Many would argue that bringing in external talent to replace a CEO is an example of failed succession planning. However for many SME’s and small-cap listed companies, they are not always going to have the internal talent available to step into the departing CEO’s shoes. 

Bringing in external talent inevitably presents a greater risk for a board (or owners), so it is critical they get the recruitment and engagement process right.

Consider the following tips:

Constantly map the market for talent: Even if you have no intention to hire immediately, mapping the market for talent and future leaders is sound business practice and should be part of your contingency planning. Find out who the rising stars are in your industry, talk to customers, liaise with consultants and generally get to know ‘who’s who in the zoo’. Online media and profiles make this much easier than ever before, so use the tools available.

Be very clear on your vision, values and objectives: Good candidates will be wary of a board or owners who cannot articulate what they would like to see from their new leaders. Take your time to get this right.

Apply a thorough recruitment process: Make sure you establish a very clear and robust process. Engage the right panel and external advisers to help, particularly when it comes to the final selection stages.

Tell the whole story: When it comes to recruiting new leaders, you need to give them the whole story about how and why your company has evolved the way it has. Change may be required, but a new CEO needs to be aware of previous mistakes, key learning’s, war stories, milestones and sacred cows.

Don’t rush the hiring decision: Too many times we see companies rush important decisions. Remember, ideally you would probably have an internal succession plan where the knowledge and cultural transfer is much easier, so at the very least, get to know your future leaders very well before you sign them up. Your interview process should include several formal and less formal stages – from interviews, case studies and presentation tasks through to lunches or dinners with key stakeholders.

Consider an Interim CEO: The use of professional interim CEO’s is on the rise. When there is a sudden CEO departure, an experienced caretaker can buy you more time and provide a lower risk option than rushing a in a permanent hire.

Use objective data: Don’t discount the value of cognitive and psychometric testing in the process, as well as a series of objective background checks. Just because a CEO is successful in one setting, doesn’t mean he or she will adapt to or succeed in the next.

You need a quality on-boarding process: Most people make up their mind how long they are going to stay in a job during their induction period. A well organised, insightful and engaging process that delivers the incoming CEO with all the knowledge, tools and support they need will set the foundations for high performance.

Provide ongoing feedback and coaching: Quality CEO’s value ongoing learning opportunities for their teams as well as themselves. No-one is perfect and we all have development needs, so make sure you don’t fall into the trap of thinking if you hire the right CEO they can fend for themselves.

It is important to remember that people provide the execution link between business strategy and company performance. Selecting and engaging the right CEO is a decision that can (and probably will) make or break your business.