The CEO candidate appeared like an ideal match. Blackstone, the personal fairness titan, had acquired an actual property firm and was looking for the perfect chief to helm it. The candidate had excelled as a senior govt at one other Blackstone-owned actual property firm and had vastly impressed interviewers on the CEO search committee.
However quickly after he was employed to the brand new place, issues started to floor. The position required a chief govt who had a robust grasp of the native market, relationships with regional policymakers, and experience in managing regulatory affairs—areas the place his expertise was restricted. Inside six months, it was clear that the CEO was struggling. The corporate had fallen considerably behind on its development plan and failed to satisfy key monetary milestones. Blackstone initially tried to rent its method out of the issue, including a chief transformation officer, an govt to restructure prices, and a extra lively advisory board chair. The CEO was additionally given suggestions and training. However regardless of these efforts, his tenure lasted solely two years.
“If we had simply stepped back and asked ourselves, ‘What do we uniquely need this CEO to do to get us where we need to be?’ we would have realized he wasn’t the right fit,” admits Courtney della Cava, Blackstone’s senior managing director and international head of portfolio expertise and organizational efficiency. “Instead, we became enamored with his past success—and it set us back.”
It was a pricey error, however one which Della Cava says highlights the significance of Blackstone’s present method to hiring CEOs for the 250 firms in its portfolio.
Blackstone has reached the highest of the personal fairness pyramid by mastering the artwork of buying promising firms, bettering their operations and profitability over a couple of years, then promoting them at a better worth. It’s a technique that has grown its portfolio of firms and actual property property to a price of $1.1 trillion—an almost 13- fold improve in comparison with the $88 billion in property beneath administration when it went public in 2007.
The success of this mannequin hinges on having the best leaders in place. And Della Cava was employed in 2021 to remodel the agency’s CEO recruitment from an artwork to a extra exact science.
Touchdown a C-Suite position at a Blackstone portfolio firm is exceptionally aggressive, and most candidates received’t make the lower, says Dan Kaplan, a senior shopper accomplice at Korn Ferry’s CHRO follow. “Everyone wants to be there,” Kaplan says. “It has become a brand synonymous with being best in class.”
Underneath Della Cava, every aspiring firm chief now undergoes a rigorous and time-consuming three- to four-month recruitment course of that features almost a dozen interviews with Blackstone stakeholders, advisors, and consulting companions, in addition to board displays, third-party assessments, exhaustive suggestions from references, and an almost five-hour psychometric analysis that’s designed to deeply probe the candidate’s cognitive skill, character, motivations, and essence as a frontrunner.
Deciding on a CEO is about betting on potential, and Della Cava has discovered that every element of Blackstone’s search course of improves the probability of constructing the best appointment. This playbook, she says, is very essential for a task that’s grueling, fast-paced, and requires an individual who can deal with the volatility of being celebrated as a hero someday and criticized as a villain the subsequent.
“Being a CEO is a high-intensity sport,” says Della Cava. “For the right person, it’s extraordinary. But it’s not for everyone.”
Blackstone’s CEO recruitment framework, which Della Cava and her group have refined over the previous 4 years, has rapidly develop into the envy of different personal fairness corporations, in accordance with a number of govt recruiters. Her 11-person group usually works on dozens of firms’ management searches without delay.
With billions of {dollars} at stake, the significance of choosing the best CEO for a Blackstone portfolio firm is awfully excessive—for not solely an organization’s monetary success but in addition its tradition. “An underperforming leader results in an underperforming company,” says Della Cava. Put merely, she says: “Leadership is the No. 1 driver of value creation.”
And getting a rent unsuitable is usually a cascading catastrophe. Research carried out by administration consulting agency ghSMART discovered {that a} typical hiring mistake prices an organization 15 instances the worker’s base wage in onerous prices and misplaced productiveness. For instance, a single error in hiring a $100,000 worker may end in losses exceeding $1.5 million. The stakes are even larger for govt roles.
