As some have speculated, the departure of two top CalPERS execs is, at least in part, linked to the giant fund’s commitment to social accountability in a harshly competitive financial environment. The search for a new CEO will be critical in this effort. It won’t be easy for the fund to find an individual with the vision to understand the potential impact that CalPERS can have. Ordinary CEOs of fund managers are unlikely to be attracted to the highly political situation nor have the political skills to succeed. 

One important development: the CalPERS board has struggled to find the right balance over the last decade, but finally appears to be on track (gone are the days when a labor representative ran against a labor friendly Willie Brown for the presidency!). And I say this despite my initial criticism about the lack of transparency right now in midst of this governance transition. This makes all the difference to an incoming CEO – when the board’s values and direction are clear it is much easier to provide the necessary internal and external leadership.

One bit of unsolicited advice to CalPERS: pick a CEO first, and then work with the CEO to pick a new CIO.  The CIO has to follow the political lead of the board and the CEO has to be in place first to make sure the chemistry is right.  And resist the temptation to hire interim figures.  The search does not need to take forever.  Make the right choice; do it quickly and get up and running!