Who Hires The CEO?

When it comes to hiring freshers, it’s obvious that the Human Resources department plays a crucial role in this process. For hiring middle management candidates, the process could involve interviews with senior management folks. And senior management folks are hired only after they get approval of the CEO. But what happens if the CEO himself is to be replaced? Who hires the CEO? Well, there can be various scenarios and different processes for hiring a CEO. For better understanding, here’s a quick look at the various methods that businesses use for hiring a CEO.

Selection by outgoing CEO – In some cases, organizations are lucky when their outgoing CEO makes recommendations regarding who should be the next CEO. This can work in cases where the outgoing CEO is familiar with the skills and aptitude of a potential CEO candidate. If the outgoing CEO has a good record, their recommendation for CEO can be taken forward by the Board of Directors.

Selection by founder – In startup companies, the founder usually takes up the role of the CEO. However, as the company grows, it may become necessary to hire a CEO from outside. In such cases, the founder or founders will be primarily responsible for choosing the replacement CEO.

Selection by the board – In many cases, it’s the board of directors who take up the responsibility of finding the next CEO. They can direct the HR department to start searching the right candidates. Or they can onboard an external hiring agency to come up with a list of potential CEO candidates. After this, the shortlisted candidates can be evaluated further by the board of directors.

Internal hiring – This is another common way of hiring a CEO, wherein an existing member from the senior management is promoted to take up the role of CEO. There have been several cases where employees have worked their way through the ranks to become the CEO of the company. This simplifies the selection process, as the board of directors is already well aware about the talents and abilities of the individual.

Irrespective of the method used, what’s more important is to hire the right CEO. A CEO can make or break the company, which makes it important that all aspects be considered before finalizing the decision. When it comes to choosing a CEO, a number of things have to be evaluated such as the skill set of the candidate, experience, business acumen, communication skills, inter-personal skills, confidence, emotional intelligence, etc. CEO candidates also need to be evaluated in the context of the type of role the CEO will be playing in the organization.

It’s also important that organizations work proactively to find a replacement CEO instead of waiting for the last moment. With planning, organizations can avoid the rush and have ample time to find a candidate that is the best fit to lead the organization forward. Hiring the wrong CEO often creates internal and external conflicts and could hurt the organization’s reputation and goodwill. This is why every effort should be made to choose the right CEO.