Broken Trust Upsets CEO Candidates, Search Consultant
This is a version of a Directorship magazine article exclusively for NACD members. If you are an officer or director of a public, private, or nonprofit organization, you can become an NACD member to view the complete article and related resources. The scenario presented here is anonymized to protect identities.
The dilemma: Karen chairs a government-owned utility board. The CEO recently announced their long-expected decision to retire.
The board appointed a professional search consultant selected from the government’s list of approved providers. The board had a long list of skills and attributes that it wanted in its candidates.
As expected, finding candidates with the skills the board was seeking proved difficult. In addition, all the shortlisted candidates were then employed and on salaries above pay brackets for this level of appointment within the government sector. No candidate was highly enthusiastic about moving to the public sector at a lower salary.
To help candidates understand the nonmonetary benefits of the role, Karen and her board arranged for the three preferred candidates to have coffee with the outgoing CEO and to hear firsthand how rewarding the appointment would be. Unfortunately, the CEO’s secretary misunderstood the process and asked the internal human resources department to schedule the appointments. Now the three preferred (yet still hesitant) candidates have received a standard email asking them to come for an interview, rather than a conversation, and asking for curricula vitae (CVs), reference details, and other data.
The search consultant is furious, saying that the candidates are now upset because they feel that their privacy has been breached when they had not yet said that they were willing to take the position. The consultant has already invoiced 70 percent of their fee and now claims the process has been thwarted.
What can Karen do to help her board recover from this disaster and, hopefully, recruit one of their preferred candidates?
Julie Garland McLellan, nonexecutive director and board consultant: This is the sort of disaster that happens when directors don’t fully engage with board- and C-suite-level recruitment. The board needs to get its act together fast. It can’t abdicate its responsibilities to the CEO and search consultant. If the CEO’s retirement decision was expected, their board should have been prepared.
First, Karen needs to bring together a small group of directors to serve as a nominations committee or task force. They should go through the long list of requirements that the board has compiled and rank these into groups of “essential,” “highly valued,” and “nice to have.” The board needs to understand what the characteristics are that the candidate must bring, and what the skills are that the candidate can develop with its support and leadership.
That will help the consultant to find candidates who are willing to take on the role.
Then, Karen needs to have a frank conversation with the consultant, apologize for making them look bad in front of some high-profile candidates, and focus them on creating a list of realistic candidates who are keen to fill the role and don’t need the outgoing CEO to sell it to them.
The board should have a brief conversation with the current CEO to explain the disappointment that the board feels at the CEO’s poor delegation of such an important task and to request that the CEO, personally, reach out to each of the candidates and apologize for what happened.
The board should prepare for the eventual succession and develop a plan for supporting the new CEO. It should review delegations and create stronger oversight for the early days of the new CEO’s tenure. Much of this, but not all, will fall to Karen as the chair.
Finally, the board needs to consider its own processes for CEO succession to ensure it is better placed next time. To lose one set of candidates is unfortunate—to lose two would appear to be careless.
Julie Garland McLellan, a nonexecutive director and board advisor in Sydney, Australia, created the original concept for a monthly newsletter titled "Director's Dilemma." She is a regular contributor for the section in Directorship magazine.