NEW: Selecting a CEO for your organisation

27 Nov, 2021 - 12:11 0 Views
NEW: Selecting a CEO for your organisation CEO (Chief Executive Officer) wood letters in scattered alphabets with glowing light bulb

The Sunday Mail

Memory Nguwi

One of the most critical assignments for board of directors is to hire the right CEO, and the right supporting executives.

This is not an easy job.

Most boards are left frustrated after completing the process of hiring the CEO. The frustration stems from the fact that the person fails to deliver as expected.

More frustrating is that generally, board members may not agree on what performance for a CEO looks like. They may also not have consensus on what failure or non-performance is for the role of the CEO.

When the board does not have consensus on these issues, company performance deteriorates very fast.

If the shareholders are vigilant, the board is dissolved. How then can boards hire the best candidate for a CEO role?

“Just three in five newly appointed CEOs live up to performance expectations in their first 18 months on the job” – Eben Harrell in ‘Succession planning: What the research says,’ Harvard Business Review, December 2016, pp. 70–74, hbr.org.

The good news is that there are tested processes and procedures for ensuring that you hire the best CEO available on the market.

1) The first step in hiring a great CEO is to agree on what they will be doing. It would help if you prepared the job profile of the target CEO thoroughly. Boards tend to copy generic job descriptions from other companies or the internet. How do you get the right profile for the role? You may need to interview board members {provided they have an in-depth understanding of the business, and where it is going}. This information should be combined with what scientific research says about successful CEOs. The other way is also to look at literature, and what it says about CEOs who failed. Do they have a certain profile? Once you find the profile of unsuccessful CEOs, you can then avoid hiring one.

2) In the job profile, please avoid overemphasising experience as it has no relationship with performance. Some organisations miss exceptional talent because they have put requirements such as ‘10 years experience at the CEO level’ in the job profile. In an article by Alison Beard {Harvard Business Review}, reports on a study by Chad H. Van Iddekinge {et al.} of Florida University, in which they reviewed 81 studies to investigate the connection between an individual’s prior work experience and performance in a new organisation. The results are revealing. They found no significant relationship. What is even more worrying is that they found no significant relationship even when people had worked in exactly the same role in other organisations. This means that scientific research shows that candidates who have more experience do not perform better than those with less experience in a job. This means that employers should not overemphasize years of experience when hiring, as that has no relationship with actual job performance. Most employers prefer to put arbitrary experience requirements, which are not backed by research. This makes the selection process based on this criterion not standardised, leading to hiring the wrong people.

3) Do not put unrealistic educational requirements. Remember, years of education only contribute 1 percent to job performance variance. As people move into senior roles, their technical knowhow matters less and less. What you need is a visionary, capable of executing your strategy. You do not necessarily need a miner to run a mine. You do not need a medical doctor to run a hospital. What would be important on qualifications is to indicate the first degree as a requirement. For example, you may also want to include five major verifiable achievements that changed the course of business. I notice some put a Master’s degree as a mandatory requirement or an added advantage. This adds no value. It does not follow that your best candidates will have a master degree. The situation is worse in Zimbabwe, where qualifications are easy to obtain, sometimes fraudulently. There is no added advantage in demanding a Master degree for a CEO role.

4) It would help if you considered first time CEOs. There is a tendency to want to hire people who are already CEOs. There is a pool of talented people at the executive level, who are not given a chance to be CEOs. As a board, you must always provide opportunities for people at the executive level who have never been CEOs as long as they are capable.

5) After shortlisting your CEO candidates based on their CVs, take them through psychometric assessment to check if they have the cognitive power and the right personality to handle the role. It is bad practice to start with the interview then send people for psychometric tests. Research shows that the interview methods, on average, only explain 8 percent of the variation in performance. This means that if you hire 100 people using an interview, there is a chance you will find only eight of these people being good performers, despite your interview results having confirmed all the 100 candidates as performers.

6) After psychometric assessments, the successful candidates must then be taken through assessment centres. In an assessment centre, candidates go through simulations of the target role, in this case, the CEO role. They will be assessed on simulations by trained assessors. Some of the exercises are role-playing, leaderless group discussion, presentation and the in-basket exercise. In the assessment centre, you are now assessing a variety of leadership competencies required in the role.

7) The last important part is the interview. Given the shortcomings in an interview, doing it as the last part reduces your risk of hiring the wrong CEO. You would need standardised questions and a standardised environment for the interviews. The people who will be part of the interview panel need to be trained so that they are equipped with interview skills.
The process above will ensure that you get the right CEO for your organisation. Remember, good CEOs tend to hire good lieutenants as well.

*Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.thehumancapitalhub.com email: [email protected] or visit our website at www.ipcconsultants.com

Share This: