CEOs are responsible for the performance of an organisation, which makes choosing the right person for this role and building effective working relationships with them, one of the most important responsibilities of any Board. And as the talent pool for CEO appointments can include both experienced candidates and those looking to step up, it’s critical for Boards to know what to look for and how to support incoming CEOs – experienced or otherwise.
“In assessing CEO hopefuls, Boards must remember that every CEO was once a first time CEO and there will always be successes and failures in making this transition,” says Director, Lloyd Smith. “While candidates with prior experience are often considered the safer choice, there are times when a first time CEO should be supported in stepping up into the role either internally or externally.”
Lloyd shares these insights on choosing and lifting the performance of first time CEOs.
Are you ready?
As the top-ranking executive in an organisation the role of CEO is both highly coveted and challenging. “The stakes are high for CEOs, and when things go wrong recovering from the brand damage can take years – something we have seen manifested with some very high profile brands in recent times,” says Lloyd. “To successfully transition to CEO, you must proactively develop yourself and have the self-awareness to know when you are truly ready.”
“When you assume responsibility for the performance of the organisation your lens is focused on the entirety of the enterprise and its success, from the most significant strategic piece through to how you’re feeling and performing as a group,” Lloyd continues. “Successful CEOs understand the all-encompassing nature of the role and the broadness of skill required to perform it effectively.”
How you arrive at the role of CEO is another factor shaping this transition.
“Your appointment may follow careful career or succession planning, which prepare you to step up. Or it can follow the unexpected departure of an existing CEO,” says Lloyd. “If you are part of the Executive team and your ambition is to progress to CEO, it is crucial that you use the interim period to develop the skills and experience to prove your capability when the time is right.”
What to look for in first time CEOs
When a CEO candidate lacks prior experience, there are some skills, attributes and other factors that can support the transition into this role.
“From my experience, having exceptional people skills is fundamental to success for any CEO. Naturally it’s also hard to succeed as CEO without having outstanding listening skills, the personal drive and intellectual capability, and a high degree of emotional intelligence,” says Lloyd. “You must know how to harness these attributes to work collaboratively and be candid and honest about your failures and the lessons you have learned. Abstract reasoning skills are also vital for processing data and making quick, informed decisions where appropriate, and for knowing when an intended decision making process is required.”
A candidate’s development path to CEO can also be insightful, and Boards should consider whether someone has undertaken coaching or professional development to hone their skills, who they look to as role models and how these influences have shaped them. The variety of roles that a candidate has performed and their exposure to different parts of an organisation, are additional success factors for first time CEOs. “Really successful organisations remove silos from the C-Suite, developing senior leaders to contribute across the business and building a pipeline of well-rounded talent to feed into CEO succession,” says Lloyd.
Setting first time CEOs up for success
Building the right team
As CEO there can be no passengers on your Executive team, and building the right team is less about the individual and more about the competencies you need to deliver on organisational strategy.
“You are only as successful as the as the team around you. As incoming CEO, you must understand the talent requirement for the organisation and be able to assess the quality and capability of your team quickly and accurately,” says Lloyd. “If tough decisions need to be made this should happen relatively quickly, using the best empirical evidence from the tools and information sources that you have.”
The make up of the Chair and Board also have a profound impact on the performance of the CEO when they are united.
In any leadership role your decision making abilities largely determine your early success. “Indecision breeds uncertainty and it makes teams and organisations weak,” says Lloyd. “As CEO it’s important to be inclusive and considered in your decision making but also swift and decisive to set the strategic path for the organisation – finding the right balance is key.”
Leading in the spotlight
Lloyd describes accountability for CEOs as palpable and visible. “Whether things go right or wrong, as CEO you are totally accountable and there will always be people watching your actions, behaviours and judging your quality as a leader,” he says. “If you take on this role, be sure that you can withstand scrutiny around your financial performance and in all aspects of your personal and professional life.”
When things do go wrong for CEOs, the openness, honesty and speed with which issues are managed will determine the ability to recover. “There will be issues big and small, and the time between encountering a problem and communicating it is the shortest distance on Earth,” says Lloyd. “If an issue is significant the Board needs to know about it the moment that you do. CEOs that sweep things under the carpet find they later reappear as much bigger problems, making it much harder for the organisation and their own reputation as a leader to recover.”
Making CEO a less lonely place
Stepping up to a role without peers can be lonely, but it is a lot less lonely in environments with open and honest discussion between the CEO, Chair and Board, where issues can be raised without fear.
External mentoring opportunities help to further reduce isolation and assist new leaders in navigating new challenges. “Many CEOs belong to external groups like the Young Presidents’ Organization (YPO), where they can meet with leaders in similar situations,” says Lloyd. “First time CEOs may also benefit from building relationships with retired or experienced CEOs to offer guidance through this transition.”