Selecting the CEO is the Board’s most important job

Selecting the CEO is the Board’s most important job

To many the most important job of the board can be any and all of the following:
  • Making sure the organisation has a strategic plan
  • Understanding the line in the sand between the role of the board and the role of the management team.
  • Ensuring the governance of the organisation is fit for purpose
  • Etc.
While these jobs are required, unless the organisation has the right CEO, it will not reach its full potential.

If the wrong CEO is selected the following can happen:

  • The organisation will stagnate because of a lack of vision and poor leadership
  • Poor leadership can lead to the departure of key staff
  • Innovation and productivity will decline as the staff do not believe in the CEO
  • Morale collapses and the company risks terminal decline
  • The Board may also need to get more involved in operational matters as it has lost confidence in the CEO’s ability to manage the company effectively.

So, the Board needs to consider the following in selecting the CEO:

  • The ability of the CEO to develop, obtain board approval and implement the strategic plan.
  • Does the CEO understand the sector and can he/ she bring and add value?
  • What skills and experience are required to deliver the plan? This could include outstanding leadership skills if this had been an issue with the previous CEO. There may be a need to reconnect with the staff to convince them that they have a future and that the organisation has as well. This is where those vital soft skills come into play such as:
    • Ability to communicate in the language of staff and customers
    • Empathy, authenticity and presence… the ability to be able to convey, confidence, credibility, gravitas and decisiveness often with less than perfect information
    • Being positive, inspiring and daring to dream beyond the here and now.
    • A high degree of emotional intelligence
    • Being in the here and now.
    • A steady and consistent hand which will earn trust and confidence
  • Has the CEO worked with a board before and knows how to use it as a key resource rather than a bi-monthly nuisance?
  • What has been the record of the CEO before?  Does that experience jell with the board’s aspirations for the future of the organisation?

There may well be other considerations!

Finally, a CEO should be appointed on a fixed term performance related contract that is evaluated annually.

Appointing a CEO without this framework will only bring heartache down road as not every CEO appointment will work out.

At The Governance Company our ambition is to make corporate governance a topic that is engaging, stimulating and fun for those who need to know.

We offer the following services to help you in your governance journey:
  • Corporate Governance Advisory
  • Online & Offline Board Evaluation
  • Online Directors Competency Development & Assessment Programmes
  • Corporate Governance Bootcamps 
Join us for topical and practical articles and insights from the world of governance.
Follow us on LinkedIn and Twitter.
David W Duffy