Choosing the right CEO

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.

Motivation

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.

Technical ability

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?

Behaviours

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.

Cultural fit

Lastly and most importantly, how will the candidate conform and adapt to the core values and collective behaviours of your organisation?

Things to look out for:

• Look for red flags in resumes: obvious copy-and-paste text, mismatched dates, typos, embellishments, gaps in timeline (which could be for legitimate reasons), and people who seem to have had a lot of jobs lasting only a few years. Dig deep into why this is to satisfy yourself they haven’t been ‘moved on’.
• Check remuneration expectations to ensure your short-listed candidates will fit your budget.
• Cash flow is essential to the operation of any business. For NFPs, the chief executive is usually the biggest fundraiser and they need to be able to generate cash flow and maintain the current money coming in. Do candidates understand cash flow, revenue generation and tightly managing money?
• An appreciation of Te Tiriti o Waitangi, tikanga, te reo Māori and engagement with Māori should be a given. Check that candidates have demonstrated a willingness and openness to develop their knowledge and have experience building enduring relationships with iwi groups.
• The relationship between the board chair (and then the rest of the board) and chief executive is critical. Look for candidates who you will be able to build a respectful, honest and transparent relationship with.
• Reference checks act as the source of truth, allowing you to verify what you have been told in interviews. They help you explore any potential strengths or weaknesses you have assessed in your preferred candidate. Ensure you speak with at least three referees.
• If you are using a search firm to assist you, they can provide helpful insights, but do further research into candidates to reassure your selection.
• Lastly, it is important not to be rushed into a decision. Appointing an interim chief executive can provide the board time to identify the best candidate.

The recruitment process 

1. Consider a subcommittee to manage the process, perhaps even add an independent with experience to assist. Ensure there is regular reporting back to the full board before any key decisions are made.
2. Establish the purpose and accountabilities of the role. What do you need for the organisation at that point in its maturation? What do you want the person to be responsible for?
3. Define the competencies and experiences required for the role. How will you recognise the skill sets or talents you are looking for?
4. Agree the remuneration range.
5. Identify any external consulting support you may use, including consultants to support search, interviews, testing and background checking.
6. How will you generate candidates? LinkedIn, Seek and Trade Me are online places most candidates use to look for vacancies instead of newspaper advertisements. Search firms are useful for identifying candidates.
7. Agree the screening criteria, short-listing and selection process. Remember that unconscious bias may operate at every step of the process. Be aware of this. For more information on bias go to projectimplicit.net.
8. Congratulations, you’ve found some candidates. Now conduct in-person interviews to narrow your decision.
9. Conduct second interviews with the short-listed candidates and give them a simulation or task to assist the panel in assessing their ability to do the job.
10. Finally, once you’ve made a choice, always do reference and background checks. This is where executive search support can be invaluable. Relying on instinct alone is not enough. 

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

About the authors

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.