Understanding the executive search process
This post is an adapted excerpt from “A Guide to Recruiting Your Next CEO,” by Dennis C. Miller, which you can buy here. The book helps nonprofit executive search committees identify ideal candidates for their organization and learn which questions to ask so that the new hire is a perfect fit. Miller has written three other books related to nonprofit governance as well as an autobiography.
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If your actions inspire others to dream more, learn more, do more and become more, you are a leader. -- John Quincy Adams
Your organization’s CEO just announced that she is resigning or retiring from her position. Now what? You relied on her for so much, from human resource management to fundraising. Now what do you do?
Before you embark on this tremendous responsibility, ask yourself these questions:
- Who on our executive team or board has extensive experience with chief executive recruitment?
- Who has the knowledge and insight to identify the required skills and experience the new CEO will need to be effective in this role?
- How likely are we to recruit and persuade candidates who are happy in their current positions to leave their organizations to work for us?
- Who will do the actual work of recruiting, screening and performing initial reviews of candidates?
- What will the ultimate cost be for taking on this task internally, compared with the cost of retaining a search rm?
- Can we use the search process as an opportunity to become a better organization?
As an experienced executive search recruiter for the nonprofit sector, I admit that I am biased against any attempt to recruit your next chief executive on your own. My observation has been that boards who take on the CEO recruitment challenge without professional help are apt to limit their search to applicants who are actively seeking new employment.
While it is, of course, possible to find a qualified CEO this way, you are still working with an incomplete picture of the executive talent available to you. A professional search consultant will expand your candidate pool to include highly motivated, high-performing executives who are not currently in the market for a new position.
The biggest reason given by boards to conduct their search themselves is to avoid the fee for engaging a retained search rm. Retainer search consultants charge a percentage of the chief executive’s base salary, usually in the range of 20% to 30%. If your CEO’s salary is $200,000 and your search fee is 25%, your expense for conducting the search will be $50,000. However, when you find a successful match, the amortization of this fee over the course of your next chief executive officer’s tenure in your organization could be $5,000 per year if they remain in their job for a period of 10 years.
I will be the first to say that executive recruiters are not always perfect and they do occasionally misinterpret the quality of a match between CEO and organization. However, unless an experienced executive recruiter serves on your board, it can be a costlier endeavor in the long run to recruit your next CEO on your own. In fact, most organizations seriously underestimate the time and energy that will be required by the board to conduct a search. Combine that with the risk that a poor match will require a repeat search within a year (which most search firms will take on at no additional charge). Your organization will suffer as board and staff energy are funneled away from core activities such as programming, public relations and fundraising. And make no mistake: Major individual and institutional donors will become concerned when your organization is operating for an extended period without a chief executive.
Once you have made your decision to perform the search either internally or hire an experienced search firm, I recommend the following process for searching for your next chief executive officer:
- Identify the strategic challenges the new CEO will be faced with in your organization along with the skills and experience needed to effectively address them. What is your desired future direction? What specific strategic goals and implementation plan needs to be developed to achieve the new vision?
- Conduct an objective, in-depth assessment of your organization and board governance to determine your strengths and any areas in need of improvement related to best operating and governance practices.
- Develop a comprehensive customized position and ideal candidate profile for the CEO. This profile will include the specific competencies and experiences you are seeking in your next CEO.
- Conduct a targeted search into organizations and sectors that align with your organization to identify executives with the relevant skill sets and qualifications required by your organization.
- Develop a list of qualified prospects for consideration.
- Approach potential candidates to test their interest in the new position, communicate the strengths of your organization, and persuade strong candidates to consider the new opportunity.
- Organize a board-level search committee to screen candidates and schedule interviews.
- Present the most qualified candidates to meet with the search committee after conducting in-depth interviews and reference checks.
- Select the most qualified candidate and o er them the position.
- Negotiate a compensation package and other related benefits.
- Notify all candidates who applied and interviewed for the position and thank them for applying.
- Provide a plan for onboarding and ongoing support for your new CEO.
Developing the Ideal Position Profile
It is amazing to me how many times I have asked members of the senior team and board to describe the experiences, qualifications and knowledge they wish to have in their next chief executive and they answer, “We want someone just like our current CEO.”
Now, I will agree that is a nice endorsement of your current CEO. I am glad to know he or she is well-respected and admired by your organization. But the challenges and opportunities that confronted your former CEO may be very different from those facing your organization today and in the coming years.
Wouldn’t it be better to identify the strategic challenges ahead and the new leadership skill sets needed by your next chief executive officer to meet them?
If you would like to see a sample position profile for a new CEO, there is one on my website.