As your business starts to scale and evolves from a manageable operation into something bigger, you might need to enlist the services of an external Chief Executive Officer (CEO) – especially if you are a first-time business owner.
Appointing an experienced head helps to ensure that any teething problems are correctly managed while allowing you to navigate the complex world of business with a knowledgeable hand on your side. Indeed, if your company has received significant external investment, particularly from venture capitalists, they might insist on you employing a CEO as part of the deal.
Hiring a CEO
Therefore, as the person who is going to be in charge of your day-to-day operations, you need to ensure that you recruit the right one for your startup. To help identify what you should be looking for, we've compiled a list of the top eight things you need to consider when hiring a new CEO for your company.
1. Do They Have the Energy and Desire?
Your prospective CEO needs to be energetic and willing to put in long hours of hard work for your business. This is because, unlike in traditional mainstream businesses, startup management requires a lot more energy. Revenue and resources are going to be erratic at best, while consistency will be a luxury; therefore, you need someone who can be consistent in their outlook, vision and motivation during every hour of the working day.
2. Have They Been Recommended in Good Faith?
Gone are the days when startups had to stalk the most impressive CEOs and their feats through press releases and media interviews of the companies they run. Today, hiring a new CEO for your startup is a more simplified process; contact a specialist recruitment consultancy, and they will do the rest for you.
However, you also need to consider that the primary interest of a recruitment consultancy is to secure a commission, and that the candidates they put forward might not be the right choice for you.
Before committing to a decision, always conduct your own external research, and take everything that your recruiting consultant tells you with a pinch of salt.
3. Do They Possess the Right Values?
In modern business, corporate social responsibility is more significant than ever. Therefore, the person you choose to run your company has to have an exceptional track record of being ethical and professional.
Avoid the temptation of hiring a CEO simply because they are a firecracker. In today's world, performance alone won't cut it. You need to understand what their values are and how they align with that of your company's mission, vision and wider culture, just as you would with any other potential employee.
4. Are They Going to Shake Things Up?
Not every individual can lead, and not every individual can follow. When it comes to your CEO, however, you need somebody that can do both.
Most CEOs have their own ideas and processes and will want to shake things up; as long as the business benefits, and the changes aren't too radical, this shouldn't be a problem. But in the process, will their ideologies stand in conflict to your mission statement? Will they completely overhaul everything that you've previously built up?
Finding someone who can lead, but can also listen, is not an easy task - but one that you need to get right.
5. Do They Have the Blessing of Your Team?
If you have an advisory board or a senior management team, then pay heed to what they are saying. Prospective CEOs can impress you with their charm, but they may not be able to pull off the actual work. If you think there is a need to reinforce your decision in hiring the right CEO, interview your prospective CEO in the presence of your advisory board. This way, the candidate will be made to answer different questions from a more diverse array of angles and backgrounds, giving you a better idea on whether or not the CEO is a fit for your business, not just for you.
6. Are They Accomplished?
Values, ethics and leadership qualities are essential, of course, but don't forget that you are hiring a CEO to grow and build your business. Therefore, you want the candidate in question to have a proven background of making that happen.
Ensure that you assess your candidates by asking them to explain (and verify) their past business achievements. What kind of business model were they operating? What industry have they had success in? How favourable were the market conditions? Don't just blindly follow numbers, but consider their context, too. Someone who has achieved modest success in an extremely tough market might be a better fit than someone who's previous work was on the crest of a particular wave.
Knowing the answers to these questions will allow you to narrow down candidates and better assess their suitability for your business.
7. Are They Motivated?
Your business is not a vacation and, for you, at least, it's not an experiment, either. You don't want someone joining your company – especially in such a prominent position – simply because they are bored with their current profile.
Therefore, it's vital to find out what has attracted them to your company and why they want to work for you. If it's just because they fancy a change of scenery, then is your candidate going to be fully committed to your cause? Conversely, if they truly believe in your mission and feel that they can help you to get to that next level, then they should be worthy of consideration.
8. Do They Understand Your Business?
During the interview process, it's vital to gauge your candidates' understanding of your business. This doesn't just mean being able to explain what your company does, either; rather, it means being able to understand how and why.
Consider, too, their understanding of your wider industry. Do they have contacts? Are they able to spot trends and patterns that could potentially be exploited? Do they know how your niche operates, and what factors can affect it?
Finally, it's also vital that they understand what you are trying to implement internally, not just in terms of your product or service. Ask them about how they would handle specific scenarios, or what their plans would be for your internal HR strategy. If your current team is committed to a particular vision or way of doing things, is your new CEO going to alienate them?
If you find that you're struggling to find the right answers to these questions, then it might be worth asking yourself if you even need a CEO in the first place. After all, some startups – such as Facebook – never hire a CEO. As the objective of a startup is to be bold and fresh, the idea might even seem conventional.
That is why some startups prefer to hire a Vice President (VP) first. This way, you get to see how the VP is performing and, at the same time, retain the executive power to make changes if required. Of course, this depends on your circumstances (as mentioned, your investors may insist on it), but it's undoubtedly an appointment and a decision that you shouldn't enter into lightly.
What are your thoughts? Are externally-hired CEOs necessary for scaling startups, or are they an outdated convention? Let us know your thoughts in the comment section below.