Choosing a new CEO: this board got it right: there were three strong internal candidates, each with champions on the board. Only a rigorous step-by-step evaluation process resolved the selection dilemma to confirm the best person for the job.

• Author: Muschewske, Robert C.
• Position: SUCCESSION PLANNING

BOARD MEMBERS know that CEO selection can seem like a crap shoot. It can be difficult to predict with confidence who will be successful in the position, given the vagaries of human nature, the daunting and unknown challenges that CEOs face, and the awareness that the position is unlike any other job in the organization. However, there is a way to increase the odds of success. The entire board can engage in a thoughtful and fact-driven process, described in this article, that will lead them to a selection decision.

Recently, a $20 billion global manufacturer faced the following situation:

* The company was nearing completion of a successful turnaround in financial performance.

* Their CEO announced to the board that he was planning to step down in a year.

* The board wanted to select an internal candidate rather than go to the outside.

* The company had three talented internal candidates, but none had experience in managing a P&L.

* The board respected all three internal candidates, but they were divided roughly into thirds, each group favoring a different candidate.

How did the board resolve this dilemma and reach consensus on the candidate best equipped to lead the company?

Development of a CEO competency profile

The board's first step was to bring in an outside consultant who was an industrial and organizational (I/O) psychologist specializing in CEO succession planning. Together, they began "drilling down" to identify the challenges facing the next CEO of the company, and the skill set that would be essential in tackling those challenges.

This exercise yielded a list of eight critical leadership competencies needed in the next CEO (see Exhibit 1). Based on the presumption that the vision and key strategies required to achieve that vision had been set and that the principal challenge would be to implement those strategies, the lead competency was defined as follows:

EXHIBIT 1 Critical CEO Leadership Competencies

The critical set of competencies required for CEO leadership in addressing the strategic challenges facing the company are as follows:

Passion for Operational Excellence: Driven by a sense of urgency and desire to achieve world-class performance on all relevant customer service, operational, and financial metrics. Provide focus, make the tough decisions, and align the organization to achieve this objective.

Strategic Perspective: Stay abreast of broad technological, social, governmental, economic, and industry trends. Develop and implement proactive, innovative, and pragmatic strategies to ensure that the company continues to achieve performance objectives.

Seasoned Judgment: Possess the balance, objectivity, and wisdom needed to make key human and business decisions.

Inspirational Leadership: Demonstrate an approach to leadership that engages and mobilizes all parts of the company in a unified pursuit of its mission, vision, values, strategic objectives, and growth in shareholder value.

Personal Integrity: Possess unquestioned personal integrity and engender trust by maintaining a core set of ethical values and bringing them to life in all interactions with stakeholders.

Financial Acumen: Possess an in-depth understanding of balance sheet and income statement financial issues and know how to use financial information to shape, drive, and monitor the effectiveness of organizational strategies.

Team Builder: Attract, develop, motivate, and retain highly talented individuals to the leadership team and deploy them in a manner that will optimize achievement of short- and long-term strategic objectives. Foster the development and implementation of human capital and organizational strategies that result in high levels of talent and performance throughout the organization.

Personal Impact and Savvy: Possess the personal...