Jacob here. Several academic studies highlight just how important a CEO is to a firm’s overall performance. But not every board sticks the landing when it comes to picking the top spot: Somewhere between 13 and 21% of CEO turnover can be classified as “forced,” according to several studies.
“Boards need to make every effort to get all the data they can possibly get from within the organization before they pull the trigger,” says Dennis Carey, a vice chairman of Korn Ferry.
Wharton professor Michael Useem compares CEO selection to home buying: “What's always been amazing to me in buying…million-dollar homes is how little time goes into the actual inspection of the goods,” says Useem. “A couple walkthroughs, and somebody's going to say, ‘I don't like it’ or ‘Let's go with it.’”
The same limitations prevail when picking a CEO, says Useem, who argues that the lack of proper due diligence is one of the most common mistakes boards make when picking their CEO.
CHROs have an essential role to play in working with the outside search firm to make sure the board and the current CEO are equipped with the data they need to make an informed decision.
For insights on how CHROs can best position themselves as a strategic partner in the search for a new CEO, I spoke to:
- Dennis Carey, a vice chairman of Korn Ferry and the co-leader of the firm’s board services practice.
- Michael Useem, a professor of management at Wharton and the author of several books on boards and CEOs.
- Noah Shamosh, a consultant at Spencer Stuart and a member of the firm’s leadership advisory services.
- Joseph Fuller, a professor of management practice at Harvard Business School and a co-founder and former CEO of Monitor Group, a consulting firm acquired by Deloitte in 2013.
- Aiyesha Dey, an associate professor of business administration at Harvard Business School who studies corporate governance.
- Thach Nguyen, founder and managing partner at Plenty Search, an executive search firm for venture-backed startups.
Here’s their advice:
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