How to hire a CEO for your small business
by Susan Caminiti.
How to hire a CEO for your small business. It may sound counter-intuitive, but the skills needed to start a small business—perseverance, patience, and passion, to name a few—aren’t always the same ones necessary to take a company to the next level. Sure, as the founder you’re the person who came up with the brilliant idea for your product or service, and can zealously promote it to potential customers better than anyone. But if you can’t (or don’t want to) deal with the day-to-day functions of running a growing enterprise, it might be time to consider bringing in a chief executive officer.
Charley Polachi, a partner at Polachi & Co., an executive search firm in Framingham, Mass., works with many small companies as they’re entering their early growth stage. He says the first step he recommends for any founder looking to hire a senior manager is to define the pain they’re trying to address. “Usually it’s a matter of too much or too little,” he says. “The small business owner is either too busy and can’t keep up with all aspects of the business adequately, or the business has stalled and he or she needs someone who can come in and move it ahead.” How to hire a CEO for your small business
Know what you want
Regardless of which scenario is driving the decision, the experts we spoke with all agree on one thing: define the CEO job thoroughly before you start your search. It’s not enough to say you want someone with financial or organizational skills. As you draw up a detailed list of the attributes and qualities you’re looking for, go a step further, suggest Polachi. What functions will this person be responsible for every day? What are you able to pay? And of course, as the founder, what roles and duties are you willing to realistically delegate? “Very few small businesses need a clone of the owner,” explains Dan Bowser, president of Value Insights Inc., a business valuation and exit strategy consulting firm based in Summerville, Pennsylvania. “When you’re drawing up the specs for this new person, you want to hire someone with skills and abilities that you don’t have.” How to hire a CEO for your small business
Evaluate the person, not just the resume
Once the job has been defined, don’t rush through the interviews. “There should be no fewer than three interviews when you find a promising candidate,” says Polachi. Each time you bring them back, the conversation should delve deeper into determining if you’ve found a good fit. “Ask them if they’ve ever scaled-up a business and how they did it,” he adds. “When you’re bringing someone into a small business in a senior position, his or her management style is absolutely critical.”
That’s because the skills and style that worked wonderfully in a billion-dollar corporation with thousands of employees doesn’t always translate well into a million-dollar organization with dozens (or fewer) workers. “There is a huge difference in support and responsibilities between a big and small company,” observes Bowser. “Everything from having to make your own travel arrangements to the ego boost that comes from working for a big company—all those issues have to be considered before bringing someone into your small business. I’d have real concerns about an otherwise great candidate if all they have is big business experience.” How to hire a CEO for your small business
HireaCEO_PQ.jpgDon’t expect perfection
What if you do everything right to find a CEO for your company and the person still doesn’t work out? For starters, don’t panic. Experts say most small business owners aren’t terribly good at (or even like) the hiring process, so the chances of getting it wrong—even when looking for a senior person—are pretty high.
John Brown, president of the Business Enterprise Institute (BEI), agrees. He recently worked with a couple that was routinely clocking 50 hours to 60 hours a week at their small business and hadn’t taken a vacation in 15 years. They hired a senior manager to relieve some of the burden, but when he didn’t work out they moved him into sales and contacted Brown about selling the company. “They were so burned out and so sure they’d never find the right person that they just felt they had no choice other than to sell the business,” he says. How to hire a CEO for your small business
To avoid that sort of draconian response, set 60- and 90-day performance reviews once you’ve hired someone into a senior position. “You’ll probably know within the first 30 days if this person is going to work out, but after 90 days you should certainly have a feel for whether this was a smart hire,” says Brown. And if it’s not, Brown says he likes to remind his clients of management consulting guru Peter Drucker’s advice: Hire slow and fire fast. How to hire a CEO for your small business
Understand your new role
“Someone can be an ex-CEO of a company or an ex-president, but no one ever introduces themselves as the ‘ex-founder’ of a company,” says Polachi. “Once you’re the founder, you’re always the founder.” That doesn’t mean, however, you’re going to play the same role if you’ve decided to bring in a CEO. How to hire a CEO for your small business
Bowser advises clients to take the time to introduce the new manager to existing staff, outline his or her responsibilities within the organization, and then clearly state that this new person has your full support. Do not tolerate end-runs around your new hire by employees who say they’re more comfortable working with you. “That will only confuse people even more and undermine the person you’ve brought in,” Bowser says. “Calmly explain that the new person is now handling some of the duties you had been and ask them to work directly with him or her. Eventually employees will get the message.” How to hire a CEO for your small business