EVERY organization needs a leader. You may refer to that person by a name other than CEO, such as executive director or general manager. Hiring a great leader for your organization is difficult but it’s instrumental to the organization’s success.
No other role will have as much influence on your business’s success or failure. The CEO shapes vision, strategy, culture, and operations. The CEO influences the budget and financial performance throughout the year. There’s a great deal of pressure to get this right, whether the organization is a for-profit entrepreneurial business, a public company, a government entity, or a non-profit serving the community.
YOUR SITUATION DEFINES THE ROLE
New leadership is required in many different situations. The context of each unique situation helps define the job description of that CEO and the traits required to perform effectively.
Organizations often replace the CEO as a result of the incumbent’s natural career path, such as when that person retires or is recruited away. The board of directors may see this as an opportunity to recruit a CEO with different skills that align with a new strategic direction.
Succession planning can unfold in many different ways. In some situations, a previous succession planning process did not work out well and there is a need to regroup. Many entrepreneurs plan on their children taking over but one day find out the second generation is not interested or does not have the right skills. If the incoming generation has the potential to run the business but timing is not right, an external CEO may be hired to bridge the gap between the outgoing generation stepping back and new family members being groomed for the role. In the situation where younger family members are expected to take over, the temporary CEO will likely be required to have skill in mentoring the incoming owner-operators.
Many times, an entrepreneur realizes that he or she is not the right person to take the business to the next level of performance and needs to replace themselves as CEO. As Tracy Arno from Essence Talent Solutions explains, there comes a time when the organization outgrows the leader.
“I’ve seen extremely successful business people recognize that the business has changed, and it needs leadership with a completely different skill set. Those additional skills will end up as crucial items in the candidate profile. Maybe the business needs someone with experience establishing processes and systems. Or it could be someone who is well-suited to manage a growing team. The company situation defines the skills you need.”
It’s never status quo because everyone brings their own take to the organization and the existing employees will often change with the new leadership. In a nonprofit, the dynamics of the board’s relationship with management will change. With for-profit entrepreneurial companies, the shareholders will work with the CEO to make decisions that might take the company in a different direction. Everyone has to be ready for positive and effective change.
SUCCESS, LEADERSHIP, AND EXPERIENCE
Organizations are becoming smarter about recruiting executive talent. Most people have tended to hire employees with characteristics similar to their own rather than seeking diverse skills, abilities, or experiences. But people are becoming wiser and placing greater emphasis on identifying characteristics desirable for the position and to complement the existing team. They realize their team will reach a higher level of performance when employees work collaboratively, drawing on diverse skills, experiences, and opinions. This need to identify characteristics required for the position is particularly relevant when hiring a CEO because that key employee will need certain traits to effectively lead your organization based on its unique situation.
It is important to be mindful when contemplating what characteristics you require in your new CEO. “You have to look at what they actually need to do in the role. Can they deliver the type of change you need? Every company that hires a CEO is in a period of change,” explains Arno. “It’s never status quo because everyone brings their own take to the organization and the existing employees will often change with the new leadership. In a non-profit, the dynamics of the board’s relationship with management will change. With for-profit entrepreneurial companies, the shareholders will work with the CEO to make decisions that might take the company in a different direction. Everyone has to be ready for positive and effective change.”
One point to consider is whether you need someone with CEO experience. The first time someone takes on a CEO role, it is usually a promotion, but most people entering the CEO role will have previous CEO experience. A senior executive of a larger, more complex organization who lacks CEO experience might still be a good choice if they have the right skills for your situation. For example, someone with a sales and marketing background might be a good fit with a company poised for aggressive growth. It’s not uncommon for an experienced executive from a public company to seek out a CEO role in a smaller, private organization.
WILL THEY FIT?
The key to finding the right person for the role is to be aware not just of what someone can do, but who they are. Will the candidate align with your company’s direction, culture, and values? Overall, will they fit with the role and the organization?
“Frequently, the board of a non-profit or the shareholders of a for-profit company will want aspects of the culture to change,” explains Arno. “Does the CEO you are considering fit with the positive aspects of your organization that you want to preserve? Do they embody the traits you want your organization to adopt?” In Arno’s experience, for the change management process to be effective the direction needs to come from the CEO.
The candidate’s leadership style shapes corporate culture and values, but the CEO must also work within the existing work environment to foster employee engagement throughout the company. Arno says, “You need a CEO who will connect with your people. How inclusive is your organization? Your company’s culture is influenced by the personal traits of employees, which includes ethnic background, gender, and life experiences. Your CEO also has to understand what employees want from their careers.” With a North American all-time low unemployment rate, employees are demanding transparency, flexibility, and a voice in the business. High-performing employees value collaboration and mentorship. If your company intends to be an employer of choice for a diverse workforce, where each employee’s unique characteristics are valued and add to the organization’s success, you need a CEO with an appropriate leadership style. If you hire a leader who can inspire and engage with them, expect wonderful results from your employees.
When you hire your new CEO, take the time and effort to define the skills and traits needed to understand the business and lead the culture that will bring you continued growth and success. The perfect combination will result in someone who can excel at the strategic level in the board room and who also understands how to foster a positive corporate culture within your specific organization. Hiring such a person will result in engaged, high-performing employees and improved organizational performance.
First published in the June 2019 edition of The Business Advisor.