Born and raised in San Diego and now dwelling in San Francisco, Della Cava defies the stereotype of the laid-back, sun-chasing Californian. Impeccably dressed, well-groomed, and tall, she exudes a cultured self-assuredness and class harking back to a company Manhattan energy participant. She’s heat and extremely personable, but in addition mentally shrewd, with a considerate and deliberate method of selecting her phrases.
Della Cava says she has all the time been introspective, and was curious from a younger age about what drives folks’s actions and choices—partly the end result, she says, of being the youngest of 4 youngsters. “I was the kid who put herself to sleep,” she recollects. “When you’re the baby in a large family, you become self-sufficient, and I became very observant, which turned out to be a gift.”
Her father, an lawyer, and her mom, a homemaker, usually hosted dinner events. “I would sit under the dining room table as a kid and just listen,” she says. “My parents didn’t know I was there, but it was a wonderful learning experience. I was enthralled by their conversations, trying to connect the dots and understand what they were discussing.”
This fascination with folks and their motivations initially led Della Cava to a profession in advertising. “I wanted to understand why people make the choices they do. Why Pepsi over Coke? Why Mazda over other car companies?” she says, seated in a Forty third-floor boardroom at Blackstone’s headquarters overlooking Manhattan’s Park Avenue.
Her profession finally shifted to administration consulting, together with stints at Bain & Firm and Russell Reynolds. At Bain, a lot of her work centered on “the what”—as in, the technique, she explains: “How do you figure out a business model quickly? What are the market dynamics, and what adds value?”
In 2010, Della Cava joined Russell Reynolds because the agency transitioned from being generalist to changing into professional in choose industries. It was there that she had a pivotal realization: Whereas a lot of the administration consulting business focuses on “the what,” success largely hinges on discovering the best “who” to execute it: the employees, and particularly firm leaders.
This epiphany got here from her relationship with a longtime shopper, a retail CEO, who adopted Della Cava from her earlier position in administration consulting to her new place in govt search. Their dynamic advanced from “sterile” technique discussions to deeply private teaching about his ambitions, legacy, succession planning, and constructing a robust govt expertise pipeline.
“I had this aha moment,” she explains. “If we could help companies get the right people in, they could figure out the ‘what’ because good leaders know the right questions to ask. But equally, you can’t get the right people in until you’re clear on strategy.”
From her front-row seat working with Fortune 500 shoppers, Della Cava discovered that essentially the most profitable firms focus intensely on the “what” and the “who.” Each are encompassed in what Blackstone calls an “investment thesis” for every firm.
$1.1 trillion
Worth of the 250 firms and 1000’s of actual property property in Blackstone’s portfolio
A Blackstone funding thesis identifies three to 5 key levers for creating most worth, which can embrace M&A, digital investments, or enlargement into adjoining markets, and all the time incorporates a management element. It additionally units the time horizon for attaining these aims and, if relevant, outlines the exit plan.
The CEO choice course of is in depth—and might be exhausting for candidates going via its many phases. It begins through the due-diligence course of for a possible new funding. “Step one is figuring out how to drive the most value for the company,” says Della Cava. “Step two is finding leaders who can stay the course and deliver on it.”
Della Cava’s group assesses the corporate’s organizational construction, tradition, and incumbent C-Suite. They collaborate with exterior advisors, enterprise heads throughout personal fairness and actual property, and Blackstone’s community of roughly 100 senior advisors to translate the rising funding thesis into management necessities.
About 85% of the time, there’s some C-Suite reshuffling, which Della Cava acknowledges might be anxiety-inducing for incumbent executives. However she stresses that the method is just not a one-sided slashing and burning of the prevailing management group. “It’s a transparent dialogue where we’re assessing whether the current team has the capabilities and skills required,” she explains. “And they’re also determining if they want to stay.”
For every mission-critical C-Suite and board position, Della Cava’s group creates a management scorecard that aligns their obligations with value-driving levers. After a deal is finalized, the CEO search begins in earnest. Blackstone works with govt recruitment corporations comparable to Spencer Stuart to determine potential candidates to exchange the present management.
