Recruiting and identifying your next CEO can be fraught with risk. But while the risks are known, they can also be managed, so that in the end, the board and its search committee feel strongly that the individual they have chosen will prove to be the right choice. So how can you ensure that your business can successfully onboard a new CEO?
We have been involved with conducting extensive research on CEO recruitment and have successfully placed both CEOs and CFOs for clients over the past decade. For this blog I want to focus on the steps required once a CEO or CFO has been selected to go forward. What happens in the first 100 days as well as the first 12 months? In my opinion your businesses ability to successfully onboard a new CEO is just as important as the hiring process.
What is the leading reason why executives depart within two years of being appointed?
Our experience is the culture of an organisation is pivotal to the successful candidate’s tenure in the role: Our research highlights that almost half of the CEOs who departed were perceived as having one thing in common: They had failed to adapt to the new organisation’s culture.
“Poor fit” is a term often cited as a reason for departure, but this explanation assumes that behaviour is rigid; it overlooks the ability of the CEO to adapt. As is often the case with new executives, they tackle the job using the same leadership style they had developed in his previous assignments. However, unfortunately, if they fail to adapt to the new organisation’s culture chances are they will soon be fired with the criticism being leveled at the recruiting process for not having identified the appointment was a “poor fit” for both parties.
So how do you avoid this situation?
It starts with the board. As with the previous “poor fit” example, change must be desired by the board by setting an additional expectation about culture on top of the skills based expectations for the role. The CEO needs to be told (preferably by the Chair) that, if he accepted the position, he would need to adapt his approach to the organisational culture. This means working with the CEO during meetings with the senior executives and board and to provide 360-degree feedback for him for a few months after he started (within 100 days), to help gauge how well he was adjusting.
In my experience, far too often, both boards and new CEOs emphasize the need to change the organisation, and downplay the need to adapt to it. Yet if change is to happen, it will almost certainly require the help of the existing team. Adaptability is therefore important in enabling change. (Note: The message here is NOT that the new CEO should live with existing organisational norms forever, but to find a balance between adapting to an organisation’s culture on the one hand, and introducing change on the other.)
How to successfully onboard a new CEO
To determine and enhance the incoming CEO’s ability to achieve this balance, try the following 4 things:
- Ask interview questions that probe for examples of adaptability. Listen carefully for examples of how the candidate adjusted to new organizations.
- When conducting reference checks, ask about the candidate’s flexibility. For example, ask the referee to rate the candidate on a scale of 1 to10 regarding his or her ability to adapt to a new culture, or to be flexible if a cultural shift occurs.
- Assign a board interpreter for the CEO. A board interpreter is a director assigned by the board to help the CEO read between the lines and accurately understand the board’s unspoken messages. Board chairs often fill one or both of these roles informally.
- During the person’s first few months on the job, conduct a 360-degree survey and provide feedback. By providing feedback from a 360-degree survey, organisations help new CEOs understand what behaviour is working well and what needs to be changed.
Although the challenge of adapting falls mostly on the new CEO, the board can help by setting expectations and providing tools such as those above that assist the CEO in managing his or her adjustment.
If this blog has inspired you to reaching better outcomes with your next CEO/CFO recruitment we would love to talk with you about the detailed plans. In this blog the use of he and she is interchangeable as our experience applies equally to men and women CEOs when it comes to adapting to organisational culture.
Good luck with your senior executive recruitment adventures.