The Most Dangerous Hire

"I often give advice to founders at exactly this point in time. They say, 'We are hiring a CEO.' I say, 'Slow down!' The founder should look for someone who is organized, systematized, thoughtful, thorough, and who gives some resistance -- a COO rather than a CEO. But that person will not run the company. This complementary person will take care of the guts of the company. The COO looks at the inside, while the founder looks at the outside."

Do the hiring slowly and carefully. "Hire as a consultant a COO for whom you have respect and watch him," Adizes advises. "You must go through a courtship stage before you hire someone. It is as difficult as matchmaking. If you can't hire a consultant, then bring someone in and give him the pieces of authority one at a time. This is a transition that can be very dangerous. What founders should not do is get to a stage of despair where they look for someone and give him the keys to the shop.

"Then you build a team of people to work with him to make the changes that you all agree need to be made. People will start developing respect for him, and by the time he's finished, he is a natural. It becomes clear that the company needs this guy. Eventually, the COO becomes president, and you are the CEO/chairman. Then he becomes president, CEO, and chairman."

Of course, Adizes says, the best time to hire a COO is "when you start the company, so that this crisis does not occur. If you didn't do that and have nobody to promote, then do it when the company is very successful and growing."

Is there a process that I can go through to help me decide whether I should stay or go? And if I decide to leave, how can I find and train a new CEO without harming my company -- or myself?

To answer those questions, we turned to Dick Strayer, CEO of Larcen Strayer Consulting, in Los Gatos, Calif. Strayer is an adviser for venture-capital firms, like OVP Venture Partners and Alpine Technology Ventures, and their portfolio companies. He advocates taking a step-by-step process that begins with self-examination -- What do you want your company to achieve next? What do you want to do with your life? -- and ends with thoroughly integrating a new leader into the business. Here is Strayer's abbreviated version of the process:

"First, take a look one to two years out in the context of your business strategy. What will be the requirements of leadership at that juncture? What does that mean for the leader? Try to get input from the board and from the management team. The answer is there.

"The second step is, assess your current strengths and weaknesses and your potential for growth -- for example, many founders can't escape a tendency to micromanage," says Strayer. "Ask yourself, 'Can I attract and manage a strong executive team? Do I have an interest in working with investors?' Then the toughest part is, 'What's my potential for growth, and where's my real interest?' That requires a high degree of self-awareness.

"Depending on where your company is in its growth curve, there are different sets of leadership requirements. When you're scrambling for money and trying to convince people to join, you need a leader who breaks all the rules, who's persistent and stubborn, and who doesn't delegate a thing. As you move into adolescence, many founders start to falter.

"Then there's the other vector. Where do you go? If there's nothing for you to go to, you're going to resist moving ahead. You have to find a passion, excitement, a pathway for yourself."

If after careful self-examination you decide you want to hire a CEO, Strayer advises that you do so methodically. "I think it's absolutely essential that you have a selection process," he says. "The board and you should agree on the criteria and who's going to make the decision. There should be consensus on the weighting of those factors.

"The next phase is getting the handoff -- there's a great book about this phase called Passing the Baton, by Richard F. Vancil. If you're remaining with the company, make sure from the get-go that there's a clear ledger of how you turn over information to a new executive, including contacts, staff, and product knowledge.

"The ideal period of time for the transition phase is three months at the outside," says Strayer. "What I try to do is get a board member involved as a mentor to the newly hired CEO and the founder -- someone who has a power position and meets with them every other week, separately and together. His job is to say to the founder, 'How are things going? Where are the problems?' To the new CEO, he says, 'Are you satisfied with the transition?' If you're meeting every other week, it doesn't give anyone time to get ticked off.

"Then there is the team integration. The new CEO is probably going to bring in other people. So the team is wary and anxious. The CEO has to manage that not only with you, the founder, but with the team members. It's a tremendous challenge. We try to have the founder be really aligned with and supportive of the new CEO. In the first week or so, we try to have a new-CEO forum, where he meets with the current team and talks about the culture he'd like to put together, what he hopes to do in 90 days, and so forth. The founder should sit in. After several months there should be a team-building session with the new team."

Is there a tried-and-true method for finding the perfect leader?

Not exactly, says Colleen Aylward, who in 1992 founded Seattle-based search firm Devon James Associates Inc. But there are key factors that lead to success -- and to failure. Aylward has seen them all. In recent years her company has performed a long list of searches for companies ranging from Cray Inc. to Microsoft and Amazon.com.

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