Choosing a CEO is one of the most important aspects of any company. Whether your company is a multi-billion dollar group or a brand-new startup, CEO selection is going to be a big step.
In fact, in many cases, it’s likely that this decision will determine whether or not your company succeeds or fails. The easiest way to think about this is to consider what differentiates good CEOs from bad ones.
Bad CEOs are those who insist and focus on their own ideas, plans, and people agreeing with him or them rather than using an objective approach or getting things done in a collaborative manner. This could lead a company through ups and downs without making any significant impact on its success metrics, growth, market reputation, or value.
Good CEOs are those who know how to make decisions and how to lead their companies in the right direction.
Deciding the right CEO selection criteria and the CEO selection process makes all the difference between identifying good or bad CFO candidates.
You need to consider a number of factors when assessing CEO candidates. The most important thing is that you find someone who can take your business to the next level.
Here’s a list of things to include in the CEO selection criteria:
Having the right education is as big a part of a CEO’s role as anything. Out there in the world of business, instinct can only take you so far: even if it’s just to stand on an equal footing with the executives of other companies, a CEO is going to need the backing of a relevant postgraduate degree from a respectable university.
You’ll need someone with experience in the sectors you operate as well as experience in marketing and sales to various clients in the industry. This will help them be more effective at communicating with customers and investors. On the other hand, industry knowledge helps CEOs be more involved in the day-to-day operations of their company and get a first-hand understanding of problems and obstacles in their way.
A CEO will have to communicate with investors, employees, and customers — so make sure your new CEO has the knowledge and skills to achieve the associated goals. They should also have the right functional knowledge to make quick and right decisions about various operational matters. Charisma is a secondary requirement, but one appreciated just as much: a CEO who’s able to keep both stockholders and customers happy is a great CEO.
When selecting an executive team for your business, you should look for someone who has a proven track record as an entrepreneur and/or as an executive at other companies that have thrived under their guidance.
This is something that can really set an entrepreneur apart from other candidates. It’s also important because it shows others how much they care about the company they work for, which can help boost morale among employees as well as investors who may be skeptical of their success.
You also want someone who has demonstrated leadership skills, both in terms of setting direction for their companies and developing employees so that they can make decisions based on business needs rather than personal preferences or biases.
In companies that have a Board of Directors, choosing a CEO is done by the whole board instead of by a single owner. These companies, which are often multi-million dollar corporate groups, have strict interview procedures for choosing a CEO.
For mid-sized and SME sector companies, CEO hiring cannot be based on similar formats. The companies will have to brainstorm and come up with the right formats.
Here are the six interviews any CEO applicant can expect in the CEO selection process:
Being a CEO means dealing with business-related, fiscal, and industry-specific problems every waking moment of every day. This first round of interviews focuses on testing the applicant’s basic knowledge of business, along with taking an inventory of their specific skills and efficacy in being totally responsible for the day-to-day fiscal welfare of a large corporate entity.
With the previous things listed ticked off the list, next, any decent board will test CEO candidates’ abilities to drive a corporate entity towards growth. That is, after all, the endgame of any business: to show growth every year. This isn’t as easy as it sounds, though: candidates face intensive questioning on aptitude-based questions and have their abilities to manage an inventory of company assets tested to the very limit.
Like we said above, a CEO’s not going to be of very much use at all if he or she has no industry knowledge. If they’re expected to navigate through the everyday problems of a company, a CEO needs in-depth, extensive industry knowledge. And that’s nowhere near enough: the applicant needs to have an aptitude for the market-share simulations where they brainstorm ideas to theoretically increase the company’s market share.
Communication is the cornerstone of any functioning relationship, and in reality, it becomes even more important when it comes to the corporate scene. Your CEO is going to be wearing a lot of hats: he or she needs to deal with the Board of Directors directly and keep them calm while also delivering to outside shareholders and stakeholders. All the while, he needs to ensure the company’s products and services remain up to the quality standards.
All of that requires the right kind of patient personality, combined with a no-nonsense attitude and aptitude for innovation that this particular interview tests for.
With all that said, though, it’s always going to be true that every Chief Executive Officer has their own personal style of leadership and management. Some CEOs choose to focus on their Research and Development departments, while others take a vested interest in inspiring a dispirited workforce. This penultimate round of interviews gauges the CEO’s management style and people skills with aptitude-based questions, as well as scenario-driven problem-solving sessions.
This one’s more or less self-explanatory. You can’t have someone without any tech background running your company. Even if your company has nothing to do with technology solutions, all operations will require the best and most relevant tech systems. Your CEO needs to have extensive knowledge of related technology to assist in decision-making. This is usually the last interview and the biggest hurdle for applicants.
The resignation of a CEO, which is often the founder, can be a traumatic experience for a company. There are numerous considerations to make in this important transition process—from finding a replacement CEO and negotiating an executive compensation package to addressing family issues and conflicts between board members. In the end, with so many elements to consider, the CEO selection criteria will vary from company to company.
Thankfully, company owners looking for a Chief Executive Officer don’t have to immediately start screening hundreds of top university grads to find the right fit for their company. Instead, they just have to head over to Alliance International, a C-Level (Chief-Level) recruitment agency that has been providing the best Executives for over a year now.