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Bangkok Post
Bangkok Post
Business

What a board should know when choosing a CEO

A candidate's resume, professional record and educational history are mandatory for the selection process.

Jack Welch, the late CEO of GE, once said: "Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others". His words provide us with a clear picture of the expected quality of achieving true leadership.

Proving oneself as a capable manager is a must but to be a true leader is another story altogether. It requires a different skill set, and authentic leaders must dedicate time to improving both their hard, functional skills as well as the so-called soft side of handling other human beings.

Imagine if you were a director on a corporate board and had to choose the right person to be your company's next CEO -- someone who possesses both the qualities mentioned above. Let me share with you my views.

To begin with, board members should discuss and agree on what they should expect from the new CEO. Does the board want to maintain the current business direction and grow organically? Or is it looking for a CEO who could jumpstart and create new S-curve businesses to create future revenue streams?

Then, directors can draw up their list of expected qualifications. These include functional, hard subjects such as technical knowledge and financial competence, and soft subjects such as people skills and leadership skills.

Internal or external candidate? In many boards, CEO selection is delegated to a nominating committee, which comes up with candidates who ultimately must be approved by the full board.

The nominating committee has to decide to consider internal or external candidates or both. This will make a difference in the selection process since the directors will know the internal candidates more than the outsiders. Favouritism or negative bias can play a role here, which can distort the ultimate decision.

Well-prepared information: What kind of information should the board have in order to choose the right CEO? A candidate's resume, professional record and educational history are mandatory. Additionally, the board should ask for reference checks, with permission from the candidate, to obtain insights into performance and behaviour in current and previous roles. A personality assessment is also an important element in selecting the right CEO.

All of this information should be available for the board before they conduct a personal interview with the candidate, so they can come up with the right questions to ask.

Reliable assessment tools: With a reliable tool, the board can gain insights into a candidate's personality in order to help predict future performance and behaviour. Cognitive ability assessment can provide crucial information about a candidate's logical, numerical and abstract reasoning abilities, for example.

In order to choose the right assessment tool, the board should ask for a reliability index, which measures the consistency of an assessment tool, meaning it should show the same results for the same person at different times. The second index is validity which refers to the amount of predictive power related to a criterion like "job performance". For example, a validity rating of 40 says that this tool alone can account for 40% of the reason why a candidate will be successful in a new job.

Some reliable assessment tools also provide a growth potential index that offers further insight into a candidate's prospects. In one of my studies, only 105 out of 291 people surveyed had outstanding potential to grow (and deliver good performance) while just 29 (out of 291) preferred strongly to lead, not follow, others. These two indicators alone can be highly useful for board members to consider regarding suitability of a candidate for the position.

Predicting potential behaviour: After directors receive all the above information, a face-to-face interview should be conducted. The pandemic has led to a lot of discussions being conducted on screens, but when it comes to choosing someone for the top job in your organisation, an in-person meeting is essential if possible. Human beings communicate roughly 70% via body language, so a candidate's gestures, facial expression and other behaviours can tell you a lot.

Based on personality and cognitive ability reports, interviewers should be prepared to ask some critical questions such as:

  • Please share with us your own approach to leading and motivating people in order to achieve the same goal.
  • Have you ever encountered disagreement with your direct supervisor regarding regulatory compliance?
  • Do you have stress occasionally? If this is the case, how can you handle your stress?
  • Have you ever missed a deadline? If so, how do you change yourself to be on time?

By allowing the interviewee to answer verbally, interviewers can see how the candidate handles the questions, controls himself or herself, and so on. This can help board members to predict how a candidate will behave in the future.

Some board members may be only looking for short-term results and may want to consider someone based mainly on their their industry knowledge while ignoring other crucial information such as personality and cognitive ability or reference checks.

Ultimately, making the right choice requires good preparation. Therefore, the chairman of the board must ensure that the directors have a long-term mindset -- even longer than their term of directorship.


Sorayuth Vathanavisuth, PhD, is Principal and Executive Coach at the Center for Southeast Asia Leadership. His areas of interest are executive coaching, leadership development, succession planning and talent management. He can be reached at sorayuth@sealeadership.com

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