer told The Wall Street Journal.

In a corporate world racked by scandal and outrage, a new wave of leaders is sweeping into power, but many of these "fresh faces" look decidedly familiar. With former superstars in retreat, the trend is to hire turnaround specialists with grey hair, long résumés and extensive personal networks - not to mention a work history marked by competence and probity.

Embattled boards are desperate to find people who possess that elusive quality known as "character," says business historian and author Richard Tedlow of the Harvard Business School. "You need someone with a breadth of vision who understands that the corporation serves not only shareholders but communities, customers and employees."

But recruiting leaders for their character is difficult, he says, "because it is soft and mushy and hard to quantify - and you can't mathematically model it."

For many scandal-ridden companies, the answer is to recruit senior managers who have weathered serious storms, scored some enduring successes, and taken on an aura of managerial gravitas. It's a good time to be a reputedly squeaky-clean former CEO.

These recovery experts certainly have their work cut out for them. Mr. Notebaert disclosed this week that, as well as being in dire financial shape, Qwest is facing an investigation by the U.S. Justice Department. At Vivendi, Mr. Fourtou is caught in a cash crunch and under increasing pressure to sell assets so he can cope with it.

Coupled with the WorldCom debacle and coming on the heels of the great Enron scandal, the ever-widening crisis in the executive suites has prompted a serious call for action. Groups such as the U.S. Business Roundtable and the Canadian Council of Chief Executives have tried to head off the spectre of increased government regulation by proposing that corporate leaders clean up their own messes.

But clearly more regulation is coming, as evident this week in U.S. President George W. Bush's so-called declaration of war on corporate criminals. The presidential rhetoric sounded bold - promising harsh punishment of executives who "cook the books" and violate the public trust - but the implication was that wrongdoing can be fixed by weeding out some bad apples.

However, Warren Bennis, the dean of U.S. management-leadership experts, says character can't be imposed by legislation or by greater sanctions against offenders. It requires a profound change in corporate culture, in the way people are compensated and in the values that ultimately prevail in society.

What Mr. Bush offered was a mere Band-Aid, says Professor Bennis, who teaches at University of Southern California. He should have vowed to ensure that every appointment by his administration will serve as a role model, but that wouldn't be easy. After all, Mr. Bush and Vice-President Dick Cheney themselves have come under suspicion for things that happened while they were businessmen.

"I think we have to create a different set of values, other than the rise of the stock price, as the tag line of success in capitalist countries," Prof. Bennis says. He argues that the spate of scandals has effectively ended 20 years when the marketplace totally dominated institutions in the United States, ahead of even government and religion.

A big part of the problem, Prof. Tedlow says, is that the CEO-selection process became unbalanced, with boards placing undue weight on the answer to one question: Can this candidate get the stock price to go up? Perhaps not surprisingly, senior executives became obsessed with share prices, at the expense of workers and customers. In the process, they corrupted capitalism itself, wiping out the trust of the very shareholders who are supposed to benefit from rising markets.

"To look at a corporation and to think that its sum and substance is to be a moneymaking machine, with no other function to perform in this world, is asking for trouble," he says. "We have asked for it and we're getting it."

The emphasis on stock appreciation, at the expense of all other corporate goals, bred several layers of abuse. It spurred questionable diversification and expansion, as corporate leaders strived to report ever-increasing revenues and profits. They were spurred on by their own compensation schemes, which became ever more dependent on owning stock or at least the option to buy it.

They also felt pressured to meet the ever-rising, short-term targets of investment analysts, who themselves often abandoned any semblance of objectivity by shilling for companies their firms were backing.

Even when business turned bad - as it always does, at some point - many CEOs desperately scrambled to improve short-term earnings to meet their promised targets, in some cases by fiddling with their accounting. To inflate or smooth profits, the companies resorted to tactics that went beyond their reported balance sheets. Accounting irregularities of one form or another fuel the allegations against Enron, WorldCom Inc. and other companies such as Adelphia Communications Corp., which have become household names.

In fact, the offending companies were so big and so arrogant that they were able to drag their outside auditors into the game, striking at the very integrity of the system. It didn't help that another supposed safeguard of the system, the board of directors, often proved toothless - dominated by the CEO's friends, or simply cowed by the power of the chief executive, who in many cases doubled as its chairman.

