Hiring a CEO is a time-consuming process.
That is especially true when considering the time spent on succession planning and developing a potential candidate before a new CEO even gets into the seat.
Even with careful preparation and selection:
- 50% to 70% of CEOs will fail within the first 18 months.
- Hundreds voluntarily vacate their positions each month.
These failures are costly; when the wrong candidate is chosen, it impacts businesses negatively. However, in many companies, it’s unclear to the board of directors how to keep this from happening.
While there is no universal right answer or guaranteed method for choosing a CEO, a few traits are heavily associated with longevity and achievement:
If a board can create a CEO selection criteria protocol to address these markers of success, it will be in a much better position to make better choices for the company.
Many CEOs have high-level degrees from Ivy League schools and other prestigious institutions. While this usually means they have high levels of academic knowledge and solid critical thinking skills, there are other forms of intelligence that matter in business.
CEOs must have the executive know-how to take new business ideas from concept to reality by formulating strategies and seeing initiatives through to the end.
Doing so means mastering skills in three critical areas.
Those three areas of intelligence include:
- Leadership Tasks: Assessing the economic environment and determining the best response; anticipating obstacles and strategizing solutions; challenging others’ assumptions; knowing where to get crucial information; detecting unintended consequences and mitigating them
- Working With People: Discerning people’s motivations and understanding what makes them tick; anticipating others’ emotional reactions to decisions; identifying core issues in any situation; balancing the needs of all stakeholders
- Self-Management: Evaluating and adjusting personal attitudes and behaviors; intentionally pursuing and welcoming feedback; recognizing personal flaws, mistakes, biases, and limitations; knowing when to listen to others and when to stay the course
These skills and characteristics indicate high executive intelligence. They are best evaluated in interviews where candidates are given realistic business scenarios and asked to analyze the situation, draw a conclusion, and justify their reasoning.
This type of evaluation most closely mimics the job and is the best way to determine whether a candidate would be a good fit.
Executive intelligence and emotional intelligence are of equal importance. To be a successful CEO, a candidate needs to display the following:
- Cordiality: A good CEO should avoid aggression at all costs and get their point across without going after people or bulldozing them
- Positivity: Negativity and pessimism do not inspire others to buy into the company’s strategic mission — people who are negative typically do not accomplish anything
- Business-Minded Ambition: The CEO should be ambitious, but only to push the business forward — a focus on self-promotion could eventually destroy the business
- Comfort With Risk: To innovate and advance the company, a CEO has to be willing to take risks; otherwise, they will eventually stifle and jeopardize the business
While these personality traits cannot guarantee success in the CEO role, they can help boards assess whether a candidate is a good fit.
There’s no doubt that being a CEO is a complex and difficult position. In order to take on the massive challenges they are sure to face, CEOs must be inspired and motivated. Unfortunately, these elements cannot be taught or brought out of them through the encouragement of others. Instead, CEOs must develop them within themselves.
However, it’s important to realize that motivation isn’t about general desire or how strongly someone wants the role. It’s also about why they want it.
Research from McKinsey & Company indicates that ego isn’t enough of a motivator to sustain someone in a CEO role. Because the job demands so much of their lives, they usually won’t find it worth it in the end.
Instead, the CEO’s motivation needs to be the sheer privilege of serving the company they work for and the exciting collaborative vision they have for it. Any good CEO candidate should be motivated by becoming the best they can be, even if they’re not chosen or not the right fit for the role.
4. Learning Agility
You probably hear about business agility often. It’s all about a company’s ability to pivot quickly when market conditions change or new opportunities come down the pipeline.
Learning agility is a similar concept. It can be defined as the ability to adapt to changing circumstances, learn from feedback and mistakes, and transfer knowledge to other contexts. It includes traits like curiosity, openness, the willingness to take risks, and the ability to embrace ambiguity as an opportunity to look deeper for innovative solutions.
Learning agility is important because it helps a CEO do the following:
- Cope with uncertainty in a positive way
- Respond to changes in business
- Achieve greater personal and professional development
- Foster development in the workforce
The CEO’s learning agility is key to building an agile organization and seeing maximum success throughout the company.
Achieving the Right Fit for the CEO Role
The high CEO failure rate in recent years indicates the need for a better method of choosing candidates who are a good fit for the top spot. One way boards can do that is to rely on proven traits to help them find the right person.
Executive intelligence is critical to the role and involves a deep understanding of how to set strategy and see initiatives through to the end. Personality is also important, especially regarding emotional intelligence and risk-taking.
Motivation helps CEOs stay the course when things are difficult and complex. It isn’t just about inspiration but also about what personally drives a CEO. Finally, learning agility is key — not only for healthy coping and problem-solving but also for instilling those same values in an entire organization.
All of these traits might be hard to find in one person, but they are important to watch for. Not everyone is cut out for the role of CEO, but knowing a good one when you see one can reduce costly CEO turnover and contribute greatly to the success of the company.
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