Articles: How Should a Board Select a CEO?

How Should a Board Select a CEO?

Selecting a CEO is the most important responsibility of a Board of Directors. Based on our experience working with clients of many kinds, here are the key considerations that should guide a CEO search:

The primary objective should be to conduct a thoughtful and objective process that gives candidates and Board members a fair and full opportunity for review.

The focus on the process should be the future competency requirements of the position (see the Organization Assessment section of Articles and Presentations for an explanation of competencies). Therefore, the Board must work at gaining a common understanding of the organization’s future requirements.

Before expected competency requirements are identified and candidates are considered, the Board needs to consider and reach a consensus on issues such as:

1.What are alternative scenarios regarding the future business climate and basis for market competitiveness?
2.What is the anticipated future business strategy?
3.What are alternative ways of reorganizing that might influence what is expected of the CEO position?

Agreeing on required competencies and reaching consensus on key issues is crucial to gaining a common understanding among board members — don’t assume it will happen! — so that when actual candidates are considered, Board members can be consistent in their assessment.

The competencies that are developed should serve as the basis for the Board’s interview questions and for any diagnostic instruments (such as 360 degree assessments) used to help evaluate internal candidates.

The process should be instituted as far in advance as possible. Two years in advance of the need-to-hire date is an ideal timeframe. A long lead time is especially important if there are internal candidates who may need time to demonstrate their readiness to the Board. This may also represent the minimum time needed to prepare backups for internal candidates who may be chosen, or to prepare for the impact on individuals not chosen (e.g., if a contender not chosen for the CEO position decides to leave the organization).

The respective roles in the selection process, including the Board’s responsibility and the current CEO’s responsibility, should be made clear.

Succession Process Roles

Board of Directors

•Identifies competency requirements of future CEO
•Gains exposure to candidates
•Reviews progress reports
•Interviews candidates
•Makes final selection decision

Current CEO

•Offers views on competency requirements and candidates
•Provides Board with opportunity for exposure to candidates
•Coaches and provides developmental opportunities for internal candidates
•Delivers progress reports
•Provides succession recommendations
•Communicates process and progress to the organization as appropriate
•Seeks constructive relationships with candidates not chosen
•Assists selected candidate with transition and (if internal) succession consequences further down in organization

Candidates

•Participates in competency and diagnostic interviews
•Facilitates their own diagnostic review (e.g., for internal candidates: 360 degree feedback, management style, organizational climate, etc.)
•Develops skills in needed areas, under CEO guidance
•Performs special assignments and deliver board presentations
•Prepares for formal Board interview
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