Through the early phases of a CEO search, round 10 to fifteen candidates are thought-about, with solely two advancing to the ultimate phases. The method sometimes takes 90 to 120 days, with CEOs chosen after an govt chair has been appointed.
“Being a CEO is a high-intensity sport. For the right person, it’s extraordinary. But it’s not for everyone.”
Courtney Della Cava, Blackstone
In some instances, no adjustments are made to the C-Suite. Different instances, a brand new position is added, or an present govt is promoted. By the tip of the primary 12 months of the funding, nonetheless, the go-forward group is firmly in place.
In November 2022, Ross Shuster, then CEO of Scotland-based industrial firm Howden, received such a name from Spencer Stuart. Would he be enthusiastic about a CEO alternative at a Blackstone portfolio firm?
The earlier month, Blackstone had introduced its $14 billion acquisition of a majority stake within the engineering agency Emerson’s local weather applied sciences enterprise, forming a brand new firm later named Copeland. It was a fancy transaction: Although Blackstone had acquired the enterprise, Emerson retained a 40% fairness stake. Copeland, an HVAC compressor firm, wanted a CEO able to carving out and reworking a noncore division of a bigger conglomerate right into a stand-alone entity—all whereas driving vital development.
What adopted for Shuster was an intensive four-month course of that included a number of interviews with almost a dozen folks. He flew from the U.Okay. to New York Metropolis twice to satisfy the Blackstone group and spent numerous hours making ready for every interview and the ultimate board presentation—whereas nonetheless managing his CEO obligations on the time. “It was definitely time-consuming,” says Shuster, who formally assumed Copeland’s nook workplace in April 2023. “But it was intentional. It was focused.”
Probably the most probing interview that Shuster went via earlier than he was employed was with Rosanna Trasatti, a medical psychologist and management guide who has helped administer a lot of Blackstone’s psychometric analyses.
Trasatti’s job is to get previous the spiel that almost all candidates come ready to ship. Those that have reached the best ranges of company America are inclined to current a cultured persona. “They’ve reflected deeply, are self-aware, and have crafted a well-rehearsed narrative they’ve shared countless times,” says Trasatti.
Ross Shuster, CEO of the local weather tech agency Copeland.
The almost five-hour psychometric evaluation, with its probing and incisive questions, is designed to push candidates to maneuver past their practiced narratives and supply deeper insights into how they suppose, be taught, lead, and talk. “By hour three—and certainly by hour four— most candidates let their guard down,” says Trasatti. “It’s challenging to maintain a polished story for that long.”
Among the questions immediate candidates to offer particular examples of their duties and outcomes, whereas others are designed to encourage deeper reflection on the candidate’s life journey. “We take people back to their childhood and ask them to explore where they believe their drive originates,” she explains.
As an example, potential CEOs is perhaps requested to pick out six colleagues from the previous 5 years and clarify how these coworkers would describe them. This encourages candidates to think about themselves via the eyes of friends, studies, and managers. “We’re cognitively playing with getting them to access and share their stories in different ways,” says Trasatti. “I don’t allow them to sit in a space of practiced responses or emotional detachment from their narrative.”
The psychometric outcomes are shared with members through the session, the place they’re ready
to debate and pressure-test them. Typically candidates get defensive as a result of they don’t agree with the outcomes. Typically the insights problem their understanding of their very own management model. If a candidate’s evaluation suggests they thrive in entrepreneurial environments with minimal construction, for instance, Trasatti would possibly ask how they’d deal with implementing in depth structured processes. Doing so permits candidates to interact with the info, mirror on whether or not it resonates, and navigate sudden and even troublesome conversations that deviate from their ready narrative.
For Shuster, the evaluation highlighted his management model as that of a group builder. Whereas able to taking cost when mandatory, he prefers to behave as a facilitator, empowering others and fostering a shared possession of decision-making. “My ideal executive team is, if someone walked into a room and saw the 12 of us talking, it would be hard to identify who the CEO, CFO, or CHRO is because everyone is passionate about every aspect of the business,” says Shuster.
