Hiring a great CEO

  • Date:01 Feb 2014
  • Type:Company Director Magazine
Karen Gately reveals the secrets to hiring a great CEO and outlines the common mistakes to avoid.


Among the most important decisions any board of directors can make is who to appoint to the role of CEO. 

The decisions CEOs, in turn, make about the managers they entrust to lead their teams unquestionably have a profound effect on the performance and ultimately, the viability of any business.

Poor hiring decisions at the most senior levels of an organisation are at the heart of the performance challenges I observe in many of the businesses I work with.

Getting selection decisions right begins with having a clear view of the role, as well as the capabilities and approach needed to drive results.

While the role of CEO may on the surface seem obvious, understanding the unique context of your organisation and what that means for the top job is critical.

For example, some organisations are best served by an entrepreneurial leader while others are more effectively led by someone able to mature the organisation or take it to the next level of operational excellence and service delivery.

The role of CEO

Regardless of the unique requirements of your organisation, creating a clear and compelling vision for the future, developing and executing effective strategies, ensuring governance and building the capability and spirit of the team are at the heart of what every CEO must do.
 
Optimising business performance demands that the CEO lead the way and hold others accountable for leveraging the full potential of people and organisational capabilities such as products, services, systems and processes.

No matter whether the CEO is leading a large organisation or a small business, these priorities remain the same.

Arguably the most important role of the CEO is to take ownership of results and provide strong leadership.

To be effective in his or her role, it is a non-negotiable requirement that a CEO demonstrates personal commitment and consciously role model desired behaviour.

CEOs must strive to be a clear and visible example of what they need and expect from others. In other words, they must lead by example and be visible champions through their mindset and behaviour.

It is the CEO’s role to inspire and influence the engagement of all key stakeholders, including the board, executive team, managers and staff.

To build a thriving and sustainable business, a dynamic and ongoing approach to planning for the future is critical. It is the role of CEOs to lead their team to create their vision and regularly challenge it to maintain its relevance. The ability to imagine possibilities and identify the best direction and strategies to adopt is a core competency of great leaders at the top of any business. CEOs must be capable of guiding their teams to identify the steps and capabilities required to succeed. Just as important is their ability to leverage the knowledge of their whole team to identify obstacles and challenges they may encounter along the way.

The CEO is responsible for ensuring the executive team understands and is committed to achieving business objectives. As a leadership team, it is critical that it adopts a determined, focused and courageous approach. Every leader, starting with the CEO, must consistently mandate and endorse strategies, initiatives and policies aimed at achieving the organisation’s vision.

At the end of the day, success is determined by the extent to which CEOs hold themselves and others accountable.

For any organisation to have a strong team spirit, CEOs must earn trust and respect; the things that matter most are their ability to act with integrity, have compassion, drive accountability and operate with transparency.

The CEO must play a lead role in defining and executing strategies to grow, protect and harness the spirit of the whole team. While often supported by specialist experts, it is very much the CEO’s job to coach and lead executives to leverage the full potential of the team.

Key elements of an effective hiring process

The objective of any hiring process is to optimise the quality of the decisions made. While there are no guarantees or failure-proof strategies, a strategic approach can go a long way to avoiding costly mistakes.

Quality outcomes are underpinned by a well-considered and planned approach. A common mistake I have seen boards make is launching into a recruitment process without first giving enough thought to what they want to achieve or how to go about it.

Before embarking on a search process, ensure you understand the required:

  • Knowledge and skills: What are the minimum requirements for a candidate to be considered? Consider technical, organisational and interpersonal capabilities.
  • Experience: What scenarios or environments must a potential CEO have experienced before and performed well in?
  • Values and behaviours: What must the CEO bring to drive the organisational culture needed to achieve success?

Determine the process you will work through to assess each candidate. Important considerations include:

  • Whether the candidate has demonstrated capabilities reflected in experience and achievements. Expect candidates to share insights into the effect they are able to have on your business by showcasing what they have done in the past.
  • A non-negotiable priority on culture alignment. Never hire a CEO who is unlikely to bring values and behaviours aligned with the culture you want in the business.
  • The expectations you have of the role. Ensure candidates are able to accurately assess the role and have the ability to deliver and the desire to take on the inherent challenges.
  • Having a diverse group of people in the selection panel. Leverage those able to bring varying perspectives that will support a full and accurate assessment.
  • Using psychometric and skills-based assessment tools to provide further insights into each person you seriously consider for the role.
  • What your gut reactions tell you about the suitability of candidates. If something doesn’t feel right, it probably isn’t. Keep digging until your concerns are either validated or dismissed.
  • Talking to referees directly – assign responsibility to a member of the board with appropriate capability. While skilled executive search consultants can do an effective job, it is important to remove potential bias driven by their desire to place their candidate.
  • Leveraging the services of capable executive search consultants. Select the right people to work with you and listen to their advice.
  • When to consider the recruitment process complete – that should only be once the appointed candidate successfully finishes his or her probationary period. Be prepared to respond swiftly to early indications of the candidate’s capabilities or approach being different from what you expected.

Common mistakes to avoid

Maintaining a balanced focus on technical skills or industry knowledge with the ability to drive business performance through people is of paramount importance. All too often, CEOs bring deep knowledge and insights of the business or industry, but fail to engage their workforce effectively to turn vision into reality.

Avoid the all-too-common mistake of being enticed by technical capabilities in the absence of cultural alignment.

Much like what I observe at more junior levels of an organisation, a common driver of poor executive performance is appointing inexperienced people and failing to provide the support they need to grow into the role.

While it can be a viable option to appoint someone early in their senior leadership career, their chances of success are hit or miss at best, unless deliberate steps are taken to grow their capabilities.

It’s common for me to observe leaders operating at one end or the other of a spectrum of leadership approaches.

At one end are the leaders focused on driving results and at the other are those whose greatest concern is for the needs and wants of their team.

The “results guys” -- or intellectual leaders, as I often call them -- fail to effectively inspire and engage their teams.

Equally the “nice guys” or empathetic leaders fail to take action and deal with the tough stuff needed to optimise performance.

Great leaders integrate these polar extremes and bring a balanced focus on getting the job done and engaging the people who make it possible.

In other words, the integrated leader places equal priority on the need to achieve outcomes and to engage people effectively in the process.

Balanced in their thinking, they are typically commercially astute and understand the link between people performance and business results.

It is common for boards to hire CEOs who fail to bring this integrated approach.

Significant value is often placed on driving results without adequate focus on how the candidate is likely to go about that.

While commitment to driving performance outcomes is essential, so too is the CEO’s ability to achieve that through the talent and energy of his or her team.

Figure 1 above illustrates where the integrated approach to effective leadership lies.

Unfortunately, there exists no magic wand guaranteeing the success of any executive appointment.

What is critical is a well-developed understanding of the role, a planned and thorough attraction and assessment process and focused onboarding activity. And remember that a little bit of luck along the way always helps!