Conducting an executive search for a CEO for a closely held or family-owned company where the owner(s) don’t have a successor-candidate already working for the company can contribute to challenges for any search consultant no matter how qualified.
One of the principal challenges involves a discussion on owner(s) transitions. It’s understandable for an owner to question the need for a CEO, especially when that owner has been running their company for more than 30 years. Yes, for the most part I’m referring to baby boomer and Gen X business owners, who have been at the helm and are now pondering how to get out – sell or not to sell, merge or not to merge, liquidate or not, or perhaps, just perhaps, stick around and hire a CEO to help to grow company value and legacy.
In my owner transition and executive search work it is difficult to separate the two factors – how can an owner prepare him/herself for the hiring of a CEO when they have left unanswered how they are going to transition out of the long-held executive role, and, eventually, sell the company.
It may sound easy but it’s not. Consider that the owner has worked in their company (oftentimes as a founder) for many years, is still privately held, has a stable customer, employee and vendor base, and enjoys the support of the local community. But and this is a significant but – owner age, industry competition, technology changes, and, most recently, the impacts of the COVID pandemic on employee recruitment, competitive pay, and increases in vendor costs are stressing both the owner and the company’s position.
Consider also that there are at least ten different ways for an owner to transition out of their company. Without even commenting on all ten (although four are referenced above), the owner must deal with emotional and behavioral considerations (some would call it baggage) that have accumulated over the years, which they now must address and resolve prior to deciding a transitional course of action.
When you help an owner decide what to do with their business, then create and implement a successful business transition strategy you can then help the owner move toward an effective executive search strategy and process. Here are several of the steps that are involved a transitional discussion. If you think the process can be performed overnight, think again – the company is oftentimes the only business that the owner has worked in.
Change takes time.
- Emotional confidence – perhaps underappreciated but helping the owner gain emotion confidence in deciding that, in my work, engaging in an executive search to retain a CEO is a huge step and involves considerable discussion.
- Explore strategies and criteria for preparing their company for successful transition – as noted above, there are at least ten options available to an owner to transition out of their company. I’d be doing a disservice to my clients if I did not help them explore the viability of each. Thinking about it – I’d rather have a successful search process where the owner is fully committed to the search because they understand their” WHY”.
- Explore and apply strategies for choosing the best new owner – as part of the ten options reviews, I also focus on choosing that best new owner, in part because the hiring of a CEO most likely includes providing an equity stake to the CEO and an option to purchase the company at some future date.
- Design both their personal and family goals, and their goals for their company – oftentimes overlooked, these should be an integral part of the discussion, as the owner and family relationships to the company are often so intertwined that it can be difficult separate them out without a step-by-step elaboration of the personal, family, and company goals.
- Develop step-by-step action plans – assuming the owner does want to pursue an executive search process it is important to set up an actionable plan for the search – for instance developing an overview of the company’s strengths, opportunities, aspirations, and results desired.
- Finally, but certainly not the least working with the owner to develop a plan to work effectively work with various types of professional advisors to help them plan for and achieve their transitional and executive search goals. While I have the latter covered, I know I can’t help an owner with financial planning, accounting, business valuation, business sale, and other advisory services.
I realize I’ve discussed a lot in a short post but wanted to illustrate that in a closely held or family-owned business where there are no successors in place it is important for the owner to develop a transitional strategy prior to deciding to engage in an executive search. That’s the sum and substance of my executive search services. Perhaps a bit unorthodox, but I know it is necessary – and it works.