Hiring a CEO is a monumental decision. Getting it wrong can mean millions or billions down the drain, or even the end of your company. It’s critical to do your research and make the right hiring decision.
Here are 8 secrets to successfully hiring a CEO. Follow these tips to bring on a leader who will uplevel your company for years to come.
- Start Early
Hiring a CEO can take anywhere from 3-8 months, so you’ll need to start in advance. You want to begin looking for your next leader before you need her.
Once your company decides succession needs to occur, here are parts of the process that need to be worked out:
- How to actually hire a CEO
- Search leaders
- Vetting candidates
- Compensation packages
- Start date
- Resources to ensure the new CEO’s success during the transition
While you can work out some of these aspects as you go, most should be determined ahead of time. This article will nail down objective one, clarifying how one goes about hiring a CEO. We’ll give you tips on some of the others, too.
- Keep an Open Mind
It’s easy to fall back on biases and assumptions, especially when hiring a CEO. However, an organization’s objectives can shift on a dime in today’s fast-paced corporate world, and assumptions are frequently thrown out. Thus, it’s imperative to keep an open mind when searching for your next leader.
Your next CEO may not currently be a CEO, and that’s okay. Never assume that the best CEO for your company is one who ran another company or is at the top of everyone’s minds. You want to give the decision-makers options, including external, non-CEO candidates.
There are many instances of successful CEOs who had never been close to the CEO level before. These include Bill Gates, Larry Page, Frank D’Souza (Cognizant), and Michael Dell. Search far and wide to ensure an ideal CEO selection process.
- Build a Diverse Group of Search Leaders
While hiring a CEO is the decision of your company’s board, you’ll need to pick directors who spearhead the process. The leaders you choose bear a significant impact on the CEO selection criteria and processes used.
First, focus on finding search leaders who’ve earned the trust of their colleagues. These are frequently board chairs, leaders, or former CEOs with proven business prowess.
Other leaders should add objectivity. These are the people who ruthlessly ask questions to get to the truth and are adamant about not “going with your gut.”
Finally, you’ll want search directors who have solid networks and can source external candidates effectively. Ideally, they are willing to look at levels below the CEO to produce a diverse pool of candidates.
Ultimately, these leaders should be diverse in experience, thought, and demographics so they can bring together various perspectives and make decisions that are as unbiased as possible.
- Figure Out Your Company’s Future First
Hiring a CEO who hasn’t a clue the direction your company needs to go sets them up for failure or, at best, a lack of clarity.
CEO recruitment means coming up with a clear vision for the company moving forward; you’ll need to hire a candidate who you best believe can fulfill that vision based on past performance and references.
You can think about which areas of your company are lacking and holding it back. Identifying these and allowing your future CEO to rectify them helps take your business to the next level. This can include:
- Strategic acquisitions
- Improved time management
- Better social media presence and company image
- Improving company culture
- Stronger hiring processes
You should establish these goals over short- and long-term scales, including quarterly, semi-annually, and annually, as well as further into the future.
- Nobody, Not Even Your Next CEO, is Perfect
One of the biggest mistakes any company can make when hiring a CEO is searching for the perfect candidate who can do it all. Nobody can do everything perfectly.
With this in mind, know that candidates will have some weaknesses or flaws no matter which one you hire. Your job is to pick the person who you think, overall, maximizes the chances of taking your company to the next level.
Instead of throwing out excellent candidates because they have weak spots, do what you can to support your new CEO by filling their gaps. For instance, if this person is particularly weak at finance and has struggled in the past, you can hire a CFO who compliments them.
Don’t expect any CEO to be perfect.
- Get First-Hand Opinions on Candidates
You’ll want to understand what it’s like to work with your new CEO before hiring them. To get an accurate picture of who your top candidates are, you’ll want to check with multiple verified sources. Even a handful of these sources is better than tens of references who never worked closely with the candidate.
Beware that, sometimes, you can be given false information. That’s why the number and closeness of references matter during the CEO selection process.
- Don’t Neglect Future Candidates
When hiring a CEO, don’t forget about internal top-performers who may be passed up. These are the top employees at your company who’d make a strong contender for the open position but who you may not want to hire yet.
To prevent these people from leaving, you’ll want to work hard to retain their presence at your company. This may require extra compensation or other incentives to keep them around. Being passed up for CEO is a tough pill to swallow, and you don’t want to lose extremely talented (potential future CEOs) as a result.
- Use an Executive Search Firm
The impact of hiring the wrong CEO is tremendous. At global companies, the wrong CEO can cost a company $100 billion. Further, 39% of investors are likely to sell stock based on the CEO, but only 19% are willing to buy it based on the CEO’s reputation. Suffice it to say, this is not the time for a hiring mistake.
Significantly improve your odds of success when hiring a CEO by using an executive search firm. These are teams with extensive networks and decades of experience hiring leaders.
On the hunt for your next leader? Jennings Executive can help you pick the perfect CEO. We specialize in hiring executives for a select few industries. Learn more today.
Now that you know the secrets behind successfully hiring a CEO, it’s time to get started. CEO recruitment is a long, involved process, but the results pay off well into the future when done correctly.
Best of luck!