7 minutes
The selection of your next CEO is among the most important decisions you will make as a board of directors. No one argues that point. It’s part of your collective legacy, whether you make a good choice or a bad one. I wrote about this idea in “The CEO Mind, Defined” in the February 2013 issue.
That article suggested that the selection criteria for the CEO position should focus on 1) the accountabilities of the position, and (2) the combination of skills and competencies unique to the CEO position. Example accountabilities/competencies included whether a candidate could effectively use influence strategies, generate a compelling vision and manage strategic change, and achieve increasingly ambitious goals. Who wouldn’t want those kinds of qualities in their next CEO?
Another element should be considered when hiring your next CEO. It’s a bit more abstract and difficult to pin down with the kind of clarity that carefully worded accountability and competency statements provide. I’m referring to figuring out what culture you want for your credit union and whether a particular CEO candidate could help you get there.
The CEO has enormous influence on an organization’s culture. We all know that. We’ve seen it manifested in both positive and negative ways over time. If we were able to take an organizational snapshot—or, put in today’s terms, a “selfie”—of how the organization operates, the CEO’s fingerprints would be all over it. This “selfie” might show the dynamics of how decisions are made, how strategic choices are examined, how difficult times are managed, and a whole host of other factors that are barometers of how things get done.
The “selfie” is worth examining closely as part of the preparation for initiating the CEO selection process.
Sample ‘Selfie’ Examination
Consider the following scenario:
Highly Successful Federal Credit Union has a long history of steady growth and profitability. It has skillfully weathered the economic ups and downs and the steady march of increasingly burdensome regulatory pressures. The organization is healthy. Its members are pleased with results and give high marks to the service the CU provides. Highly Successful FCU’s CEO has been in the top executive position for 14 years, and both he and the board realize that the time is coming when he will retire. His performance has always been solid—delivering good results, maintaining a stable organization, leading effectively—all of which contribute to the high level of confidence the board has in being able to effect a smooth transition to new leadership when the time comes. Highly Successful FCU is well positioned to handle the change without missing a beat.
So, what’s missing here, if anything? I would suggest that a pause in the action is called for—so that organizational selfie can be shot and examined. What that entails is a serious look at the organization below the surface and the dynamics that have been driving it for so long under the CEO’s leadership. This doesn’t suggest a fault-finding exercise—even though a hard, objective look may surface issues that, in retrospect, have had long-lasting dampening effects on the organization’s ability to leverage its resources to the greatest advantage.
Let’s consider a narrative that could be discovered with the careful review of the rosy scenario above. Fourteen years ago when the CEO joined Highly Successful FCU, he inherited a nearly rudderless ship. It required very strong leadership and he provided it. It was a natural development that the organization’s culture became CEO-centric. The fixes that were needed were his. The lion’s share of the creativity and innovation was driven by his ideas and personal drive to achieve. While his management team and staff were very capable and executed well on what he delegated to them, only a limited amount of the impetus for growth and change came from them. Over time, the frequency and intensity of the new ideas and plans for development trailed off and more resources were committed to the maintenance of what was in place. Innovation was more tinkering around the edges than fundamental shifts in strategy. Results were still good, but the organization was operating in maintenance mode, and entertaining the kind of risk the CU undertook 10 years before was given a passing look and, for the most part, set aside.
The importance attached to examining the organization’s culture and understanding the long-term impact of the CEO’s style depends entirely on the board’s vision for the organization. If operating in maintenance mode is OK, organizational culture’s influence on how the directors select the next CEO will probably be minimal.
If, on the other hand, keeping on with the norm points to an eventual loss of market share and missed growth opportunity, the current culture should have a significant effect on the characteristics and competencies defined for the CEO’s successor.
The board’s vision for the future of the organization has to be clear to the board itself, and must be made equally clear to the candidates the board will be meeting.
Let’s go back to the “selfie examination” outcomes in the example and assume the board now recognizes the ever-so-gradual shift away from the sense of vitality and “can do” spirit that drove the turnaround of years past. Should it make a difference to them?
That depends on whether the shift is consistent or inconsistent with their collective vision for the future. Do they see continuing with the status quo as compromising their vision for innovation and the growth it brings? If so, what should they do? How do they integrate those concerns into the search for the successor? What needs to be done to ensure the selection of a person who will be successful in fulfilling their expectations? The board needs to look at leadership style.
Which Leadership Style?
Competencies, to the degree we can describe and detect them in anyone, tell us what a person is capable of doing. How a person plans to leverage his or her competencies contributes to what we sometimes refer to as “operating leadership style.” One long-standing model included three basic, easily understood styles:
- Fixers: leaders whose skills are particularly suited to taking on knotty problem situations, analyzing what needs to be done, and acting on the fixes that they determine are needed.
- Builders: leaders whose skills are more strategic, who have the capacity to take the longer view, who flourish in a culture that balances the need for immediate action to rectify what’s wrong today with the investment needed in the organization to ensure ambitious growth over time and consistently high performance.
- Maintainers: leaders whose skills enable them to continue to motivate the organization to steady, reliable performance—avoiding risks that could disrupt its reputation for consistency or take the organization too far outside its comfort zone.
All these leadership styles are legitimate in certain organizational settings. It’s rare, however, that any one, alone, is appropriate over time. What is appropriate is a blend of them over time.
How would candidates operate, and would their styles be consistent with the board’s 10-year vision? It’s the board’s responsibility to define that vision and communicate it clearly, not just when the CEO is selected, but year in and year out.
Look Forward
It’s difficult to go deeply into what brought Highly Successful FCU to where it was at the beginning of the CEO search process, but we do know that:
- The long-time CEO was very effective in righting the ship. The steps he took to stabilize the organization were on target and contributed to both the CU’s short-term survival and longer-term stability.
- His personal drive and creativity infused the organization with new energy and the innovations he introduced put Highly Successful FCU on a good footing.
- As his tenure unfolded, that drive and innovative energy slowed to a pace that began to resemble operating in maintenance rather than growth mode.
- The CEO’s style through the first several years of his tenure didn’t cultivate—perhaps even discouraged—original and innovative thinking in the senior management group. All the organization seemed to need was coming from the CEO.
- If the CEO and the board had a shared vision for the future at the outset, they may have lost sight of it as they slowly drifted into maintenance mode.
We don’t know why this happened. The underlying causes are important, but not nearly so important as what the board will do to set the stage for the next CEO. Left undone or given inadequate thought and attention, the board is courting the potential for times not unlike what the retiring CEO inherited, fixed, and is leaving as his legacy. What will be this board’s legacy? That’s up to them.
William A. Stevenson is senior associate with The ProCon Group, Madison, Wis.
