Board members are tasked with many responsibilities – determining strategy, monitoring performance, agreeing acceptable risks and ‘setting the tone’, to name but a few. Arguably the most important task for any board is recruiting the right CEO. The CEO is the leader of the staff team, the face of the organisation, and the interface between the board and staff. They are responsible for implementing the agreed strategy, and their success is the organisation’s success.
The average tenure of a CEO in the UK is around 6 years. If your board term is 3 years and you serve two terms, it is likely that you will, at some stage, be involved in recruiting a CEO. The question is, do you know when that might be?
Succession planning is a hot topic. Attracting investment, key customers and good staff depends on confidence in the CEO. All stakeholders need to know that there will be a strong leader at the reins in any eventuality. Funders, investors, staff and customers can get nervous when there are changes at the top, and want to be assured that there is a robust process for ensuring the best person will be recruited for the job.
That process starts long before the incumbent signals that they may be leaving. To recruit a great CEO, you need to know what you need them to do, and that is going to depend on your strategy. In order to identify the mix of skills, experience and attributes needed, your board should regularly review the strategic priorities of the organisation.
The preparation stage should include a review of the job description. The role of the CEO is dynamic, and new opportunities may result in new duties being added to the job description. This in turn informs the person specification. By reviewing it, the board should have a fairly up-to-date job description to start from.
Using that as a starting point, the board then needs to look to the future. No matter how much you loved the CEO who’s leaving, you must avoid rose-tinted glasses. Yes your CEO was great, but do you need a carbon-copy? Answering this question and determining exactly what you need in the new CEO is the most difficult stage of the process, as it will determine the pool of candidates you get to meet.
Internal or external? Appointing an internal candidate can be tempting. Boards love people they know and are comfortable with, and this can give internal candidates an advantage. After all, they know the business, the personalities involved, and will have a shorter learning curve. They may be the best person for the job. However, it is the job of the board to follow a recruitment process that tests all potential candidates and selects the best one for the job.
For a CEO position, boards should advertise the post and work to attract applications from a range of potential candidates. This is the only way to ensure everyone with an interest in the job knows about it.
Things to consider when choosing a CEO
During the selection process, there are 3 main things the selection committee should consider. These are:
- The candidate’s commitment to and interest in the company.
Are their values aligned with yours? Can they demonstrate an interest in what the company does? Are they committed to its vision and enthusiastic about moving towards it? Are they willing to make the necessary sacrifices that go with the job (travel, attendance at functions, networking and so on)? Do they have a support network to enable them to do so? Do they have the necessary confidence, resilience, assertiveness and diplomacy to carry out the role?
- The candidate’s competence in relation to the needs identified in the job description and person specification.
Can they do the job you need them to do? Can they demonstrate how they acted in similar situations? Will he or she be able to lead the organisation, inspire and motivate staff, represent the needs of customers and stakeholders, deliver the strategic vision of the board, and ensure financial probity and security. Can they identify and manage risks? Will they inspire confidence among investors? Can they work independently and also as a team player?
- The candidate’s key weaknesses.
Any candidate is bound to have some weaknesses. There may be some flaw in a candidate which is a ‘deal-breaker’ for the board. Often these issues centre on things like communication style, a misunderstanding of the role of the CEO or the board, or a serious culture clash.
The sooner any weakness can be identified in the successful candidate, the easier it will be to address them. The process of appointing a new CEO doesn’t end with the offer letter and contract. The board is responsible for ensuring a smooth transition. This includes designing a proper induction programme to help the candidate to ‘hit the ground running’, and possibly helping the new CEO to identify a suitable coach or mentor to help them adjust to their new position.
Given the essential nature of the role, investing in preparation, selection and induction is resource well spent. And remember, directors have a legal duty to act in the best interest of the company.
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