Situation: An early stage company is preparing for an IPO. The founder and Board have selected a new CEO with experience taking companies public. How do you facilitate a CEO transition, and how can the founder best position himself to support the new CEO?
Advice from the CEOs:
Get clear on your own strengths and desired primary responsibilities, but prepare to be flexible in negotiating responsibilities with the new CEO. For example, if the founder’s strengths are marketing, IP and early stage fund raising, see how these compliment the strengths of the new CEO. Then select a title which will allow you to leverage your strengths without impinging on the focus of the new individual. Don’t pigeon-hole yourself with your new title; keep it as broad as possible, for example Executive Vice President.
If you, as the founder, have a good long-term relationship with your VCs and the Board this will be one of your strengths. Be prepared to counsel the new CEO on individual personalities and objectives of this group. The CEO will form him own relationship with the VCs and Board over time.
Chemistry between the founder and new CEO will be very important. The job of the new CEO is to captain the ship. Your new job is to be a superior first mate.
It appears that you have an excellent learning opportunity. Learn as much as possible from the new CEO as well as the experience of the IPO process.
To smooth the transition personally between the two of you, take the opportunity to tell the CEO that you believe that the Board made the best choice and that you look forward to the opportunity to learn from him. This might be best done outside of the office, for example taking the new CEO to dinner.
Maintain your relationship with the key VCs on the Board. Let them know about your future ambitions and that if the right opportunity opens up in one of their portfolio companies, you could be interested.
Situation: The CEO of a high tech company has been working long hours, and has had no time for himself, or even for much sleep during the past few months. As is typical in a small company, the CEO and everyone else wears many hats. What have you done to successfully fit in time for yourself?
Advice from the CEOs:
Take a calendar, and mark all of your time for several weeks to a month. Then look at the ways that you spend time and prioritize them into categories:
Life – eating, sleeping, etc.
Must do – mission critical
Must do – could possibly delegate
See how many of the “Must do” activities you can delegate or otherwise handle and recategorize this time into Life or Free Time. You may be amazed at how much more efficiently you can use your time. Ask all employees to do this every 90 days to assure that they are utilizing their work time effectively.
If you have long commutes or lots of travel time, get an extended battery for your laptop. This will allow you to make travel time more productive.
Or, if you have a long commute, hire a semi-retired driver to drive you to and from work. Turn your commute time into productive work time.
Semi-retired drivers are available for as little as $10 per hour. You can pay them $1,000 at a time in advance, and the driver keeps a log of the time spent driving the client.
Use your car, or the driver’s car and if the latter, reimburse the driver for mileage.
To make this work effectively set the rule that you are the client, and not looking for conversation. You want to accomplish as much work as possible during the trip.
Look for professional drivers, with the proper licensing. Do an MVR check on the driver’s history as part of your evaluation process.
Situation: A company’s Board is pressing the CEO to hire a COO to oversee operations. The Board’s concerns include succession planning for the CEO and a desire for the CEO to put more focus on the vision and strategy of the company. There are no current candidates within the company. How do you identify and bring in a COO?
Advice from the CEOs:
Think beyond roles and responsibilities and consider how you would describe the ideal candidate. This includes attitudes and behaviors, talents, experience, and essential skills. Map these attributes and use them to guide your recruitment and selection process.
Increasingly, companies are using a values-based process to evaluate personnel both for promotion and outside selection. Tony Hsieh of Zappos talks about this in his book “Delivering Happiness.” This doesn’t substitute for skills and experience, but helps to identify candidates who will help to strengthen your company’s culture.
Assure that you have a full process in place that will help you to recruit and select a good candidate. If it has been a while since you last recruited a high level executive, consider securing outside resources to assist. One of the CEOs even hires a 2nd expert to vet the recommendations of the primary expert.
Where can you look for good candidates?
Talk to your key vendors about who is really good in the industry. Look for a high potential individual in another company who doesn’t have room to grow in their current situation.
Also look at related industries where there will be cross-over knowledge and skills.
Don’t overlook the military. Talented officers are regularly rotating out of the services – people who have exceptional experience leading and motivating people.
On-boarding a new senior executive is different from a lower level employee. If you choose the right individual and they fit your culture, this will ease the process. Be aware that some of your current senior employees will likely be upset that they were passed over and may be difficult. If you haven’t done this in some time, it is worthwhile to secure counsel on the best ways to bring a new COO on-board.
Situation: A company has a long-term clerical employee. While this individual has handled a wide range of responsibilities, they have not significantly grown their skills even though cumulative yearly pay raises put this individual on the higher end of the company pay scale. Increasingly, the individual is refusing to do work requested. In your experience, what can the CEO do to get this individual back on track?
Advice from the CEOs:
Recently the CEO hired a personal assistant. The position was offered to the individual in question but declined because of hours and expectations. The personal assistant has supplanted much of the contribution that this individual historically made to the company. They are likely hurt by the resulting reduction in their role. This may explain the refusal to do certain tasks that used to be routine.
To have the best chance of recovering this individual, it is important that your approach be positive, not punitive.
Instead of going over performance variances in your next review, bring the individual into your office and let them know that “we need you.” Present a vision of the company and its future growth. If the individual shows a willingness to turn around, take them into your confidence and show them your plans. Ask them what role they see for themselves in the organization chart.
Simultaneously, be frank. The company has changed and is poised for growth that was not possible two years ago. Tell the person you want them on the team and set forth long-term goals. Establish and agree on objectives for 90 days and measure from this meeting forward.
Either the individual will rise to the challenge or will let you know within the 90 days that the company is no longer the place for them.
The key point is that this must be a caring and heartfelt discussion.
Analyze how this situation arose so that it isn’t repeated with other employees.
Hire for both current skills and the potential for growth. Develop new and existing staff in line with plans for growth. This is how you achieve extraordinary results with ordinary people.
Situation: The Company is hiring their first CFO. How do they integrate this key person into the company?
Advice from the CEOs:
The company should reflect the values, needs and desires of the CEO.
Have a clear discussion and agreement with the CFO candidate on values, role, and organizational structure before hiring or announcing anything to the company.
The talents of the CEO and CFO should complement each other.
The CEO may put the CFO in charge of areas that they want to delegate – accounting, administration, finance and contracts.
The CEO should remain involved in banking relationships.
Recommended announcements and timeline:
When the new CFO is announced, simultaneously present the new organization chart (broad responsibilities, not detailed position descriptions).
Set a timeline for realignment of roles. It is not necessary to specify exact roles at the time of the announcement – let everyone know that this is a work in progress and give a time frame within which all will be resolved.
Once the CFO is in place, the CEO and CFO should meet at least weekly, to assure that the CFO has the support and resources needed to accomplish their responsibilities.
All decisions within the CFO’s group, personnel responsibilities and any shifts in roles should come from the CFO, with the support of the CEO.
This will help the new CFO to more rapidly assimilate into the company and will give them the authority needed to manage their organization.