At any time, executives somewhere face charges of wrongdoing, such as insider trading and tax evasion. Even in less contentious times, the allegation that someone like Martha Stewart had benefited from insider knowledge on stock would have been front-page news, as would the accusation that Dennis Kozlowski, the former CEO of Tyco International Ltd., the U.S. conglomerate already under an investigative cloud, dodged state sales taxes when buying works of art.

But now the general stench magnifies any suspicion of errant behaviour. Many CEOs are walking the plank for being reckless with shareholders' money during the go-go years of the late 1990s. Often they paid too much for assets that were grossly overvalued and have since come down to earth, causing massive destruction of shareholder value.

A common sin, this affects companies close to home, such as BCE Inc. and Nortel Networks Corp., as well as Vivendi and its kind. But the deterioration of business leadership is much more widespread. For one thing, the resurgence of older, experienced managers means that corporations are coming full circle from the days when the media tripped over themselves to hail the latest 28-year-old CEO running an Internet company, doing deals and feasting on options from outrageously inflated stocks.

Executive suites often seemed to resemble daycare centres. At its height in 1999, the youth craze spawned a headline in Fortune magazine: "Finished at 40," above an article describing how in the New Economy, "the skills that come with age count for less and less. Suddenly, 40 is starting to look and feel old."

But it didn't take long for most of the kid millionaires of the nineties to flame out, as stock markets tumbled and their often tiny, overvalued companies disappeared. Sadder but wiser, many made their way back to business schools - or to living with the parents.

Still, the nineties also saw a trend that was even more disturbing - the rise of a new breed of leaders who had taken charge of much larger companies but lacked profound knowledge and appreciation of both their industries and the people who worked in them.

These swaggering outsiders operated as opportunistic deal makers or flashy entrepreneurs, and talked about "creating new paradigms" and "blowing up the business models" - common euphemisms for "we're going to make a lot of money in a business we know nothing about."

The quintessential 1990s executives were Mr. Messier, the deal maker turned media mogul, and Bernard Ebbers, the former Edmonton milkman and college basketball player with a fondness for cowboy boots who built WorldCom Inc. into a telecommunications high-flier from its base in rural Mississippi.

In his glory days, Mr. Ebbers, also a former hotelier, revelled in the fact he was an outsider to the telecommunications game and had little technical grasp of how the industry worked. But aided by cheerleading stock analysts, he represented himself as a visionary who could think outside the box, trumping the boring engineers and professional managers who had traditionally run the telephone business in the United States.

He presented WorldCom as an industry consolidator, engineering a flurry of acquisitions. At the same time, he wowed Wall Street with fat profit margins that other telecommunications managers could only envy.

In the end, these margins have turned out to be highly suspect. This week, Mr. Ebbers, who resigned as CEO at the end of April, declined to testify during an appearance before a congressional committee looking into allegations that WorldCom had inflated its cash flow to the tune of $3.8-billion.

At 52, his successor, John Sidgmore, is nine years younger than Mr. Ebbers, but he has far greater standing in the communications business. Considered a pioneer in the building of the Internet, he joined WorldCom in 1996 when the Ebbers team took over his old company, and has tried to distance himself from the accounting scandal, saying his role in WorldCom's day-to-day decisions was minimal.

Now, having actual experience in your industry, as Mr. Sidgmore does, is again considered an asset in an executive, rather than a liability. Companies want leaders who can reassure not only demoralized investors, but their employees, who need to know there is an experienced hand at the helm. They feel bruised from watching so many deposed bosses walk away with multimillion-dollar settlements, while the jobs of the rank and file are still imperilled by the fantastic schemes and huge debt loads left in their wake.

That has spurred an interest in hiring and promoting managers who have not only run companies, but also are untainted by the excesses of the late 1990s. The ideal résumé line for a prospective CEO these days is: "1998-2000 - retired from business, sailed around the world."

The hope is that these grizzled returning veterans will bring a talent for consensus-building to companies that have been torn apart by the reckless strategies of now-departed leaders. Many companies still face the ticklish task of melding recently merged entities into a cohesive whole - or, in some cases, selling off units that cost too much and never quite fit in.

Integration is a major challenge facing Mr. Notebaert at Qwest, as well as Richard Parsons, the recently appointed CEO at AOL Time Warner Inc., and a score of leaders of media companies that made big investments based on the elusive dream known as "convergence."

Two years after the blockbuster $165-billion (U.S.) amalgamation that formed AOL Time Warner, the New York-based communications giant is still trying to find "synergies" between the media units (magazines, movies and television) at the former Time Warner and the brash Internet operators at AOL.

