CEOs have the potential to profoundly impact the organizations they lead. In fact, CEO performance can predict up to 40% of business outcomes, according to research.
Given their monumental importance, finding the right CEO is critical. However, this is easier said than done in today’s competitive business landscape.
In this article, we’ll look more closely at why finding a great Chief Executive Officer is important — and the challenges associated with identifying and attracting top CEO talent.
We’ll also identify best practices for conducting a successful CEO search, including one uniquely powerful resource for connecting with elusive top talent.
Why Finding a Great CEO Is Important
If a business is a ship, the CEO is the captain.
When viewed through this lens, there’s no more important decision for board members to make. No matter your company’s industry, its CEO impacts every aspect of business, including devising strategies, optimizing performance, and reaching pivotal goals.
In addition to increased profitability and greater organizational success, CEOs also play a vital role in facilitating employee morale and customer satisfaction. This directly affects KPIs pertaining to everything from customer retention metrics to employee engagement metrics.
Additionally, as businesses endeavor to leverage the full power of data, analytics, and AI, research also indicates that CEOs can play an instrumental role in leading data-driven cultures.
Finally, CEOs also directly affect a company’s perception and reputation. Names like Jeff Bezos, Bill Gates, Indra Nooyi, Warren Buffett, and Meg Whitman are synonymous with the companies they represent.
Challenges in the CEO Search
Because they bear so much responsibility, CEOs require a breadth and depth of hard and soft skills. Necessary competencies include, but are not limited to:
- Growth mindset
It follows that finding the right person can be an intensive and time-consuming endeavor, especially when you factor in the following challenges.
Finding the Right Cultural Fit
A CEO doesn’t just chart the course for their company. They also set the tone. So while “fit” is paramount for all positions, it’s especially vital for CEOs.
If the core values of a CEO don’t align with those of the organization, the end result can be not only chaotic, but detrimental to the company’s overall success. This is especially important with external candidates who are completely new to your organization.
Poor cultural fits also lead to high and costly turnover rates. In fact, replacing a CEO may cost as much as 50–60% of their salary (which doesn’t include implicit costs like onboarding and training expenses, lost productivity, and impact on company culture).
CEO succession planning can only go so far. With so many CEOs exiting their jobs (nearly 70% of C-suite execs are considering leaving their roles), they’re leaving behind massive vacancies — and companies desperately vying to fill them.
This means stiffer competition for top talent and that job seekers have the upper hand regarding compensation, benefits, and working conditions.
Traditional Recruitment Methods Limit the Hiring Pool
CEOs require extensive knowledge, skills, and experience. Throw in current economic challenges, and hiring C-level talent can be extremely difficult for hiring teams and human resources professionals. This search can be further complicated by antiquated hiring methods that put specific previous experience over skills and potential, slow down the process, and rely on a single recruiter’s book of business
On paper, there may not be enough qualified candidates to fill leadership positions in this system. Therefore, successful hiring for these and other roles mandates more innovative approaches to recruitment.
Time and Resources Required
Identifying and attracting top talent is crucial. However, the time and effort involved in the process can direct attention away from other mission-critical responsibilities. While the average job search takes around five months, this number skyrockets to closer to a year for executives.
Because of this, many forward-thinking companies like Hunt Club are leveraging the power of AI and other advanced technologies to streamline the process of identifying and connecting with the best candidates.
7 Best Practices for a Successful CEO Search
CEO recruiting is of extraordinary importance. Not only can the process be expensive and time-consuming, but getting it wrong can be crippling to your company.
The good news? Adopting several best practices and initiatives can help you get the search process right.
1. Define Your Company Culture and Leadership Needs
We’ve already established that fit is everything when it comes to your CEO. But how can you determine fit without first defining your company culture? Before starting your search, consider the shared values, practices, behaviors, attitudes, and goals that characterize your company and its employees. A CEO who shares these characteristics will thrive and inspire others to do the same.
This is also an opportunity to evaluate your leadership needs. The best teams have a balance of personalities, skill sets, and backgrounds. Some people will be big-picture strategic thinkers, while others may be stronger at operations and details. Some may be more about building products, while others may shine at selling.
Representation across various strengths (and weaknesses) can have a symbiotic effect in which the sum is truly greater than the parts.
2. Develop a Comprehensive Search Plan
CEO searches are complex and multi-faceted. A comprehensive search plan can help you wrangle these elements into an actionable process. Typical elements of an executive search plan include:
- Establishing search priorities
- Determining your search strategy
- Developing marketing plans for the role
- Moving forward with a short list of the most qualified candidates
- Conducting thorough reference and background checks
3. Establish a CEO Search Committee
An effective search committee is key to implementing a thorough, equitable, and productive search plan for the CEO selection process. Most search committees comprise five to seven credible, trusted organizational representatives and stakeholders.
Criteria for search committee membership include understanding the organization and its challenges, the ability to judge talent and make intelligent assessments, working well with others, and the desire (and ability) to act with urgency.
4. Prepare a Competitive Compensation Package
Well-designed compensation packages don’t just help companies attract top talent; they can also help drive performance.
Here are some elements of a competitive compensation package:
- Average or above market-rate base pay
- Annual bonuses
- Long-term incentive payments
- Restricted stock awards
- Stock options and stock appreciation rights
- Supplemental executive retirement plans
- Executive insurance plans
- Fringe benefits and perks (financial planning, executive memberships, moving expense reimbursements, etc.)
5. Diversify Your Networking Opportunities
With competition fierce and a sparse candidate pool, expanding your search parameters is critical. One of the most effective ways to find qualified candidates for leadership roles?
Leaders are especially skilled at leveraging their professional networks and relationships, and companies able to tap into these connections are uniquely positioned to connect with elusive talent.
6. Cultivate a Strong Employer Brand
Just like companies evaluate CEO candidates for fit, candidates evaluate companies for fit. Make it easy on them by developing and conveying a strong employer brand. When choosing between companies, candidates will seek out those with positive reputations and strong brands.
Not convinced? Consider these eye-opening statistics:
- 84% of job seekers say a company’s reputation informs their decision on where to apply for a job.
- 50% of job candidates won’t even consider working for a company with a poor reputation — even for a higher salary.
Tracking several KPIs can help you better understand your employer brand’s effectiveness, including job offer acceptance rate, time to hire, quality of hire, hiring manager satisfaction, employee referrals, employee engagement rate, new hire retention rate, and win-lose ratio.
7. Partner With an Executive Search Firm
Placing entry-level employees and hiring a CEO are very different endeavors. That’s where executive search firms like Hunt Club come in. Also referred to as “executive recruiting agencies,” executive search firms specialize in sourcing, interviewing, and hiring executive candidates.
Executive search firms use their hiring knowledge and experience to make fast and high-quality hires. However, they also have access to a multitude of valuable expert resources for searching, screening, interviewing, and onboarding candidates. This helps ensure the smoothest transition as you bring in your new CEO.
Revolutionize Your CEO Search With Hunt Club
Whether you’re a healthcare organization, private equity firm, startup, or other entity, conducting a strategic executive search is instrumental to helping your board of directors identify and hire a new CEO with transformational potential.
Unfortunately, many costly and time-consuming pitfalls can arise along the way with potentially dire consequences.
Working with an executive search firm with a proven track record can help you avoid these obstacles and expedite the recruitment process for CEOs and other key professional roles. Hunt Club deploys a unique approach that combines a people-first executive search with an extensive network of business leaders and proprietary AI technology. With a laser-focus on finding the best candidates, we can help accelerate the process of finding your next CEO, COO, or other critical executive role.