Searching For A New CEO – A Lawyer Needs to be Able to do More than Draft an Employment Agreement
I serve as outside general counsel to a 45-year old, family-owned, consumer electronics business. The Founder, Chairman and CEO announced at a recent Board Meeting that he was getting ready to throw in the towel as CEO. There was no obvious successor from within the family, since those who might otherwise have succeeded the CEO were already established in other businesses and professions. The company would have to search for a new CEO with the necessary background and credentials, as well as the ability to “integrate” into the culture of a nearly half century old, family business.
Every business organization has its own culture. That culture consists of a number of different things, including a shared set of visions, beliefs, working language, systems and ways of doing things. Corporate culture is often established by the founder(s). It affects the way people interact with one another, with customers and with other people who have an interest in the company. So, when the Founder decides to step down as CEO after 45-years, it is important for the company to take time to do some introspection, before it starts interviewing CEO candidates.
As corporate general counsel, it is important that you assist the company with the challenge of replacing its founding CEO. A summary overview of that process is as follows:
1. Corporate counsel, with the assistance of a management consultant with a background in social psychology and CEO counseling and evaluation, must help facilitate a clear and candid set of discussions among owners and management that reviews, evaluates and challenges existing assumptions about the company’s culture. The “professed” culture may no longer be the actual force that directs and drives the company. It may simply be an “imprint” of earlier periods in the history and development of the company.
2. After “drilling down” to the underlying elements of the company’s current culture (which, in many cases, consists of “unspoken rules of the road” that have evolved over the years and are often very different from the “professed” rules), the company will be in a better position to determine the parts of its culture that remain healthy and viable, and those that require change and refocusing.
3. The process of re-defining the “rules of the road” helps the company realign at all levels (from ownership, to management, to the broader employee base). The realignment process can help the company become a stronger and more cohesive team, with a more clearly defined, shared vision. This, in turn, often results in increased productivity, growth and efficiency, and reduced counterproductive behavior as well as employee turnover at all levels.
4. The refocusing and realignment process has another significant benefit. It allows the company to evaluate CEO candidates based upon clearer guidelines as to the characteristics and attributes that its new CEO will need to possess in order to successfully move the newly realigned company forward. As a result, the selection of a new CEO becomes a significantly more relevant and informed process.
By Joel Fishman