A family business choosing to recruit an external CEO is accepting that the family is relinquishing responsibility for a level of management of the business. The question is to what level and it is critical that this be agreed so it is clear to all stakeholders particularly the incoming CEO what the decision making authorities and reporting requirements are. This is a critical element of developing the Position Description and will help create a framework for the recruitment decision. This framework also needs to incorporate several other key factors:

Strategy drives Structure and Resourcing

In making good resourcing decisions particularly recruiting a CEO it is important to accept that Strategy drives Structure and Resourcing. Recruiting a non family CEO like all resourcing decisions needs to be based on the needs of the Business. The resourcing needs of a business are shaped by the strategy so it is critical that your strategy is comprehensive and robust. A strategy is comprehensive and robust when the basis of your competitive advantage and positioning, your mission and vision of the future for the business are clear, there are comprehensive action plans and initiatives based on a thorough SWOT analysis defined and fully agreed. This strategy then needs to be translated into specific capabilities needed to drive it and deliver against it.

Family Values

Another key component is the business and family values. Hopefully these are fully aligned. Your business values need to be clearly defined and translated into capabilities and attributes that reflect these values.

You also need to articulate your company’s “familiness” (Family values). “Familiness” is a combination of the unique cultural dynamics, unwritten values, and processes in your business that are used or impact on the decisions that are made. It is critical to recognize your constrictive “familiness”. Constrictive “familiness” is the combination of attributes and behaviours that hinder your company’s success caused by the same dynamics, values, and processes that contribute to positive outcomes. If you are not prepared to change these constrictive elements you need to ensure they are clearly understood and communicated in order to attract the best available talent in the market that will engage fully with your business. A good way to consider your “familiness” is to review business decisions that are made, who makes them and how they are made.

Change Plan

A change plan must build and maintain commitment to the need for change, provide a clear picture of the outcomes of the change, provide those impacted by the change with enough information to accept the change and a clear process that is to be followed to deliver the planned outcomes.

Even if this is the first time you are choosing to recruit a non-family CEO, there will likely be many questions and concerns from other family members and any independent/external board members. Clear communication to all internal stakeholders is critical including explaining the need to look outside the business for the next leader. Using your strategic plan and analysis of familiness within your business, keep family members informed about the recruitment process. This helps manage the change and enables the successful applicant to enter a more supportive environment.

A structured recruitment program

A structured recruitment program includes an appropriate sourcing strategy, comprehensive and aligned candidate assessment processes and an engagement plan for the successful candidate. The basis for determining your sourcing strategy is the selection criteria and the market for candidates against these criteria.

Your selection criteria must replicate the capabilities and attributes identified in the strategy and values analyses. That is the specific capabilities and personal attributes needed to drive and deliver the strategic plan and truly promote your business values. These capabilities and attributes then need to be weighted using a comparative analysis to ensure the appropriate emphasis is given to each criterion during the evaluation and decision making stage.

In sourcing potential candidates you are looking for people who have successfully responded to the challenges and opportunities that your business will confront in the foreseeable future (with particular emphasis on the next 2-3 years) by applying the capabilities and attributes you have identified.

The key is to remember you are looking to source and secure the best available candidate in the market. Therefore limiting your sourcing strategy to just looking at your own industry sector, personal networks or relying on response to job advertisements may limit your ability to deliver the best available candidate.

Good recruitment decisions are based on the quantity and quality of information that is gained during the assessment and evaluation stages. The assessment and evaluation stages need to be aligned and ensure adequate assessment of all criterion and duplication is avoided. Key stakeholders should be included as necessary in the assessment and evaluation stages in line with your change plan.
In addition to assessing their capabilities and personal attributes it is just as important to understand their motivators. This includes understanding what challenges they find rewarding and those they find mundane or less rewarding.

Remember CEO’s are not an homogenous breed. There are visionary leaders, strategic leaders, those who are adept at business growth strategies, business turnarounds and those who are good at being hands on and staying close to the operational level. You need to make sure you get the type that matches your business needs.

This article has been provided by David Williams, Managing Director of Kurtis Page and an FBA Accredited Adviser. The advice in this article is general in nature.