CEO turnover is increasing, and more companies are looking outside the firm to find new candidates who can turn things around. While these "external" searches typically land in the lap of the board, you're missing an opportunity if you fail to tap the contacts of the board's individual members. The hands-on, active directors of younger companies in particular often know someone (who may even know someone else) who could be an ideal interim or full-time CEO candidate. How can your board best recruit from this personal network of talent (while avoiding potential problems)?
- Networking? Yes. Freelancing? No. The CEO search should still be channeled through "a search committee of the board -- that's an absolute requirement," says Tom Sherwin, president of recruiter firm CEO Resources. "You can't have everyone running off to find their own guy. The venture guys will say you've got to have someone with a big finance background, and sales and marketing directors will push someone with a sales background." If directors with hot contacts are on the committee, or present their names to it, you add a layer of professionalism to the search. Even those with a pet candidate will be more comfortable with the process, and less likely to view the prospect's rejection as a personal affront.
- About that CEO search committee? Select 2 or 3 directors with the most connections for the committee, but make sure the group still answers to the whole board. "The committee can introduce the CEO to the rest of the board and act as liaison. Otherwise, every member of the board may want to interview the candidate, and that becomes a time-consuming, three-ring circus," says Sherwin. Worse, it can convince the CEO prospect that the board is disorganized and intrusive -- in other words, a bunch he doesn't want to work for.
- Build a sound CEO job description. "By writing a job description, you make sure there's agreement on what your candidate looks like," advises Sherwin. While you want board members working their Rolodexes for talent, pre-agreement on the skills and background sought will lessen disputes and misfits. Also, it's a must if you decide to deal with a recruiting firm.
- Watch out for poaching problems. If you are a director on the boards of company A and company B, and approach a talent at B to take over the top slot at A, then your personal fiduciary duties are an issue. In such cases, the director should "at least discuss the issue first with the CEO of company B," suggests Sherwin.
Copyright © 2001 Ralph Ward's Boardroom Insider