Tips for Hiring a Non-Family CEO By a Board of Directors
The first non-family member CEO for a multigenerational company is a very big step for both the board and the family owners.
When this occurs the board needs to take their fiduciary responsibilities up another level to make sure the shareholders interests are best served.
Once the decision has been made to go outside the family to select a new CEO, the board should first immediately form a search committee to oversee the process. Depending on the size of the company, the committee should be somewhere around 3-5 people. Second, the search committee should assign both family and non-family (and independent directors). Third an extensive amount of input from the family shareholders should be collected to ensure that all voices are heard.
Best practice is to hire a professional board recruitment company to conduct the search on behalf of the boards search committee. The search committee selects one person to work with the recruitment company as the point of contact. Internal candidates should be considered and vetted by the recruitment company just a rigorously as outside candidates. This helps ensure that any internal candidate is hired for the right reasons, not because they are known and convenient.
When it comes time for the selection of the new CEO, the candidate must first be approved by the search committee, second by key senior management and third by a select group of family members. This will help make sure the new CEO is given the best chance to succeed.
After the hire has been made and the new CEO is on board with the company, several Board Members should stay close to help the CEO be successful.
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