To manage a large organisation successfully, a chief executive cannot run everything alone. They need capable right-hand men and women they can trust to perform and solve difficult tasks.
Most of us may focus on CEO selection, yet recruitment of other C-level executives is no less important these days. The question is, how deeply involved should a board of directors be in this area?
Many boards usually trust CEOs to select their lieutenants as they do not want to cross the line between between the duties of management and the broader responsibilities of the board.
Nevertheless, directors' duty of care to shareholders demands a certain level of performance, so they must ensure that a corporation is being managed appropriately.
In addition to their regular duties of preparing for, attending and participating in board meetings, directors need to think ahead, especially about who is running the show, in response to expectations from stakeholders.
In this regard, no board can turn a blind eye to C-suite selection and promotion if it wants to truly fulfil its duties to shareholders and investors.
ROLES AND TITLES
What should the practice be in this regard? To begin, directors must agree on the responsibilities and titles of C-level executives. Roles and duties can differ depending on the nature of the business.
This may sound like a fairly simple and routine duty compared with reviewing capital expenditure, which may consume large amounts of cash on hand and require extensive bank support.
I suggest directors take a closer look at what kind of executives the company is really searching for.
Some firms may combine administrative, operational and human capital functions under one title as they grow organically. Therefore, it is not unusual to see a chief operating officer who is accountable for both operational and HR excellence.
These two distinct functions are not the same, but combining them under one roof is appropriate if the organisation is not complex, staff numbers are moderate and the business has just one or a handful of locations.
Some firms may expect their chief financial officer to handle the investment portfolio. This may seem logical given the relationship between two major roles -- accounting and financial management on one side and investing decisions on another.
However, these two roles can come into conflict as one will try to avoid risk while the other could push for a high return on a high-risk project.
These two examples help to demonstrate how and why boards need to get involved at the first stage of the selection and promotion process, seeing eye-to-eye to ensure the organisation has the C-suite it needs.
Directors must ensure they have all the necessary information about the candidates: work experience, performance record, education and special training, annual appraisal, 360-degree feedback, personality assessment, cognitive ability, and so on.
ADVANCE PREPARATION
Many directors, CEOs and HR heads consider an in-person interview an important part of the decision-making process. This is true, but it will not be useful if those taking part have not reviewed all of the relevant information beforehand.
I believe many of us have had the experience of seeing a board member flip through each page of a document, trying to understand the issue and eager to ask the right questions.
Some directors may finally break the silence and ask a critical question, but some may never say a word. It may not be their fault. In some cases, the documents were delivered to them too late to allow for preparation.
Understanding the information is critical. The terminology used in each document can be different, with the core meaning up to the author of the document.
In one personality assessment I looked at, "leadership" was a specific personality trait or work style. A director may understand that someone who has a high percentile score for leadership can lead effectively.
However, leadership in the context of this particular assessment reflects the likelihood of an individual asserting themselves in group situations, motivating others to achieve common goals, getting others to do what is requested, taking charge of groups, and feeling comfortable directing others.
A careful reading tells us that this type of person has ambition and is not someone who is content with following others, but it does not mean the person can or cannot lead effectively.
In a world where many meetings are conducted remotely, there is no substitute for an in-person interview when it comes to choosing someone for a crucial senior role.
Being able to evaluate a person's emotional responses through non-verbal communication is critical.
We are all aware of the importance of emotional intelligence. To complement a reliable psychometric assessment, meeting in-person can help shed light on this area, allowing directors to feel more comfortable about who should be the pick of the bunch.
Sorayuth Vathanavisuth, PhD, is Principal at the Center for Southeast Asia Leadership. His areas of interest are leadership development, executive coaching and succession planning. He can be reached at sorayuth@sealeadership.com
