The Secrets of CEO Selection
The Secrets of CEO Selection
Selecting a CEO is rarely easy. It’s one decision that can make or break the future direction of your company. Make the wrong choice and it can be devasting for the public image and operations of your organisations. Companies like Apple, HP, and Yahoo have had a revolving door of CEOs over the year as they struggled to find the right fit for the role.
Selecting the right CEO is an easier process than some board members and other C-suite leaders might expect it to be. The secrets of CEO selection revolve around four things that act as the backbone of successful recruitment. They set out to clarify the specific qualities that a CEO needs to succeed in the role while keeping an open mind when exploring candidates of different backgrounds and industries. Board members who recruit the right CEO are objective in their candidate comparisons and deep dive into the candidate’s credentials, beyond their CV and acknowledge that the ‘perfect candidate’ doesn’t exist.
Exec Capital is a specialist recruitment agency that offers 360-degree recruitment for C-suite positions, including CEO. We’re here to help through every step of the recruitment process to find the candidate who can hit the ground running.
Why Hiring CEOs Is Hard
Company boards face several challenges when recruiting CEOs. Recruiting C-suite positions has always been tricky, but it becomes more complex with CEOs. There is as much anecdotal evidence on how not to recruit a CEO as there is helpful advice on finding the right candidate. The reality is that very few recruiters – and even fewer board members – have been involved in CEO recruitment, making it a specialist field.
Recruiting a CEO is also complicated because determining the CEO’s responsibilities can set the board members at odds. Defining the roles and responsibilities of the CEO makes it easier to short list candidates and determine what to look for. Looking beyond the expected responsibilities to company-specific goals will make it easier to decide what characteristics the ideal CEO needs.
It’s tricky to find a CEO who has experience running a company of a similar size in the same industry with the type of performance wants for the company going forward. CEOs are unlikely to work for two similar companies back-to-back as many seek out a challenge or a change of scenery. Boards and companies will inevitably have to compromise on their expectations and be prepared to accept the reality that imperfections exist and can be worked on.
Choosing the Right Search Leaders
While the full board will be responsible for selecting the CEO, certain individuals will be tasked with leading the search, usually working with a recruitment agency or headhunting service. These so-called ‘search leaders’ are involved in the interview process and determine what characteristics the company needs from its CEO. Choosing the wrong search leaders can make the recruitment process more difficult.
The most suitable search leaders are often those at a director level or who have the trust and respect of the rest of the board. Board members who have previously been CEOs are ideal choices to lead the recruitment process. Often the right search leaders will emerge naturally and should be allowed to guide the process, especially at the beginning and during the post-interview stage when their insight can be crucial.
Don’t forget to consider objectivity when choosing search leaders as they’ll often be more ready to think outside the box and provide thoughtful questions and insight. The outgoing CEO may also choose to be involved in the recruitment process or can work with the search leaders to offer advice and guidance.
Risk management plays a role in CEO selection. It takes time to determine whether the chosen candidate is actually the right fit. It’s why companies should ‘pivot’ and deep dive into the candidate’s strengths while acknowledging their imperfections and considering how these blind spots could be filled with mentorship or training.
Exploring the Candidate’s Characteristics
The board will spend most of its time looking at the CEO’s CV and professional characteristics. The era of ‘soft skills’ means that personal characteristics are now just as important as professional areas of expertise. They’ll want to consider aspects like the candidates’ public profile, community involvement, leadership experience, education, and industry knowledge.
Characteristics extend to more than just the candidate’s CV but also their leadership style and personality. The board should consider the candidate’s adaptability, how they interact with colleagues, and how open they are to accepting new ideas and approaches. It’s vital that the board doesn’t get caught up focusing solely on the candidate’s characteristics.
Choosing ‘The Pivot’
The company’s current and future needs for a CEO should be the foundation of choosing ‘the pivot’ of two to three factors that the right CEO should meet. The pivot isn’t a shopping list of things that the right candidate needs to tick off but rather company-specific factors that align with its long-term strategy and current needs.
The board should be specific in determining its pivot and making it clear from the beginning. The pivot will differ between industries and should account for industry-specific factors, such as growing regulation and increasing digitalisation. The retail industry for example will require companies to consider their focus on consumer experience, digitally driven logistics, and developing the retail ecosystem with delivery services and vendors.
Adopting an Open Mind
Board members and search leaders should have an open mind after they choose their pivot and draw up the first short list of candidates. Adaptability is crucial and they may find that the recruitment process has brought forth other characteristics and needs that they didn’t initially account for. Candidates who were initially favourites of the board should still be given the same examination as other candidates.
Adopting an open mind requires the board to fight against unconscious bias and discard assumptions. The board is more likely to choose a better final short list of two to three candidates when they take a big-picture approach.
The final stages of the CEO recruitment process can take time, especially if succession planning is involved. It’s not unusual for board members to want to get to know their potential CEO and get to observe them in different environments and with their potential future colleagues. However, these drawn-out recruitment processes can lead to search leaders playing favourites and taking a rear-view approach to recruitment.
