Founder to CEO Transition: What’s Your Board’s and Management Team’s Responsibility?
Editor’s note: This is the second post in a series aimed at founders who are considering hiring a professional CEO to run their company. The author, Ori Eisen, is a member of Georgian Partners’ Advisory Board. As the founder of 41st Parameter, the leader in online fraud intervention, he underwent the transition from founder to CEO himself, prior to selling the business in 2013. The first post in this series on the founder to CEO transition was on whether or not you really need a CEO.
As a founder, any time you decide to hire a professional CEO, you, your board of directors and your executive team need to be involved in the decision to ensure a successful outcome. It’s important to understand which part everyone has to play to ensure a smooth transition.
Let’s start by taking a look at your role as the founder.
Even though you may have initiated this process, you’re bound to have mixed emotions about it. That’s why it’s important to be honest about the transition with yourself as well as with your board and executive team. So before you initiate a major transition like this, make sure you’re clear on your reasons.
Once the process is underway, you’ll be playing a critical role in finding the right person to lead the company and you’ll need to be directly involved at every step of the way. One of the challenges you may face is managing this change with employees. If you come across people who say, “But I joined the company because you’re the leader…” or “I thought that I would always report to you…” you’ve got to be direct with them and share your convictions on why you know this is the right move.
That’s why you should only look for a professional CEO when you really think the time is right. The worst thing that you can do is say one thing while demonstrating that you feel another through your actions. Your team will pick up on this and it will only make the process harder.
It’s also important to make sure that you always share your inner most thoughts and feelings with your board and your executive team — they’ll come out sooner or later regardless — staying cool, calm and collected when you do so that you come across the right way. Remember, everyone knows that this isn’t easy so don’t hesitate to be honest with them about the challenges.
As the custodian of the company, your board is responsible for not only maintaining the business, but also maximizing shareholders’ value, including yours. Most of the time you’ll be aligned with your board on key issues. However, the reality is that if, as a founder, you ever became an obstacle to your company’s success, it’s your board’s duty to resolve the issue any way that they can.
During any CEO search and hiring process the board needs to support you as much as possible. As a founder, you will go through an unavoidable roller-coaster ride, even if you initiated the process and fully support the decision and the candidate.
One of the tricky situations that could arise is when the founder likes one candidate and the rest of the board likes another. To reach agreement, both parties should focus finding common ground by considering what’s best for the company.
Finally, the board needs to monitor the health of the company and the executive relationships as the transition begins.
When it comes to your executive team, remember that hiring a CEO doesn’t mean that you’re going to be cut off from them. As the founder, you and the management team will both be working closely with the new CEO. That means that your management team should, at a minimum, be asked to provide input about the CEO candidates since that person will ultimately be their new leader, boss and champion. You want people to feel like they are part of the decision, even if they’re not the ones who end up making it.
I also believe that you should share with your thoughts about bringing in a professional CEO — both positive and negative — with your management team. Hiding your true feelings will only cause the rumor mill to grow, in a negative way.
Focus on the Big Picture
No matter what the impetus for hiring a professional CEO, there will be range of emotions that the founder goes through as the transition occurs. That’s natural. I have been through it myself and experienced both highs and lows of the process.
What’s important is that as the founder you keep an open mind, communicate well and stay focused on what’s best for the company and for scaling the business that you’ve built.
Like what you’re reading? Check out the next post in this series around the founder to CEO transition, which focuses on how to hire your replacement.