CEO Search Questions: Red Flags Not to Ignore

rawpixel-651333-unsplashYou’re excited. You’ve finally read that CEO profile that sounds just like you. This is the one that you’re going to go after and nail through every step of the search process. You start authoring a unique cover letter, creating a standout resume that will leap from the desk into the recruiter’s top 3 candidates, and map out the scripts for the leave behind videos to make you unforgettable. You forge ahead, practicing the delivery of your story, becoming eloquent at all of your responses, and rush head long into proving you’re the candidate of choice.

And now stop.

There are several key issues to investigate before you can ascertain whether this is really a position worth exploring. Recruitment firms can be tremendous sources of key information in the early stages of a search, along with your own research, authoring questions to ask a search committee that get to culture, relationships, and partnership, and listening intently for the subtext of all responses from all parties regarding this potential new employer.

Be sure you start the conversation with these six questions, and receive satisfactory answers, before you spend too much of your precious search time on any company or organization.

  1. Why is the current CEO leaving? There are plenty of legitimate retirements, a new job offer, changes in careers, and so on. However, if the departure is couched in, “well….it was no longer a good fit.” Or “we authored a new strategic plan, and we think it’s the right time for a change.” Anything that is not direct has a story behind it. Hopefully, there aren’t power plays on the board, personality conflicts with upcoming Chairs, or disagreements about vision and how to get there. The current board owes a potential new CEO the full story on the dynamics that have recently occurred in the association, because a new leader will be viewed through the lens of everything that has happened before. The past Board/CEO dynamics create expectations. Don’t forget too, that if the Board of Directors has mistreated a current CEO, a pattern may emerge in the future that envelopes you.
  1. What is the board really like? Find out whether the recruiter has done any culture and board partnership discovery work, as they onboarded their client. Do they know what the board preferences are for leadership behaviors styles? Have they had the board declare what a successful Board/CEO partnership looks like? What are the dealbreakers for the Board? Is the Board willing to put a list of Board commitments into your contract that holds them accountable to certain behaviors? If not, are you entering an environment of a high performance board that is going to operate in full partnership with you with clear roles?
  1. Does the Board have a current – preferably new – strategic plan? Many boards will wait until they have a new leader to author the new strategy. It creates a huge vulnerability for organizations and companies, because the likelihood of hiring a misfit leader for the times is increased. If you know strategically where you’re headed in the next 5 years, you have a much greater opportunity of aligning strategy, skill set, and leadership capacity. Getting stuck with an organization that hasn’t done the heavy lifting may leave you either with a board that hasn’t committed to an ongoing strategic dynamic or one that is an operational board instead of a strategic board. Give some thought to whether you want to take the risk of hoping that the board is good at, and committed to, being a strategic board.
  1. Is the organization financially healthy? Don’t rely on the latest monthly financial statement, the most recent audit, or oral statements of affirmation. You need a minimum of five years of audits & tax returns in order to ascertain the patterns of revenue, spending, and reserves. If they can’t or won’t provide them, run don’t walk. Be sure to get the management letters and pay attention to the audit notes. The last thing you want to walk into is an organization where the leadership doesn’t know how to read financial statements and hasn’t paid attention to trends.
  1. To whom does the CEO report? Any position description, profile, or ad that reads “the CEO reports to the Chair of the Board” is an immediate red flag. CEOs report to Boards of Directors as a body – not an individual. Organizations for whom the CEO reports to the Chair generally have operational boards instead of strategic boards, with the Chair’s agenda each year driving how the organization pivots its resources and focus. The opportunity for tension between the CEO and Board Chair is much higher, and the likelihood of altering culture is low due to the necessity of power being shifted from personal position to high performance board governance.
  1. Who has the authority to hire and fire staff? The Board has one employee – the CEO. The CEO has responsibility for all other employees. If the position description and the contract do not confirm that all authority to hire and fire staff rests with the CEO, there is significant opportunity for the CEO to be undermined and never be able to lead the company or organization. Regardless of the contractual agreements, if culturally, pressure is brought on the CEO not to fire an employee, or conversely to hire someone, not only is there corporate breach of contract, there is also leadership role failure in place. Make sure that this dynamic of clear CEO responsibility for all employees is not just written but cultural.

When going for a CEO position with a company or organization about which you have passion, excitement or belief that you are the right person for the times, it is very difficult not to ignore red flags that appear in the search process. Nobody wants to see the very thing that will keep them from getting the position they think they want. However, be attuned to spotting the issues that may make you impotent as a CEO, derail your leadership with political nightmares, or undermine your ability to accomplish the great vision you have for the future.

Great companies and organizations exist with fabulous cultures, respectful leadership, well-trained and disciplined governance, and engaged teams. Finding the right one, and keeping yourself from being lulled by imposters, is a search discipline that is best learned early in your career arc to become a CEO.

 

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