Ten questions every board member needs to ask in order to hire the right CEO
Most directors, if asked whether they can guarantee their members that the financial products and services provided to them are the very best possible, would respond in the affirmative. If you asked the same directors if they could guarantee that their search for a new CEO will produce the very best results possible, the response would be more tentative.
The search for a new CEO is undoubtedly the most important strategic endeavor a board will undertake, and carries with it the future viability of a credit union. History tells us that there are many noteworthy and successful CEO’s recruited for the top job of a new company only to fail wretchedly. Consider John Scully of Apple and Carly Fiorinia of HP. There is one stellar success amidst this list of failures – Lou Gerstner, who left RJR Nabisco and turned around the fortunes of IBM.
The biggest risk to the future viability of a credit union is not consolidation in the industry, it is not increased competition from banks, nor is it a more technologically demanding consumer. The biggest risk faced by credit unions today is the departure of their long serving CEO and the board’s lack of experience and understanding of how to recruit top talent.
In order to hire the very best CEO, directors need to answer the following ten questions individually and collectively.
1. What talents and skills do we need from our new CEO?
It is well understood that successful teams blend individuals with varying communication and thinking preferences. Some CEO’s naturally tackle problems from an exploratory perspective – they look into an uncertain future and bring back to the present ideas rooted in the exploration of new ideas. They are invigorated by change, growth, and believe that greatness is rooted in an unchartered future. They are driven by the “possibility” of an idea and welcome thinking outside of the known and predictable.
Other CEO’s tackle the same problem from the opposite perspective. You need both just at different times. Which skill set will prove most rewarding at this time for your credit union?
2. What values must be preserved at all costs?
Many boards don’t have a list of core “non-negotiable” values. When it comes to hiring a new CEO one of the most important tasks is to get crystal clear as to what values are most important to the board as well as to members. Alignment is crucial here and must venture beyond the theoretical and philosophical and enter the world where a pen collides with paper and accountability.
A new CEO will bring a whole new perspective, vision, beliefs, and values to their job. The question a board needs to have answered is whether there is alignment and congruence between the credit unions and the potential new CEO’s values and beliefs. Without clarity there can be no alignment or congruence – and that leads to an unsuccessful CEO recruitment.
3. What leadership style best suits our credit union?
There are many different leadership styles any of which can be successful and profitable. A command-and-control style of leadership has worked well with police and fire departments, but might prove debilitating with nurses and healthcare professionals.
Each director has a leadership preference, what I call a leadership philosophy. Their philosophy influences their decisions about board governance as well as the search for a new CEO. A director who is a self-described collaborative leader will search out a collaborative CEO. A competitive director looks for a CEO with a strong competitive spirit. There is no right or wrong leadership style only one that hasn’t been clarified and therefore can’t be aligned with the board and credit union as a whole.
4. Is there a culture fit with our new CEO?
In 1969 my family emigrated from Glasgow Scotland to Birmingham, Alabama. There were two aspects of living in Birmingham that came as a complete shock to me. One was the oppressive ninety-five degree weather with 90% humidity. The second was the oppressive race relations. Neither was my family prepared for.
A credit union’s culture has implications for a new CEO and directors need to be prepared to help a new CEO navigate what will be unfamiliar territory. The best way to do so is to have the board clearly articulate the parts of their culture they are proud of as well as the parts that they are sad of. Recognizing that there will be parts of your credit union seen as oppressive to a new CEO is the first step in determining whether there is a true culture fit.
5. How long can we expect our new CEO to stay with us?
There is a talent war taking place for top notch CEO’s, and the war is being waged for a generation of CEO’s that are a minimum of ten years, if not fifteen or twenty years younger than a retiring CEO. Director are best served by recognizing that this generation comes to their role with a different perspective on loyalty and longevity; neither of which are static.
Good CEO’s will be recruited in ways never imagined. While a CEO serves at the pleasure of the board, increasingly younger CEO’s are willing to consider serving their board only for as long as it fulfills their career aspirations and goals – and more than likely that will not be twenty years. One of a directors jobs is to actively retain their best talent.
6. Are we collaborating or delegating to our search firm?
As with younger CEO’s, each generation of director views and utilizes recruitment firms differently. Most traditionalist directors (those sixty years of age and older) feel comfortable delegating the responsibility for a new CEO search to a recruitment firm. A Generation X or Baby Boomer wants to collaborate with their firm.
A director’s first priority is to differentiate between the words collaborate and delegate. Collaborate is rooted in partnership and requires a clear understanding of each parties’ roles and responsibilities. Then and only then can a recruitment firm partner with a board in their search. Delegate is what you provide to the recruitment firm, as in delegating the screening of candidates based on a clear set of criteria developed by the board. There are five critical questions each board must answer in order to effectively collaborate with a recruitment firm.
What are our expectations of our recruiter, and what are their expectations of us?
How will we measure each other’s contribution to a successful outcome?
Do we want senior management involved, if so, when, for how long, and how will we use senior managements input?
How many finalists do we want, and how will we know we’ve identified the ideal candidate?
How will we hold one another accountable?
7. Is a merger an unspoken criterion of our CEO search process?
In a recent strategic planning session, a director suggested they consider recruiting the CEO from a credit union they had identified as a potential merger candidate. He felt that there was a good possibility that “they could secure the CEO with the merger.”
Mergers and CEO searches are two completely separate decisions and need to be kept separate. The criterion for a new CEO might involve communication excellence, leadership philosophy, and capacity for change. With a merger, consideration is given to economies of scale, branches, and member / technology integration. These decisions require separate objectives and metrics and should be kept separate so as to ensure the quality of each decision.
8. What’s our plan for internal candidates?
Boards can become so engrossed in the recruitment process that they forget about communicating with and managing an internal candidate’s application process. I heard a horror story recently about how one internal candidate was told glowing positive feedback from a recruiter and less favorable feedback from their internal sources. Communicating with internal candidates influences other employee’s behavior so manage this process like you would a political campaign. Have your talking points, stay on message, and have one person be responsible for all communication with internal candidates.
9. Will our search process instill confidence and enthusiasm with members and employees?
Directors are not invisible. Their words, actions, and behaviors send a clear message to their members and employees about what is important. Throughout the search process it’s important for board members to keep in mind that they are being watched, and that their behavior is clearly communicating to everyone involved to everyone who’s watching them what is important to. The search process is not being conducted in a vacuum. It needs to be visible to everyone who will be affected by this position.
There’s a wonderful opportunity for directors to look at the hiring process in the discipline and the rigor that is infused into the process as a clear indication to both members and employees that the search for a new CEO will result in the very best choice possible. Important for directors to remember that day camp through this process and still a sense of confidence as to their leadership of the credit union and to the future results but they aspire to.
10. Are we relying on hope as a strategic asset in our search for a new CEO?
If you pay close attention to the words your fellow directors use in describing their recruiting process, you will oftentimes hear words that suggest hope has become a key strategy for hiring a new CEO. Yes, hope and optimism are admirable characteristics, and yes, more than likely every board member has reason to be hopeful and optimistic about their recruitment process. However, the best advice is to strive for clarity, discipline, and focus as your secret sauce.
These 10 questions are intended to be a conversation starter for your board as to the sometimes less asked questions. They can be a catalyst for your board to ask different questions of one another and to recognize that sometimes the best response is simply I don’t know. Knowing the right question to ask is for my firm and me more important than having the right answers. Though give a wrong, being able to have an answer is important to your members and your employees. But, knowing what questions to ask are the jumping off point for more ineffective in powerful positions.
