F18 CEO Selection

How to choose the best of the best

Imag­ine

You are a Direc­tor on a com­pa­ny Board and you need a new CEO. Chances are you feel this is a crit­i­cal point in your tenure on this Board — a chance to make a real dif­fer­ence in the future of the com­pa­ny and look out for the long term val­ue cre­ation which the share­hold­ers have entrust­ed to you.

"...you still are having a hard time evaluating who is the best candidate"

Inter­views with prospec­tive can­di­dates are cer­tain­ly nec­es­sary. You need to get to know them, under­stand their past accom­plish­ments, how they lead, and what their ideas are for your com­pa­ny and its strat­e­gy. You need to assess if they are a good fit for your com­pa­ny, and deter­mine if you think they would per­form well. But after inter­view­ing sev­er­al accom­plished can­di­dates and hear­ing about their inter­ac­tions with oth­er Board mem­bers, even after col­lect­ing ref­er­ences on them from peo­ple you know, you still are hav­ing a hard time eval­u­at­ing who is the best can­di­date, and it is not at all clear your fel­low Board mem­bers and you have reached a consensus.

How do you choose the best of the best?

At this point in a tra­di­tion­al search process, the Board usu­al­ly has to make a selec­tion based on what they have learned. A few Board mem­bers may be very opin­ion­at­ed. Maybe one or two have a favorite can­di­date. Maybe it is not clear how inter­est­ed each can­di­date is, and time is run­ning out….some Board mem­bers are becom­ing wor­ried about who will take the job.

In our experience…

We have found that, in the end, this most impor­tant deci­sion may be made by a few of the most pas­sion­ate and ener­getic Board mem­bers who will dri­ve the process to a con­clu­sion, drag­ging the rest of the Board behind them…but giv­en the process lim­i­ta­tions just out­lined, how often is it the BEST decision?

F18 - A Product of Our Experience

At Lon­er­gan Part­ners, we have devel­oped the F18 process to help Boards and CEO can­di­dates increase their lev­el of rel­e­vant engage­ment pri­or to a CEO hire, test align­ment issues, and improve the suc­cess rate of new CEOs. It is our belief that through F18, we ensure a much high­er like­li­hood of a smooth tran­si­tion and a pos­i­tive outcome.

What Is F18?

F18 is a work­ing ses­sion of the Board where the top 3 CEO can­di­dates each out­line a strat­e­gy for the First 18 Months” (thus F18). Can­di­dates are pro­vid­ed a list of gen­er­al ques­tions as a guide, but are encour­aged to lead the Board in a dis­cus­sion in the direc­tion of their choos­ing. Board mem­bers take an active role by chal­leng­ing ideas, rais­ing ques­tions and inter­act­ing from a Board per­spec­tive. F18 as prac­ticed by Lon­er­gan Part­ners has been a pos­i­tive process for both Boards and the can­di­dates involved.

F18 Benefits the Board

  • Engages the whole Board in its most fun­da­men­tal respon­si­bil­i­ty – the selec­tion of the new CEO — and ele­vates the dis­cus­sion; the deci­sion is then not sole­ly the respon­si­bil­i­ty of the nom­i­nat­ing com­mit­tee mem­bers who have spent the most time inter­view­ing candidates
  • Tests for can­di­date com­mit­ment — since the can­di­date must pre­pare and must spend time with the whole Board, it rep­re­sents real skin in the game”
  • Approach­es a real world test of lead­er­ship: can the can­di­date work with the Board on shar­ing his vision and cre­ate a forum for a healthy dis­cus­sion of its merits?
  • Is actu­al­ly a strat­e­gy-lev­el dis­cus­sion for the whole Board — who they select is a vote on where the com­pa­ny will need to go

F18 Benefits the Candidate

  • The select­ed can­di­date will enjoy across the Board sup­port, with a high lev­el of com­mit­ment from the Board for their choice of leadership
  • Sets the stage for CEO/​Board part­ner­ship on an ini­tial approach to run­ning the com­pa­ny, because an ear­ly vision for the approach has been aired, test­ed, and the major­i­ty of the Board is behind it
  • Cre­ates an ear­ly forum for active engage­ment with the Board on busi­ness issues fac­ing the company
  • Lifts the basis of CEO eval­u­a­tion beyond resume and ref­er­ences, which are very impor­tant and nec­es­sary, but do not well approx­i­mate a real world” test of the CEO’s leadership
  • Allows the CEO can­di­date to see his future Board in action