You are a Director on a company Board and you need a new CEO. Chances are you feel this is a critical point in your tenure on this Board — a chance to make a real difference in the future of the company and look out for the long term value creation which the shareholders have entrusted to you.
"...you still are having a hard time evaluating who is the best candidate"
Interviews with prospective candidates are certainly necessary. You need to get to know them, understand their past accomplishments, how they lead, and what their ideas are for your company and its strategy. You need to assess if they are a good fit for your company, and determine if you think they would perform well. But after interviewing several accomplished candidates and hearing about their interactions with other Board members, even after collecting references on them from people you know, you still are having a hard time evaluating who is the best candidate, and it is not at all clear your fellow Board members and you have reached a consensus.
How do you choose the best of the best?
At this point in a traditional search process, the Board usually has to make a selection based on what they have learned. A few Board members may be very opinionated. Maybe one or two have a favorite candidate. Maybe it is not clear how interested each candidate is, and time is running out….some Board members are becoming worried about who will take the job.
In our experience…
We have found that, in the end, this most important decision may be made by a few of the most passionate and energetic Board members who will drive the process to a conclusion, dragging the rest of the Board behind them…but given the process limitations just outlined, how often is it the BEST decision?
F18 - A Product of Our Experience
At Lonergan Partners, we have developed the F18 process to help Boards and CEO candidates increase their level of relevant engagement prior to a CEO hire, test alignment issues, and improve the success rate of new CEOs. It is our belief that through F18, we ensure a much higher likelihood of a smooth transition and a positive outcome.
What Is F18?
F18 is a working session of the Board where the top 3 CEO candidates each outline a strategy for the “First 18 Months” (thus F18). Candidates are provided a list of general questions as a guide, but are encouraged to lead the Board in a discussion in the direction of their choosing. Board members take an active role by challenging ideas, raising questions and interacting from a Board perspective. F18 as practiced by Lonergan Partners has been a positive process for both Boards and the candidates involved.
F18 Benefits the Board
- Engages the whole Board in its most fundamental responsibility – the selection of the new CEO — and elevates the discussion; the decision is then not solely the responsibility of the nominating committee members who have spent the most time interviewing candidates
- Tests for candidate commitment — since the candidate must prepare and must spend time with the whole Board, it represents real “skin in the game”
- Approaches a real world test of leadership: can the candidate work with the Board on sharing his vision and create a forum for a healthy discussion of its merits?
- Is actually a strategy-level discussion for the whole Board — who they select is a vote on where the company will need to go
F18 Benefits the Candidate
- The selected candidate will enjoy across the Board support, with a high level of commitment from the Board for their choice of leadership
- Sets the stage for CEO/Board partnership on an initial approach to running the company, because an early vision for the approach has been aired, tested, and the majority of the Board is behind it
- Creates an early forum for active engagement with the Board on business issues facing the company
- Lifts the basis of CEO evaluation beyond resume and references, which are very important and necessary, but do not well approximate a “real world” test of the CEO’s leadership
- Allows the CEO candidate to see his future Board in action