Lessons from the IMF: How to hire in a crisis

June 28, 2011, 7:16 PM UTC

The first rule of hiring a new leader during turmoil: do not make the crisis worse.

Today, the International Monetary Fund selected Christine Lagarde as its next director to replace the disgraced Dominique Strauss-Kahn, who resigned on May 18 amid accusations that he sexually assaulted a maid in a New York hotel.

It doesn’t really matter whether Lagarde would be the best choice for the position had Strauss-Kahn’s term come to a natural end: she’s a good choice for right now.

In a crisis, “Sometimes you’re going to have to compromise — you’re going to choose the candidate as a concession to certain interests,” says Gene Grabowski, senior vice president and chair of the crisis and litigation practice at Levick Strategic Communications.

While Lagarde’s appointment is not necessarily a concession, there are several reasons why she fits the bill.

For one, there’s no better time for the IMF to hire its first female director. Grabowski says: “It sends a message that the organization isn’t just an old boy’s club and is aware of the seriousness of the charges against Strauss-Kahn.”

Secondly, the IMF does not need to rock the boat too much. The organization can afford to hire someone internally who will spur positive but minor changes. It doesn’t need an overhaul because this particular crisis was isolated to one member of the management team.

That’s not always the case.

For example, Mark Hurd’s resignation from his position as CEO of Hewlett-Packard (HPQ) last August happened in the midst of a larger management problem. The sexual harassment charges filed against Mark Hurd split the company’s board and unsettled its shareholders. HP needed fresh blood to make things run smoothly again.

But Lagarde taking over the IMF is comparable to when Gerald Ford stepped up after Richard Nixon was impeached, says Grabowski: “Ford, by most people’s estimation, was not the perfect president,” but he was perceived as honest. “That was his role, to be a steward, not a change agent.”

Lagarde’s role is similar, in that the IMF doesn’t need to restructure. It does, however, need a leader to represent a shift away from the kind of moral carelessness Strauss-Kahn had come to portray.

Regardless of his success at leading the IMF, his behavior (he had been known as a notorious womanizer even before the charges surfaced last month) was off-putting at best and dangerous to the organization during times of crisis, like now.

To be sure, the presidential succession process is different from the process that went into the IMF executive board’s selection of Lagarde, which is, in turn, different from the way a company like HP chooses its next CEO. But it’s the unique qualities of a crisis that unify them.

Along with stewardship, managers entering under crisis conditions must also understand the demands of leadership in the digital age. In the past, personal transgressions were forgivable for exceptionally talented leaders. That’s not the case anymore and the public has significant access to managers’ public and private lives.

Grabowski says: “In this age of transparency and Internet empowerment, virtually anybody who wants to be can be in your board room.” And in your bedroom, apparently.