Chief executive officers and founding owners make one classic mistake when evaluating successors, says Mike Zwell, CEO of Zwell International, an executive search firm that specializes in competency-based CEO and board searches, and chairman of Exxceed, the creator of Web-based solutions for succession planning and performance management: They don't start out by identifying what the critical competencies of a CEO are. "The reasons that successors fail typically are because they are weak at some of the necessary competencies that they have not been evaluated on," Zwell says.
The difficulty in the CEO position is that a CEO needs to be fairly well rounded in a wide range of competencies. This means evaluating a potential successor's ability to do the job on an academic and experience basis as well as evaluating his or her skills as a leader.
"When we do a CEO search, we use as many as 18 different competencies that we assess CEOs on," Zwell says. Here he offers the five most critical, and most often overlooked, competencies that candidates should be evaluated on.
The ability to build teamwork. "Getting a management team and different functional areas in concert and working together is an important skill," Zwell says. The CEO's responsibility is to manage the business in such a way that departments and individuals work together to fulfill a vision.
The ability to think strategically. Does the person have an understanding of the position in the organization, a vision of where to take the organization, and the ability to put together a workable plan to get from here to there? "Very often you'll have a CEO or founder who is a visionary, and you'll have someone else in the company who is a COO," says Zwell. "The natural inclination is to make that person [ COO] CEO, but it's very often that that person is not a visionary." The candidate needs to either be a visionary or be able to work with someone in the company who has that competency.
The ability to communicate. This skill goes goes further than being able to articulate the company's values and vision. "You're really talking about aligning people and making sure that there's communication throughout the organization," Zwell says. The candidate should be able to communicate to others their jobs and roles at a very simple level and to make sure they're aware of their roles in terms of the success of the business.
The ability to motivate others. "This is a very complex competency," Zwell cautions. Motivating Joe in accounting and Leslie in marketing are two very different things. It requires a fair amount of interpersonal awareness, the ability to identify what peoples' wants and needs are, and to respond to them appropriately. "Sometimes it's being a cheerleader-there are a lot of different approaches," Zwell adds. Even if the responsibility is delegated to a human resources director or the like, it's important that the candidate have the ability to take ultimate responsibility for motivating individuals in the organization.
The ability to develop others. This skill is not only the ability to be a mentor, but something much broader. A CEO needs to be focused on how to optimize people. "We are in the stage of business evolution where we're paying lip service to the value of human capital," Zwell says. "Thirty-four years ago, very few people were talking about human capital of having any value. Your objective was to get the most work out of the people that you have," he continues. In today's world, most business owners recognize that employees are their most valuable assets, but many business owners aren't putting their money where their mouths are. Optimizing the employees includes training, feedback processes, thinking about people in terms of strengths and weaknesses, and their key developmental points. A CEO successor has to be willing and able to bring people along and help them grow with the business.