How to choose a new CEO

Every company needs to think about who will fill the top post if it becomes vacant tomorrow.

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All companies, regardless of age, working hours, or CEO’s career orientation, need to think about who will fill the top post if they become vacant tomorrow. Sudden loss of leader can have serious consequences. With the CEO’s “lifetime” declining in the last few decades, this is a more important topic than ever. In short, underestimating the CEO’s successor development plan puts the company at unnecessary risk.

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When the need for a CEO change becomes a hot topic today, companies need to know the answer to one question. Should someone be promoted to a post internally or should I look for a new CEO outside the company? A seemingly simple question contains a wide range of results. What are the benefits and risks of selecting CEO candidates internally and externally? And what do you need to know to make the best decision?

Candidates for internal and external CEOs

It is rarely required to list the benefits of an in-house successor development plan. Managers who are part of the company are familiar with this and are fit for it. These candidates understand the strategic direction the company has set, the industry in which the company works, the context, and the environment. , And foster a sense of community. For individuals within an organization, the motivation may be to build their own personal growth and their own career.

Apart from its strengths, internal selection has some drawbacks. Internal managers are linked to your organization in several ways. It is primarily concerned with individual processes, interpersonal relationships, and connections. Finding a new approach to an old problem can be difficult. Mutual promotion can be harmful to an organization if the successor development plan is not transparent, open and properly communicated.

The CEO of the external environment also has a positive attitude. Traditional discussions have shown that acquiring CEOs from different companies or industries can bring new perspectives, experience and innovation to management. The position of the new CEO as a kind of outsider also seems to be an advantage. Having no connection to employees or traditions makes it easier to introduce new ideas and increases the motivation and courage to try new strategic directions. Keeping some distance from the people there also unleashes their hands in deciding on personnel and financial issues.

On the other hand, hiring outside candidates is literally costly. It’s a vast search investment that requires time and energy. The goal is always clear. Choosing the best candidate for your organization. If you suddenly lose a leader, the time available to find and select new candidates can temporarily slow down your company or cause setbacks. This is not the case when a long-term CEO change is planned and the organization is gradually preparing for it.

How to minimize the risk of selecting external candidates

Whether the organization handles the process on its own or through an independent executive search advisor, each candidate coming to the organization from an external environment needs the organization to know and scrutinize them. Hundreds of stories have confirmed that this step is necessary, as it is nearly impossible for an organization to recover from mistakes and incorrect personnel decisions. Executive background checks help minimize the chance that selected candidates will not fit in the position. This identifies potential risks and threats. Candidates can be evaluated efficiently and reliably through interviews, reviews, reference collection, searches in various databases, and the use of automated search systems and background checks.

This is a careful process that helps candidates check the authenticity and complexity of what they present about themselves and make sure they have not intentionally omitted or kept anything secret. Candidate digital traces are analyzed in-process. This includes activities on the Internet and social networks, reviewing information from the media, credibility, reputation, conflicts of interest, and overall background research of candidates in various registries.

In any case, the election of a new leader is an important decision that cannot be underestimated. Requests to leaders and managers are more burdensome than ever. Decisions should be based on a unique balance of timing, finance, industry, and availability. This is the only way to find candidates who have a unique combination of experience in creating strategies and controls, ensuring that your organization implements significant changes.

Martin Krekáč is Chairman and Founding Partner of. Genewayne Group..

Related article Not only proper selection of candidates, but also human resource development read more How to choose a new CEO

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