What to do when you receive the unexpected and unwelcome resignation of the CEO.
Boards rely on CEOs in so many ways that are too numerous to cite here. Suppose you are a member of a well-functioning board, or more particularly its Chairman, everything is humming along nicely, you’ve ticked off the Strategic Plan, the budget, the Board committees are working well, and you meet regularly with the CEO and have just congratulated yourself on this state of affairs. The one thing you’ve told yourself is that you cannot give any more time to this organisation because you’ve your own paid job to do. You are comfortable that this will not happen because the essentials of the Strategic Plan, the budget, meeting regularly with the CEO… all are in hand, as you have told yourself numerous times. Then, from out of nowhere so it seems, the CEO advises of her resignation. Your first reaction, other than to bleakly ask “Why?”, “Anything we can do to change your mind?”… is to groan mentally and say to yourself. “Oh no, I just can’t afford the time for CEO selection. I didn’t want anything like this to happen on my watch.”
What is the next sensible step? What do other Boards do in these circumstances? How can you ensure that the next appointee will have the appropriate skill sets, qualifications and cultural fit? If you haven’t done so already, you must advise other Board members of the CEO’s resignation and convene a meeting to consider the various things that must be done to secure another excellent CEO. Your Agenda would include a review of the current position description for the CEO, as it may not have kept pace with the evolution of the organisation; you would also want to discuss what you consider to be the essential and desirable attributes of the next CEO; the sort of salary package to be offered and explore your various options in attracting such individuals; the actual mechanics such as ‘search” or ‘advertised selection” and who will undertake this work. Although you want to retain your role as Chairman of the Board, you may decide to suggest forming a CEO Selection Committee, perhaps chaired by the Deputy Chairman, with yourself as an ex-officio member.
Appointing a CEO is perhaps the most important role a Board performs, but this doesn’t mean to say Board members are necessarily experienced. As Board members grapple with the idea that their CEO is really leaving, and perhaps a realisation of an urgent need to act, some suggestions will invariably be made, that in another context would be seen as inappropriate. For example, it may be that a Board member will know someone who they say who would be excellent as the CEO, or they know someone who is in recruitment and the Board should hire that firm, and another may respond that “all that is far too expensive, why don’t we just use one of the internet job boards?” Apart from lack of transparency and limiting the field from which to make your selection, you are also stepping out of your collective expertise as well as giving yourselves more to do. forde advisory is available to commit the necessary time and expertise on behalf of the Board or CEO for your next executive search.
(An earlier version of this article was printed in an EnterpriseCare Newsletter).