Hiring an individual for a CEO position is no easy feat. Yahoo came under strong criticism and had to face public embarrassment due to Scott Thompson’s resume problems. His bio pages stated that he was the holder of a computer science degree from Stonehill College in Boston, but it was later revealed that the college only started the degree in 1983–Thomson had graduated earlier.
To avoid such debacles, companies need to dig deeper and obtain better information before making a decision. Being limited to internal and external references can be a mistake because not many individuals have prior experience of being a CEO.
Some key considerations for the role include:
CEOs are viewed as ‘hedonic gods’ in the market, which underlines the need for a multidimensional skill bundle. The hiring body should recognize that the company’s production functions rely on CEO skills such as firm-specific knowledge, ability to grow sales and cost reduction..
Industry shocks are the strongest metric on which a CEO applicant can be judged. A resilient person with a foresight about the upcoming trends would define the position.
The new CEO should be able to understand a company’s culture – employee behavior, top manager preferences etc. within a few weeks. For example, the candidate may be asked to bring in a tablet and show how the device can enhance productivity across different departments in a company that runs on a BYOD culture. This is the point where companies should give a glimpse to existing top level executives as they are already aware of the company’s culture.
McLaren recently appointed Mike Flewitt as its CEO (he was previously the COO in the same company). Stryker Corporation also selected Stephen P. MacMillan, who previously served as President and COO, to fill the role of the Chief Executive Officer, which he served until 2012. This goes to show you that established companies aren’t afraid to trust existing executive position holders to fill in if duty should call.
3. Using Heuristics
It is vital for you to look beyond the obvious and bring in corporate heuristics to make the best choices for the firm. The executive quality is normally thought of in terms of the ability of a CEO to positively influence the firm’s performance.
Heuristics allows a ‘phased’ evaluation in which the assessment criteria would be changed from time to time based upon the vision of the firm.
The early stage evaluation of the applicant can be made easier by defining the
– Level and structure of the CEO’s compensation
– Tenure allotment
The definition of incentive and reward would clearly show how willing the candidate is to improve the company’s performance and also prove that he/she is better than the rest.
The board should be involved in the CEO hiring process. Members of the board can ask different questions of the applicant base on their expertise and one of them can also make sure that the selected individual goes through the transition seamlessly.
According to Gilreath Consultancy, companies should also avoid taking services of management consultants because they don’t have a track record of hiring top notch subordinates.
Bringing in a new CEO is never easy, but companies who adopt the right approach and keep the key considerations in mind will find a much better hire than companies who neglect the complications associated with the process.