The Secrets to Choosing the Right CEO - Part Two
26 Sep 2019
By Debbie Bowen-Heaton, Partner at Oliver Wight EAME
In part one of ‘The Secrets of Choosing the Right CEO’, we explored why the CEO taking ownership of the change management process is crucial to its success, plus the importance of choosing a CEO whose motivation and ambitions are aligned with those of the business.
But it doesn’t end there. As well as sharing the same ambitions, the most successful organisations are led by a CEO with an attitude and personal attributes that reflect the company’s own culture and values.
The Right Fit
One of the most common issues we encounter at Oliver Wight is the derailment of the improvement programme when a new CEO enters the company. If the process was working well under the previous incumbent but subsequently fails with the arrival of a new CEO, it’s not the process that’s at fault, it’s the CEO. For example, one international confectionary firm we worked with underwent a highly successful IBP implementation – profits were up, costs were down, and it was chalked up as a ‘success’. However, a CEO with a very different perspective on IBP was hired and left unchallenged, caused huge disruption to results.
Naturally, a CEO’s approach to company values and culture is shaped by their personal motivation; do they want to leave a legacy, or is their aim to quickly make a name for themselves? The former is conducive to sustainable improvement, as it’s based on a long-term view of the business. On the other hand, the latter prioritises self-advancement and short-termism, which is likely to result in the wrong behaviours being adopted throughout the business.
The Right Values
Hiring to the fit of the company values is based on the presumption that the right values are already in place – this isn’t always the case. An essential part of Oliver Wight’s Diagnostic Assessment is to identify the prevailing culture and maturity of the business, so we can understand if the company requires a cultural re-education. Often, they do and the coaching and mentoring of senior executives is a big part of any improvement programme and is absolutely critical to success.
Mature businesses will have a set of values that establish the parameters for ‘the way the organisation is run’, and these should permeate throughout the entire organisation. These values are the barometer against which the Board judges the CEO, or assesses the CEO’s suitability if they’re a new hire. Without these values, the CEO is free to determine their own performance measures and behave as they think appropriate. Consequently, the Board has a responsibility to ensure that it can confidently answer the question; “Are you clear on what the expectations are?”
Induct and Introduce
Too few organisations recognise the importance of a CEO induction. Often, they’re limited to the technical, when it should be about why things are done the way they are, with education and training around ways of working. Our survey of CEOs showed that 92 percent of companies spend eight hours or less educating new starters in this way and just under half spend three hours or less. Hardly surprising then, when things go wrong.
And it shouldn’t just be a one-off. There needs to be an on-going programme of education and training for all employees – including those at the top – to mitigate against risk that comes with change and reverting to old practices. And if a Class A company does veer off track, a visible programme of continuous improvement facilitates the commitment and process design necessary to get the business back on track. Class A accreditation works in the same way as a Michelin Star; as soon as standards fall below the expected level it can be taken away, so the ambition to improve is always there.
One Oliver Wight Class A client – a leading global healthcare firm – has had four CEOs and several new general managers, country and plant directors since achieving Class A in 2006, and its performance has never faltered. This is due to an on-going sustainability programme which includes an Oliver Wight workshop, called Class A for Leaders, which is run for all senior executives as part of their on-boarding, with attendance non-negotiable.
Motivations outlined and values aligned, the next step is to establish mutual trust throughout the organisations, from the top right to the bottom and back up again. Join us for Part Three to find out more.
Is your organisation in need of a Diagnostic Assessment? Get in touch with us here.