The Elephant In The Room… Navigating a CEO Failure

Friends,

Many companies are facing tough times, and in turn, they are looking to leadership for strategic direction. Every CEO is now in the spotlight. They must act accordingly and strengthen the vision and mission of their company. Yet, they still might fail.

Today’s newsletter is about how to handle those failures.

In other words, how do you detect, replace, and recover from a failing CEO?

Last year, I had one of the most important conversations of my business career. A family-owned company had recruited a very high-level executive. After about a year, they found out he was not fit for the job.

What did they miss in the interview process? Was their recruitment strategy incorrect?

Let’s walk through the steps. Digest the following points. Talk about them with your board and other C-suite team members. You must fully accept that your company may fall into one of these buckets. Then, adjust accordingly.

The Topline

There are two errors that Boards make when hiring a CEO:

1. They hire the wrong person. Full stop.

2. They should have hired someone else.

Let’s break down these two interconnected points. The reason you hired the wrong person is that you did not define what was needed in clear and precise terms. You had too many criteria in the job description. You used too many buzzwords. Every CEO should have integrity, values, and a strong work ethic. These traits are non-negotiable. They do not add anything to the job description.

The right CEO should have specific skills, experiences, and a personality that adds value to the organization. They should be able to drill to the core and know exactly what is needed for the organization. They must be able to articulate this in a way that aligns with the board’s ideals.

When you are interviewing someone, you will come across many different personalities. You must drill into their experience. Understand exactly what skills from their past are applicable to your company.

You Find the Right Person - Now What

Next, you must implement key metrics to evaluate the CEO’s performance. Determine what the deliverables will be in the first year. Communicate these with the CEO. They should be specific and precise. They must also be short-term and tangible. In order for the CEO to succeed, he or she must demonstrate they can accomplish these short-term tasks. Otherwise, they will not get the respect of the rest of the C-suite.

Remember, we said before that you should use your CEO’s previous experience to your advantage. Think strategically about this point. Implement skills from the previous experience into the metrics you are using to evaluate the new CEO. See how they are able to perform in a new work environment.

Conclusion

Early detection is key. Moreover, a bad performance doesn’t immediately mean you have to fire the CEO. But, you must work with that person to help them succeed in the early days before they are too far in the weeds and can’t be helped.

We use many buzzwords in business today. The words “role” and “responsibility” will inevitably appear on every job application. Those words, just like your next CEO, must be personalized to the organization.

When you approach hiring with this mindset, the right candidate will emerge from the group and come equipped with the ability to lead your company through tough times.

Yours in service,

Ram Charan