Don’t Forget Context
It’s not just the candidate’s strengths and weaknesses that the board should consider, but also the organisation’s current position. It needs to evaluate the challenges and opportunities that are on the horizon and external factors such as competition, supply chains, and growing regulation that will impact its future direction.
These factors will all determine what type of leadership style is required, whether it’s a candidate who is a bold innovator or prepared to turnaround a company in a quickly evolving industry. Every candidate should be assessed through the context of the company and wider industry.
Accepting Imperfection
The process of vetting candidates for a CEO role inevitably means that their flaws, imperfections, and quirks will come up along the way. A successful CEO recruitment process involves accepting these imperfections as they surface. It’s rare to find a CEO candidate who can tick all the boxes. C-suite leaders who are exceptionally strong on strategy with financial backgrounds often fall short on operational skills or so-called ‘soft skills’’. Alternatively, you may have a candidate who is strong on digital technology and transformation, but weaker on financial management. However, a skilled CFO would fill their blind spot and form a strong partnership.
Imperfections and skills gaps can be filled by supporting the CEO when they come into the post or by enabling them to build a team around them who can tick these missing boxes. These supposed imperfections could be non-issues if there are already C-suite leadership in the company who can support the candidate in their role of CEO and bring them up to speed.
Deciding Where the Role Sits
The role of CEO naturally evolves within a company over time. Some CEOs are more hands-on than others, while an expanding company may feel the need to have both a CEO and COO. The board should consider the construct of the job and where the CEO position falls within their wider company leadership structure.
What roles do the board members expect the CEO to fulfil? The board may want a CEO who will come in and shake things up or bring stability to the organisation, whether overseeing major changes or taking on new responsibilities.
It’s advisable for the board to come up with a company leadership chart that showcases who reports to who and the flow of responsibility through the organisation. Considering where the CEO will sit in the overarching leadership of the company may make one candidate appear better suited than another.
Finding the Right Fit
Once you’ve narrowed down your candidates to the final short list, you’ll have three to five incredibly talented and accomplished individuals to choose from. Now is the time to go deeper and understand how each candidate matches up with the ‘pivot’ that you chose at the start of the recruitment process. Board members should strive to find a candidate who is the right fit by getting a complete picture, including the candidate’s imperfections. The right CEO is the one who will fit into the company in the long term and understands the direction the board members want it to go in.
The interview process is the best opportunity for board members and search leaders to dive deeper into the compatibility of each candidate. Companies will all take different approaches to this process, but ultimately each member of the board has to approve of the candidate and work with them in the future. We recommend giving each board member and C-suite leader the opportunity to at least meet the final candidates and ideally get to spend some time one-on-one with them.
Why CEOs Need Job Descriptions
The role of CEO is no longer a copy-and-paste set of responsibilities. It has evolved alongside other C-suite roles, including that of CFO. The role and responsibility of a CEO will change depending on the industry and company, making it more vital than ever for companies to have a job description in mind for the role of CEO. Having a job description in mind makes determining the ‘pivot’ easier and establishes the context for the role.
Today’s CEOs usually fall into the categories of ‘Digital CEO’ and ‘Industrial CEO’. While these are both CEO roles, they have drastically different responsibilities and functions. Digital-era CEOs typically have a customer-first mindset, whereas industrial CEOs are usually working within B2B companies and have the end consumer as an afterthought.
Digital CEOs, along with those within the technology niche, are responsible for determining a road map for the company’s future. Amazon’s Jeff Bezos has said that road mapping is virtually all he does for the company with day-to-day operations being delegated to other leadership individuals.
Some CEOs will focus on long-term thinking, while industrial CEOs are preoccupied more with business operations. It’s why it’s also vital for the board to establish a structural layout for the company’s leadership to determine what sort of CEO they need, accounting for external issues and multiple organisational layers.
Determining a job description early on gives the board members and other C-suite leaders something to guide them during the recruitment process.
Start Recruiting a CEO Today
Exec Capital specialises in connecting companies with C-suite leaders and senior professionals to unlock your business’ potential. We recruit for the full C-suite, including CEOs, with an internal team of entrepreneurs and senior executives who understand both sides of the recruitment process.
Our executive recruitment team will tailor every step of the process to identify and meet your company’s needs. Exec Capital also recruits managing directors, sales directors, HR directors, and a full suite of senior management roles.
Find out more about our specialise CEO recruitment by calling us on 020 3287 2365 to start the recruitment process today.
Adrian Lawrence FCA with over 25 years of experience as a finance leader and a Chartered Accountant, BSc graduate from Queen Mary College, University of London.
I help my clients achieve their growth and success goals by delivering value and results in areas such as Financial Modelling, Finance Raising, M&A, Due Diligence, cash flow management, and reporting. I am passionate about supporting SMEs and entrepreneurs with reliable and professional Chief Financial Officer or Finance Director services.
