Getting the right CEO is crucial to the success of every organization and having the right CEO selection process should be top of mind for any board. Succession planning committees should always have a viable pool of CEO candidates in mind. At selection time, it's important to not only evaluate those candidates, but also keep an open mind to new candidates, including those whom headhunters recommend.
The selection process requires good judgment, objectivity and open-mindedness. Selection teams should work diligently to clarify the essential qualities in candidates that will be needed to serve the future needs of the organization. The process requires a deep dive to assessing which candidates shine above the others in relation to the organization's needs.
The CEO selection process should be an ongoing one that targets candidates for succession and emergency replacement. CEO selection is a necessary process that can also be sensitive. Boards can help themselves keep their planning confidential by using a board management system like Diligent Boards for secure communications and collaboration between team members.
As teams work through the process, they should be able to focus in on the critical capabilities that will make or break the company. The goal is to identify two or three capabilities that are interconnected that will be necessary for the new leader to succeed. At this point, teams should start seeing one or two candidates who stand out from the others.
CEO Selection Process Best Practices
Use these four steps to better approach your CEO selection process:Choosing the Selection Team
In a perfect scenario, the board will have formed a succession planning committee that involves the current CEO and they will meet on a regular basis. Selection committees should schedule at least an annual meeting where the team can have a comprehensive discussion about potential internal and external candidates and plan for emergency circumstances. The succession planning process should be transparent to ensure that the current CEO maintains the confidence of his or her board. In the unfortunate event that the board lacks confidence in the incumbent CEO, or where there is a corporate crisis that raises succession issues, the lead director should become the main authority for the succession and selection process. In seeking the best possible candidate, it goes without saying that the team should consider the traits, characteristics and experience of candidates in guiding the organization to future success. The team should also consider that while an incumbent CEO has been a perfect fit for the past term, the organization may need a different set of skills and experiences to lead the organization moving forward. Selection teams face many challenges in making their final selection. Boards may have poor internal dynamics and underlying disagreements that prevent the team from reaching a solid point of view. Another issue that boards have is one or two members who dominate the others. When a board is unevenly balanced with respect to power, it excludes the less-dominant members from the decision-making process. Regulators and lawmakers have required or encouraged boards to have largely independent board directors on the board. A board that is too independent may not have enough experience and expertise in the industry or on the operations side of things.Assessing Fit for the Organization
Finding the best fit begins with the candidates having a good understanding of the current and future requirements of the job. Candidates should know what some of the current challenges are and how the external environment is changing. Selection teams should be reading analyst reports and talking to insiders in the business, so they have a better understanding of what their organization needs. Sometimes outside experts can be helpful in expanding the team's thinking and lending insight to some of the complexities of the job.![Having a proper CEO succession planning process will better allow you to templatize your succession planning.](https://insights.diligent.com/wp-content/uploads/2019/08/CEO-selection-process-template-1024x578.png)