Choosing a CEO – getting it right first time | KPMG | IE

Choosing a CEO – getting it right first time

Choosing a CEO

Choosing a CEO is a challenging task. Intense competition, the risk of making a strategic wrong turn and the incredible impact of technology are just some of the issues a new leader has to get to grips with. John McCullough of KPMG considers some of the tasks involved in getting it right first time.

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Choosing a CEO – Getting it right first time

The role of the CEO is changing. According to KPMG’s most recent CEO Outlook, business leaders are having to cope with issues they didn’t grow up with or encounter in their earlier careers. Almost 80% of Irish CEOs interviewed have concerns about their capabilities around mission critical business issues they have little or no prior experience of. For example, Cyber security, big data and the impact of artificial intelligence are to varying degrees now on the agenda. Meanwhile core attributes such as leadership and vision are as critical as ever.

In looking for a new CEO, it’s useful to step back from the role and think about your business objectives and to consider two fairly basic principles as a worthwhile starting point. In most organisations there is a need for the leader to have some fairly well defined skills in both opportunity identification and opportunity execution. Keeping these points in mind can be useful in simplifying the search for a CEO by helping set some initial broad criteria.

What makes a good CEO?

The answer is a lot of things but it is possible to identify a number of key requisites which are common to all CEO roles. Some of these are personal or personality focused and the others are technical or skills driven. On the personal side it is obvious that a CEO must have a sharp intellect to analyse and conceptualise, to debate and formulate. This is essential in opportunity identification. Experience shows that many of the best CEO’s have both the financial understanding to assess and measure the value of potential projects but also the creative and idea generation skills to deliver worthwhile commercial opportunities.

A CEO must also have good levels of self confidence and self belief to make decisions and they must be able to instil this belief and confidence in others. A good CEO will be able to sell the vision to the team and be a strong communicator who can generate support and energy. Critically, they must have the ability to allow others to manage and to flesh out the detail of opportunity execution.

It’s often asked if the CEO must have relevant technical or sectoral knowledge. In some industries it can be desirable and useful, however I generally advise clients to try and keep an open mind. Obviously if you are not limited to a particular sector then the pool of relevant candidates becomes bigger and more varied. Try to focus on the key or core skills required of the CEO and on the key issues facing the organisation over the next three years and search for a match to these. The vital technical or sectoral knowledge and experience should be available within the existing management team and the incoming CEO should have the skills to access it. If this resource is not available within the team then you already have challenges and it is hard to imagine how your business can progress with resolving this issue.

Plan your approach

Recruitment at the very most senior levels requires significant planning. Give thought to where you and the rest of the Board believe the business needs to go, the market and the challenges facing the business. Follow this with some thought about the current skill set of the organisation and what is now needed to move forward. This should manifest itself as a clear and succinct job description. Bear in mind that there is no point in focussing on particular skills and attributes if you already have them within the organisation.

Very often it becomes clear that the organisation has strong technical skills for example, but is missing direction. Some businesses are very sales focussed but have regular product or delivery failure and as a result are suffering share and profit losses. Whatever the issues, a fast but thorough review of the business is an opportunity and should be treated as such. You can make good use of your recruitment consultant in this process as they will bring an objective and independent third party view in helping build a valuable job description.

Leadership profile

Building a leadership profile is essential to help match the job description. Know what you are looking for and make sure that you will recognise it when you see it by having a clear and focused role profile. Many of the desired characteristics are relatively straightforward e.g. a proven track record in finance. What about some of the so called softer skills? Leadership skills, political ‘nous’ and cultural fit are all harder to define and are often hugely subjective – again reinforcing the value of external objectivity.

Leading and building strong teams is about complementary strengths and weaknesses. Building a reliance and trust between the team members is key. The fit or chemistry at senior levels is vital as individuals must have the ability to debate and influence while also being able to accept opposition and resistance, while maintaining a strong and positive working relationship. You do not have to love each other but you do have to work together. Very often at senior level the “fit” is the key component of the search as the harder skills are more readily verifiable through profiling and background checks.

The interview

The interview process should be discussed and agreed at the outset. Like it or not the interview is usually the primary tool in making the recruitment decision. Once the CV and experience can be verified and background referencing and checking is positive, then the final decision is based upon the interview. Time should be put in to planning the interview and to clearly understanding what it is that you want to get out of it. An interview should be viewed as a projection not as a statement. What the candidate has already done is history; it is what they are going to do that we should be even more interested in. Always try to visualise the candidate in the job in 12-18 months time.

What will they be doing? What will they have achieved? What will they not have achieved? What will the mood of the organisation be? Remember that all projections are just that – projections, and they will change and be modified as time goes on.

Projections are risky and so are all recruitment decisions. It’s also worth bearing in mind the risk of ‘overselling’ in an interview to a strong candidate. The interview should be a two way conversation. Make sure the candidate has sufficient opportunity to discuss the bigger business issues facing the organisation. This is one of the best opportunities you’ll get to identify the ‘fit’ between you.

Retaining leaders

Finally, when you have them how do you keep them? The answer is relatively simple – by making the effort to do so. The days of employee loyalty and long and faithful service are long and truly gone. Business has changed and by its very nature cannot guarantee long term job security and candidates are aware of this. Technology and ever increasing competition challenge companies to constantly adapt and change. You should expect to get at least 3 years from your new recruit but after that it is up to you to keep them.

Foster strong communications and know what the issues are. Have open discussions and have your finger on the pulse. You should know your organisation and identify those executives who you must retain and then work hard to do so. A large number of successful businesses have developed a “people brand” as they want to promote their companies as being good to work for by developing a reputation that helps attract and retain people. It will inevitably be a key role for the CEO to take on a large part of the responsibility for building pride in the company that people can identify with and buy into.

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