The psychometric evaluation additionally assesses the traits which might be predictive of excessive efficiency, grouping them into “success modes” and “failure modes.” Success mode traits embrace resilience, grit, humility, and a observe document of cultivating loyalty and followership, whereas failure modes usually contain insecurity and low cognitive skill.
“Cognitive ability” may appear too apparent a requirement to notice. However there’s extra to the standard than easy intelligence. Candidates full a timed check to measure their psychological processing pace and gauge whether or not they can function on the quick tempo required for the nook workplace. “It’s not ‘Are you smart or stupid?’” says Della Cava. “It’s ‘Can you keep up? Do you have the cognitive speed, the ambition, the intellectual rigor, and mental agility to meet the demands of the role?’”
Whereas candidates who rating nicely beneath a sure threshold usually tend to fail as CEOs, a higher-than-average cognitive rating doesn’t essentially predict success. “You kind of have to be tall enough to ride the ride, but being taller doesn’t make you enjoy the Ferris wheel more,” Trasatti explains.
References supply yet one more evaluation alternative. Della Cava’s group goes past the references supplied by CEO candidates, back-channeling and reaching out to its personal community for deeper insights into the candidate’s work historical past. The group may embrace board administrators, CEOs, prospects, shoppers, former sponsors, or direct studies.
By the point candidates attain the board presentation stage, Blackstone has narrowed the CEO pool to 2 or three finalists. These hour-long displays present candidates with a possibility to share their ideas on the funding thesis and description their plans for execution. “It’s a bit of a dress rehearsal for how they’ll engage with us,” says Della Cava.
It’s an extremely complete method, however as with something involving human judgment, it’s not 100% error-free. Missteps have occurred when the agency missed apparent warning indicators or overestimated its skill to mitigate them, says Della Cava.
Even with all the knowledge and knowledge gleaned from the in depth choice course of, she concedes that it’s simple to develop into enamored with a candidate. “You start to build a character in your head instead of asking, ‘What do I uniquely need them to do? What specific qualities should I prioritize? What are the pragmatic tradeoffs, and how can we address their shortcomings with the right support and scaffolding?’”
The recipe for fulfillment as a Blackstone portfolio CEO
Blackstone’s rigorous course of for choosing C-Suite executives to run its portfolio firms features a almost five-hour psychometric analysis to evaluate whether or not candidates possess the qualities required to excel in these high-pressure roles. Based mostly on tons of of assessments of C Suite candidates, the agency has recognized key traits that point out a candidate’s potential for fulfillment—or danger of failure. Listed below are a couple of of them.
Success modes
- Resilience: Leaders are capable of thrive beneath strain, steadily managing a speedy tempo, advanced adjustments, formidable targets, and fixed scrutiny with out buckling.
- Assured management: Leaders can rally their employees during times of change as a result of they’ve a compelling presence and may rapidly seize consideration, set up credibility, and earn belief.
- Excessive emotional intelligence: Leaders have emotional consciousness and empathy and may self-regulate their emotions. They construct sturdy relationships, navigate advanced interpersonal dynamics with ease, and are distinctive communicators.
- Self-awareness: Leaders exhibit humility, take accountability for his or her errors, perceive the impression of their habits on the corporate, and perceive their strengths and weak spot.
Failure modes
- Beneath-average cognitive heft: Candidates whose problem-solving skill and psychological processing pace are beneath common relative to their govt friends are unlikely to succeed.
- Inflexibility: An unwillingness to adapt, change, or compromise in response to new circumstances or concepts works towards candidates.
- Insecurity: Candidates who usually search reassurance and solutions from others, or who attempt to sustain an look of success by withholding info, avoiding points, or presenting a very optimistic outlook improve their danger of failure.
This text seems within the February/March 2025 concern of Fortune with the headline “The Blackstone edge.”
