THE COACH: Should you make a run for CEO?

Some years ago, I observed a CEO selection process from two internal perspectives – I happened to know both Bob and Terry, one a board member and the other a senior executive of a fairly large organisation. Bob told Terry he was the board's preferred candidate, a move that over the ensuing 18 months brought about the resignation of them both and derailed Terry's career for, roughly, three years.

In speaking out of turn and advocating for Terry, Bob caused a board split and lost the confidence of the chair, while the board failed to tell Terry that it was seeking an independent candidate and when a new CEO was appointed, he was taken unawares and unable to work with him.

The so-called 'death tap' caused enormous damage and was symptomatic of a board process defined more by accident than intent.

Fortunately, since that time and now working as a CEO coach, I've been able to play a role in making CEO transitions work, though, it can be tricky and still generate some tough lessons.

The Bob & Terry incident, and situations like it, mean I now run through at least, the following reflection checklist, which has relevance for directors, outgoing and aspiring CEOs, or interested observers.

1. Definition

Cut through the myths surrounding the role. Check whether the role is properly framed around:

• The industry, market, and financial context over the next five years.
• The organisation's point in its strategy cycle.
• Your organisational capability and its rate of development.

And, is board consensus locked in?

2. Succession

Succession may not be relevant if the board has to make the best 'hire' possible. The reporting roles may not generate CEO capability (but the incumbents' expectations must be managed). Reflect on the following:

• Who's involved? The chair, the nominating committee, or (help!) the current CEO?
• Do you know how it works, do you understand your part in it, and is it still relevant?
• Is it run in a regular, disciplined, and objective manner? Or, do you have a 'Bob & Terry' problem?

3. Assessment

In today's climate, assessment must be rigorous and able to be substantiated.

• Will you be able to defend your decision on objective criteria?
• Where are all the necessary feedback loops? Are they crisp?
• The CEO role is not a management role, but involves higher level skills. Are these being measured, or assessed, in an agreed way?

o Advocacy and influence.
o Reputation management.
o Generative (not heroic) leadership.
o Strategic range with decisive immediacy.

4. Coalition

The CEO role is both strangely isolated and deeply dependent upon a good supportive coalition:

• Internally:

o Will the new CEO receive 'cabinet solidarity' from the board, once appointed?
o Is the executive team keen, or disgruntled?
o Is the culture resilient, or dangerously cloned on the outgoing CEO?
o What's the internal communications strategy?

• Externally:

o Do the stakeholders have a real voice, and what do they say?
o What does the general market think is needed? (it can be brutally right and brutally wrong … so what is the external communications strategy?)
o Are the introductions to the market and external partners well-designed?

If you are clear on these four aspects of appointing a CEO, you have a fighting chance of being an effective board member in the decision-making process - or being the CEO whose legacy includes a smooth transition.

Or, perhaps, you are now clear about whether you should make a run at the role.

Sean Spence works with boards, CEOs, and their teams, as a consultant and coach on a range of issues. He has more than 30 years of international experience in the United Kingdom, Hong Kong, and Melbourne, with firms such as Price WaterhouseCoopers and Russell Reynolds.

He has an MA in Physics from Oxford University and was made a fellow of the Australian Institute of Company Directors (AICD) in 2003.