How to choose the new CEO of your company? “The biggest risk factor facing a company is selecting the wrong CEO,” said Warren Buffet, CEO of Berkshire Hathaway.
And this is so since succession is a critical component of a business strategy. M&As are never done without evaluating the fit in culture and strategy, but this same principle is neglected when talking about succession.
How to choose the new CEO according to the needs of the future
Once the new leader is named, the real work begins: bringing them on board. According to the magazine Forbes, About 50% of CEOs of large companies said the position was “not what they expected”. Meanwhile, a study by Spencer Stuart placed the rate of failure of CEOs between 50 and 70 percent.
This indicates that the road to success for the CEO and Senior Management is difficult and rocky, and still thus many organizations leave succession at the top to chance or have poorly designed selection approaches.
Furthermore, they compound the problem with insufficient onboarding processes to ensure success in these high-risk and high-risk positions.
A rigorous succession process in Senior Management begins with a deep understanding of business strategy and future needsas well as a profile of requirements to occupy the position that is clear and provides criteria for selection.
The success profile and the associated evaluation framework guide the search and evaluation of candidates, both internally and externally. The result is a shortlist of leaders prepared for these positions, with specific strengths to build on and gaps to fill before they are ready to take over.
Executive evaluation must be multidimensional
There is no such thing as a perfect candidate, and what makes a candidate great for one company doesn’t make them great for another. Therefore, the process should include the following stages:
- personality assessmentswhich provide information on general candidate trends.
- interviewsideal for extracting information about the success and previous perspectives of the candidates.
- business simulationsoffer insights into actual behavior demonstrated against business challenges.
The best succession processes for Senior Management also include individual investment in development and support in the transition to the new rolewhich can potentially include executive development coaching prior to promotion as well as during the critical transition period.
This way, the CEO takes office with fewer headwinds and a faster path to success. The CEO’s vision and values are already clear and part of the leadership narrative.
You have a faster path to building and growing a strong leadership team, and establishing a strong external brand with customers, employees, media, shareholders, and other stakeholders.
That’s why it’s key to move from a risky selection process and unprepared transitions to clear, planned transitions that reduce risk and create value. This creates a continuity that builds confidence and calm in the midst of uncertainty.
Martha Zaragoza He has +15 years in BTS and is one of the people who define the firm’s global strategy. In addition, she manages key relationships and projects with global clients. She is Executive Vice President of Southern Europe and all of Latin America. The projects that she develops have measurable results in business, leadership and effective transformation of the sales force. She has extensive experience in the Financial Services, Oil & Gas, Professional Services and Pharma industries. She has a degree in Economics and Business from the University of Deusto (Bilbao). She has an MBA from the Instituto de Empresa (Madrid). Her professional career began in financial areas, as an auditor at KPMG and controller of Fanuc, a General Electric group company. She later specialized in strategy and business development in the telecommunications sector, as senior project manager of Amena (Orange).