An organisation or council that loses a CEO faces an anxious time, even under the best circumstances where succession plans are in place.
Historically the response to this situation was for the business to initiate an immediate search for a successor. Little or no consideration was given to how the organisation might fill the short term gap while the board or council goes through the often lengthy process to find a permanent replacement.
Things are changing and we are seeing public sector organisations investing in interim solutions to ensure they get the best long term outcomes. ‘Executive benches’ are emerging with a pool of exceptional talent that offer their expertise on fixed, short term arrangements. They are guns for hire.
We are seeing a steep rise in boards and councillors searching for interim executives, in addition to the successor CEO. Doing so, gives them the necessary pause to get a closer read on the health of the business and acts as a viable alternative to appoint a staff or board member, to simply warm the chair.
I recently worked with a large health organisation where the chair felt there was a transparency issue with the previous CEO who was merely drip feeding them information. The chair of the board sought an interim CEO for four months to “conduct an organisational health check and provide a report for the new CEO in order for them to hit the deck running”. As we went to market for the new CEO, the report of the interim CEO was constantly further informing the critical skills, experience and style required to meet the business’ cultural transformation and growth objectives.
There are numerous benefits of bringing in an interim CEO, some of which include:
- Availability. Interim CEOs are generally available within a week or two.
- Eyes and ears. The interim CEO can provide closer observation for the board or mayor to give them confidence of the organisation’s performance or raise any issues.
- Experience. There is rich talent in the interim CEO market. Often they’ve been a CEO of multiple organisations and many have strong board and chair experience.
- Independence. Interim CEOs provide objective, independent, non-political advice. They will tell you what you need to hear, not what you want to hear.
- Settle emotions. Regardless of the circumstances, an executive’s departure can affect morale. Both employees and the board may feel abandoned, relieved, disappointed or even angry. An interim CEO can provide some much needed stability, calming emotions and re-focussing everyone as they prepare for the future.
Close attention needs to be paid when appointing an interim CEO. As with permanent CEO appointments, much will depend on where your organisation finds itself on the change continuum when the CEO’s resignation letter lands on your desk. This will range from turnaround, to realignment, to sustaining business as usual. The experience and style of an interim leader will need to support these objectives.
Due consideration needs to be given to the benefits and potential issues presented if the interim is likely to be a candidate or not.
The main benefit of the interim being a potential candidate for the permanent CEO role, is that you have the opportunity ‘try before you buy’. A word of caution though. If you choose someone who is also interested in staying on longer term, just be conscious that such information often gets out into the market and it may affect your potential candidate pool. People rightly or wrongly may perceive that the job is already filled.
Interim CEO’s role
Once in the position, the interim CEO has a clear job to do. I recently interviewed Kay Rundle, an experienced public sector CEO in Victorian local government (and now an interim CEO) and asked her about the key priorities when embarking on such assignments. She summarises it in five key points:
Kay’s tips — priorities for the interim
- Engage the board or councillors to ascertain their priorities, concerns and identified risks and work towards ensuring alignment within the organisation.
- Listen to people, talk to people and allow them to acknowledge the issues or potential turmoil the organisation might be facing.
- Develop a mindmap of the stakeholders and outline the issues and themes presenting from these conversations.
- Give all stakeholders an ear but also be honest and upfront about how you read the situation.
- Define what you are, and are not going to address due to the shorter term nature of the assignment.
So if you find yourself in a position of losing your CEO, pause and consider the benefits of an interim who can parachute in and hit the ground leading whilst you calmly embark on the search for a permanent replacement.
Clare McCartin is the Victorian General Manager for Davidson Executive & Boards.