For that reason, Mr. Parsons, a generalist known for his mediation skills, beat out the brilliant but abrasive chief operating officer, Bob Pittman, for perhaps the toughest job in business today, thanks to the fact the company has constantly fallen short of shareholders' expectations.

Of course, not every member of the new guard is exactly a wizened warrior. Michael Sabia, the new CEO of Montreal-based BCE, is just 48. He joined the company after a hot-shot career at Canadian National Railway Co. and in the federal public service, and inherited the top job when Jean Monty, 54, resigned amid the collapse of Teleglobe Inc., the telecom he spent more than $7-billion to acquire.

But even here age and experience are close at hand. Lurking in the background to provide sage counsel when needed is BCE's new chairman, Richard Currie, who is 64 and recently retired as CEO of food giant George Weston Ltd., where he was billionaire Galen Weston's key manager.

He belongs on any list (dwindling as it may be) of respected business figures, along with such senior citizens as Omaha investment whiz Warren Buffett, 71, and Paul Desmarais, the 75-year-old chairman of Power Corp., the Montreal holding company.

And yet seniority and credibility can't solve every problem. This was abundantly clear during the crisis that gripped Arthur Andersen's U.S. branch.

The attempt to save the venerable accounting firm disgraced by the Enron scandal was led by none other than 74-year-old Paul Volcker, respected former chairman of the U.S. Federal Reserve Board, but it proved futile nonetheless.

Age aside, the toppling of charismatic leaders such as Mr. Ebbers and Mr. Messier has sparked the notion that the corporate world is leaving behind the "visionary" CEO in favour of a prudent, unspectacular management style. But USC's Prof. Bennis says the problem with many ousted leaders was not vision at all. "I don't think corruption, deceit or fraud is a function of any particular style of leadership," he says, arguing that leaders of all stripes are susceptible to the enticements of power and celebrity.

For example, it has not been the best of times for the accounting types normally expected to rein in the impulses of their visionary bosses, as the demise of Arthur Andersen demonstrates. As well, charismatic executives such as Kenneth Lay and Jeffrey Skilling have shouldered considerable blame for the Enron scandal, but Andrew Fastow, an accountant and the former chief financial officer, is alleged to set up the questionable business "partnerships" at the root of the scandal.

Glenn Rowe, who teaches strategy at University of Western Ontario's Richard Ivey School of Business, says companies always need people who blend visionary leadership with solid managerial skills. Yet Prof. Bennis now winces a bit when he recalls the glorification of the CEO that once dominated popular and academic business writing alike. He admits to being a bit complicit himself, although his favourite CEOs, he says, generally have stood up well to ethical scrutiny.

But he is particularly scornful of the memoirs GE superstar Jack Welch published last year with the clear message: "God, it's great to be a CEO." Mercifully, this era of extreme adulation - and self-adulation - is over, says Prof. Bennis, who hopes to see an increasing focus on leadership in the public domain, in schools, health and government.

Being a CEO, he says, will become a much less glamorous job, with more restraints imposed by more vigilant boards and the increasing division of power between chairman and chief executive rather than leaving both functions in the hands of one very powerful person.

The leadership specialist also urges companies to open up their lines of communication, to allow more truth-telling in the face of corporate power. He has been impressed with the courage of corporate whistle-blowers, often women, who have tried to alert authorities to the worst offences.

So, have we seen the last of executive greed and arrogance? Not likely. There may be a shift, but no guarantee that it's permanent.

Looking back, Harvard's Prof. Tedlow sees strong parallels between the excesses of the recent past and those of the period leading up the stock-market crash of 1929 that ushered in the Great Depression. In both cases, business leaders were doing things that were either illegal or highly unethical and led to profound disillusionment with the capitalist system.

Capitalism will survive the current malaise without triggering another depression, he says, but there will be a fresh round of government regulation, which is probably overdue.

These things clearly go in cycles, and so are bound to repeat themselves. As Prof. Tedlow puts it, "The most dangerous words in business are, 'This time, it's different.'"

Globe and Mail writer Gordon Pitts is the author of In the Blood: Battles to Succeed in Canada's Family Businesses (Doubleday Canada, 2000) and Storming The Fortress: How Canadian Business Can Conquer Europe (HarperCollins, 1990). His next book, about the titans of Canadian media convergence, will be published in the fall.

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