Risk management: Twitter, FTX and what boards should not do
When a company fails, it is often due to accumulated under-performance, strategic drift, and poor risk management.
Four attributes stand out when trying to find the perfect fit for chief executive.
Arguably, the most important job a board has is to appoint the chief executive. Mistakes can be costly in terms of reputation, performance and settlement payments. There could also be damage to the organisation, its culture and loss of other good team members who leave frustrated with the board’s decision.
There is a paradox in hiring a good chief executive – they must be strong, yet humble, direct yet consultative, a big personality but approachable, and balancing the soft and the hard skills.
It is the cultural fit, the value set, the way they lead, manage, problem-solve, innovate and deliver which will determine whether they can be impactful. It is this ‘fit’ which is the tricky skill set to identify, develop, and hire for.
Technical abilities should be a given. They are relatively easy to measure – either they can do the job or not – and they are relatively easy to develop.
Spending money at the right parts of the process can minimise the risk of a mis-hire. This may be difficult for cash strapped not-for-profits, but can be worth it in the long run.
When searching for a chief executive look for these four attributes: motivation, technical ability, the right behaviours and evidence of this, and cultural fit with the rest of the team.
One of the most critical attributes of a chief executive is making sure there is absolute clarity of purpose. What does the business or charity exist for and what is the CE there to do? The CE needs to live and breathe the organisation. They will use their energy and drive to ‘push’ the organisation to achieve its purpose. How do they demonstrate their alignment with the bigger purpose of the organisation?
Warning! Executive leaders tend to be competitive and alpha leaders, and yet to be a high-performing leader, they need authenticity and humility. In a world that has been reshaped by Covid-19, increased environmental challenges and geopolitical tensions, the command and control approach is no longer acceptable.
How does the candidate prove they have what is needed, what experience have they had in the sector, e.g. government, health, education, transport. Some of their previous experience may be similar but in another sector so it is transferable.
Do they have functional expertise in at least one area, such as strategy, finance, marketing, sales or operations? How can you assess their commercial acumen? What is their performance track record of delivering results? Can they give examples of their delivery? How can they demonstrate they are familiar with large or complex organisations, perhaps multiple stakeholders or lines of authority, a large employee base or significant budget management?
Look for leadership behaviours of adaptability to respond to uncertainty, willingness to be authentic and vulnerable, people who can inspire and drive change, people who can balance the ‘hard’ and ‘soft’ skills, and who have business and strategic insight.
Can they say ‘no’ and keep relationships intact? Can they make tough decisions? Can they maintain momentum and drive, despite any setbacks or difficulties? How can they show they are able to innovate, make informed and effective decisions and yet also show they can be be versatile and empathetic?
When interviewing candidates, explore how they have developed and grown people and teams. Explore their ‘enterprise-wide perspective’. Can the candidate determine the strategic direction – what ‘bets’ to place – and set a framework for the operation?
Can they understand the business or charitable context and where the organisation can effectively add the most value? Are they curious about and focused on the external environment, the competitive landscape and broad macroeconomic trends and influence?
Many of these can be turned into questions to explore the behaviours of the candidate.
Lastly and most importantly, how will the candidate conform and adapt to the core values and collective behaviours of your organisation?
The Harvard Business Review suggests it is time to consider co-CEOs and the model is more viable than you might think. In its July-August edition, it also looked at the C-Suite skills that matter the most and says that, more than ever, companies need leaders who are good with people. Visit hbr.org
Chris Lokum is general manager, People, Culture & Safety at Waka Kotahi (NZTA). She has more than 25 years in senior HR roles, working in the private, public and not-for-profit sectors in New Zealand, Australia and the UK.
Victoria Carter has more than 25 years’ experience as a director on the boards of NZX, private companies, charity and council entities in the transport, tourism, education, property, and arts sectors. She is chair of Waka Kotahi’s People, Culture & Safety committee.