Posted on March 1st, 2021
Selecting a new CEO is the most important thing a board does. Choose the right one and everything else will be easier. Choose the wrong one and it can be a catastrophe. Here is how to select the criteria to get it right.
It is important to understand exactly what the business needs from their CEO. The board should discuss and agree upon what they want the new CEO to accomplish. You will need the board to define the business issues, challenges, and opportunities, and understand all the dynamics around the current executive team and board. You must figure out and share with the potential CEO candidates what are the organization’s critical ranked objectives for the next 12 months? What are the internal and external obstacles to meeting those objectives? What skills, talent, and expertise already exist on the senior team and which are missing?
Starting the recruitment process without taking the time to fully identify the needs of the organization can result in the wrong person being hired. The damage a bad hire will be to the organization can be immeasurable in both costs and time.
You will want to screen for a CEO who can lead by example, gain the loyalty and trust of talented people and motivate people to give their best for a common goals. Someone with strong personal gravitas. It is about cultivating inspiration. At any great company, a CEO has to be able to motivate people under difﬁcult conditions. They must also be able to listen and have a mind capable of adapting to changing situations—all while making important decisions on strategy, culture, recruiting, milestones, products, and much more. Things you will want to be vetted include; experience, job history, connections, and personality. Qualifications and accomplishments are the key to finding the right CEO.
Ideally you would want a CEO that has run a similar-sized company in the same industry, who matches your company culture and delivered exceptional returns for the shareholders. The first responsibility of a CEO is to own the vision of the company, which is difficult to do if he or she doesn’t have a good understanding of the company’s industry. Does the candidate have experience with how the product is produced and delivered? Does the candidate understand how and why customers spend money with the company?
You must be realistic with your expectation. Nobody is a master of all the skill sets required to run a complex company. The vetting process will expose candidates’ strengths and weakness, many CEOs with a strong background in strategy, planning or finance often lack people and operating skills and visa versa. Figure out what your “must haves” are and what your “nice-to-haves” are. In terms of compensation you must be realistic when trying to snag the ideal CEO. Do not waste time with someone you cannot afford because of generous stock options and other ﬁnancial incentives you cannot compete with. Compensation is key to retain a CEO, but one whose needs are being fulfilled will be more likely to stay. You can keep them because it is not a job, it is a passion. It is a lifestyle issue, not just compensation.
Cultural fit is instrumental to the long-term success of any organization—particularly in companies that have created a long-standing, positive, and cultivating environment. Make sure that you find someone that fits your company’s unique culture. Culture is one of the biggest reasons why an external hire might not work out at any level. Three-quarters of job seekers consider mission and culture before they apply to a company, and half of them consider culture to be more important than salary when it comes to job satisfaction. So, culture is one of those things that you need to have pinned down because candidates will ask about it. Also, a new CEO has a huge impact on what the culture will become so make sure that the new CEO has the culture you want to promote.
When you eliminate CEOs with a bad track record, CEOs who do not want to move, and CEOs who will not fit with the culture and size of your company, the field is significantly narrowed.
Utilizing an executive search firm might be your best route to finding your next ideal CEO. A good Executive Search Firm will have the resources, connections, safety nets, time, experience and energy that your company does not have. However, keep your company actively involved with the Executive Search Firm throughout the process for the best results. The Executive Search Firm can sell your company to a prospective candidate but once they are in front of you then it is your time to shine and sell the positive attributes of working for your company.
If you need confidentiality a third party, like an Executive Search Firm, is absolutely required.
When looking for the right Executive Search Firm to hire, seek out a well-connected, experienced industry specialist. Make sure that they have long track record of success with your type and size of business and stellar references.