The Subtleties of CEO Recruiting
From 1995 to 2001, CEO turnover in major corporations increased by 53 percent. The number of CEOs leaving because of the company’s poor financial performance increased by 130 percent, and the average tenure of CEOs declined from 9.5 to 7.3 years. That’s a far cry from the days of CEOs who seemed to have a tenured, life-time appointment. Today, that number is below 7 years.
Decades ago, when members of the C-suite had more time to learn their jobs and perfect their craft, executive development may not have had the urgency it does today. But today’s shareholders and boards have no patience with poor performance in the C-suite
In McKinsey & Company’s book, The War for Talent, the authors argue that “talent is now a critical driver of corporate performance and that a company’s ability to attract, develop, and retain talent will be a major competitive advantage far into the future.” The authors believe that three fundamental forces are fueling the war for talent: “the irreversible shift from the Industrial Age to the Information Age, the intensifying demand for high-caliber managerial talent, and the growing propensity for people to switch from one company to another. Since these structural forces show no sign of abating,” the authors say, “we believe the war for managerial talent will be a defining feature of the business landscape for many years to come” (Michaels, Jones, and Axelrod 2001). This insight, which is coming on twenty years old, remains prescient today.
Everyone who ascends to the C-Suite, and particularly to the CEO position, enters on a learning journey that is inevitable and unavoidable. Some companies look inside for a new CEO, particularly to the existing members of the C-Suite. The advantage of internal hires is that they have less to learn about the company and its business. The disadvantages are, first, the need to take an enterprise-level view, which entails learning about areas of the business with which they are unfamiliar, and second, making the often-difficult shift from peer to boss (or first among equals) with colleagues with whom they may have a long history and who may believe that they themselves would have been a better choice for the CEO spot.
Recruiting from outside the organization will, to a great extent alter the learning landscape, though the need to be familiar with the company and its operations will still be there. Forming relationships with the rest of the C-Suite will mean starting from scratch and is fraught with potential pitfalls.
In recruiting for a CEO position, it is relatively easy to assess experience, industry knowledge, and other metrics. There are, however, more subtle areas that are harder to assess, namely the distorted lens of past successes and complacency.
THE DISTORTED LENS OF PAST SUCCESSES
It has been said that the arrogance of the successful is their thinking that what produced their success will, when expanded, solve the problems that were the results of the successes.
C-Suite executives (which is likely be where most CEO candidates come from) are admired, lionized, highly paid as though they are the most gifted and accomplished people in their field. If executives believe all the hype about themselves, they can fall prey to two disabling myths: attainment and infallibility.
The Myth of Attainment
If an executive believes he or she has “made it” based on past achievements, they may stop learning and developing. We call this attitude the myth of attainment, and it occurs when people discount all factors save their own talent and industry that lie at the source of their success. Considering themselves “the smartest one in the room,” they focus on showing how smart they are rather than on challenging themselves and becoming smarter. To be a CEO is to occupy a unique job, and in Marshall Goldsmith’s words, “what got you here won’t get you there.” Achievement may be the ticket in, but once they are there it will not suffice to keep them there.
The Myth of Infallibility
Some (not all) people who have been successful and made good decisions in their professional lives may come to believe they are infallible. They are like a boxer with a record that is all wins and no defeats stepping into the ring assuming this means they will win tonight, forgetting that it’s not the record that is in the ring.
Worse others may treat them as if they are infallible. The executives who succumb to this myth usually have a degree of narcissism in their personality.
RECRUITING FOR CEO CANDIDATES
All the above adds some subtle factors to the list of what to look for in potential CEO candidates – it doesn’t displace any of the usual factors of experience, achievement, etc., but it does add some:
- Growth Mindset: Growth mindset means taking feedback, learning from experience, and coming up with strategies for improving. For a CEO this will include having resources to unburden themselves and to share anxieties, uncertainties, and other things they cannot or should not share within the organization.
- One-to-one communication skills: We think of CEOs in the public arena, speaking to large groups. But one-on-one communication particularly with the C-Suite executives, Board Members, and other CEOs are at least as important.
- Media communication and presentation skills: By the time an executive reaches the point where they would be considered a CEO Candidate, they probably have had some success and learning in this area but speaking as the CEO is very different in its impact. One of the painful transitions executives need to make as they grow in seniority is moving from clarity to ambiguity and from predictability to uncertainty. Those who fail to make this transition typically become indecisive, unimaginative, risk averse, and too limited in vision.
- Being a more inspirational leader
- Understanding and better managing organizational politics
- Building strong executive teams and assessing and developing that talent in their areas of responsibility
- Being a more collaborative leader or otherwise understanding and adapting their leadership style to the needs of their constituencies
Whether promoting from within or hiring from outside, these skills are crucial to a CEOs success. For an outside hire, a top recruiting firm will differentiate leadership across the C-suite, providing the foundation for results that exceed expectations.
BrainWorks is a prominent boutique executive search firm offering a 29-year track record of successfully sourcing and placing top talent. By harnessing proven strategies, collaborating with stakeholders, and leveraging a diverse and talented candidate network, BrainWorks helps businesses find, attract, and ultimately hire talented professionals that create differentiated results. To learn more about how Brainworks can help you, contact us.