Entrepreneur

Here's The Crucial Lesson I Learned When Choosing a New CEO for My Business

By Serge Baidin,

4 days ago

Every business reaches the point where its founder becomes the biggest blocker to growth. It's the moment to pass the reins to someone else and step back.

For the last couple of years, I have seen this need for my web development company, Markupus. But at the end of 2023, it finally became crystal clear: it was time to step away from operations and appoint a new CEO.

I had two options: bring in someone new or promote from within . The clock was ticking, and integrating a new face seemed time-consuming. At the same time, none of our current managers felt fully ready.

However, nurturing leaders internally is part of our company culture , which tilted me toward option #2. There were three candidates:

Candidate A was in charge of operations. This person was my first choice for a CEO. He took on the role every time I was away and was good at setting up processes.
Candidate B was responsible for tech, had been with the company since day one and was the most knowledgeable about our product.
Candidate C was responsible for sales and hadn't been with us as long, so I hadn't seen him in action beyond his usual tasks. Honestly, I added him to round out the options.

My gut favored Candidate A, but I knew I needed more than my gut instinct. So, I hired a professional assessment company to conduct a thorough analysis using global methodologies.

After we agreed on the key competencies for evaluation, they offered a 3-stage Assessment Center and business interviews to see the picture clearly, and that's exactly what we did. So, if you're in my shoes and looking to choose a successor, this process could give you insights. Let's get into it.

Psychometric test

Each candidate completed the questionnaire provided by the psychometric test developer. It was just the first stage of the Assessment Center. Before interviewing everyone in person, the experts had to know what everyone was like "on paper."

The test results described each candidate's typical behavior, thinking style and ways of coping with stress . Reports include Leadership Styles, preferred Team Roles, Career Themes, and so on.

However, no crucial conclusions were made yet: these test results gave the experts further material for analysis. After that, they moved on to other tools.

Business simulations

First, the assessors gave our prospective CEOs a comprehensive document containing data for analysis. The candidates had some time to study the material and make connections within it. Then, they presented their findings to a mock board, which tested their ability to analyze information .

This exercise wasn't just about crunching numbers; it was about seeing how the candidates formed hypotheses and made decisions based on their analysis.

The second business simulation was a group discussion. As a point A, candidates had a limited budget and many company needs. They had to fight for their departments' resources but also consider the overall company's good.

Here, the team of assessors observed how candidates influenced others, who took the lead, and who stood firm for their department's interests.

Competency interview

The last stage of the Assessment Center was one-on-one competency interviews. This was an important step to confirm or challenge the competencies the experts observed during the simulations.

During these interviews, the assessor mostly asked candidates to provide examples from their past business practice: for instance, a particular problem they faced and how they solved it.

Business Interview

The competency interview I mentioned was based on the candidates' past performance, but the business interview put them into hypothetical situations.

For instance, the business consultant asked what the candidates would do if the current CEO left without explanation and asked them to look after the company. What would their first steps be? What would their strategy look like?

The reaction here was also important. Does the candidate have an immediate answer, or are they confused? Everything was taken into account.

After all these stages, the assessment team went on to analyze the massive number of results on each of the candidates. In a few weeks, they came back with the conclusions — to my surprise.

The candidate I least expected turned out to be the most equipped for the CEO role

While all the candidates had strong soft skills, Candidate C excelled in competencies like strategic thinking and adaptability to change. His leadership potential also turned out to be higher than others. Additionally, we shared a mutual understanding of the company's direction, and he brought a proactive approach to the team's routine.

While he still had a lot to learn, Candidate C was our clear choice at the time.

And what happened to Candidate A, whom I favored? According to the assessment, his ideal role would involve working with data rather than leading. Eventually, he changed his career path and went into a different field.

After getting that report, I spent a month deciding how to move further. But after some thinking, I officially fired myself on my birthday — February 29th. A rare present for a rare occasion!

On paper, I'm still a CEO, but in practice, all the decisions are made by the newly appointed CBDO, Candidate C, aka our former sales manager, together with our Head of Development, Candidate B.

My role now is more of an advisor. I dedicate one day per week to work with the team and address any issues or questions that arise. For the rest of the week, I will focus on my other ventures, which will give me more time to pursue new opportunities.

After being responsible for everything for nine years, it felt strange to step back and help others figure things out.

But guess what? It's been almost five months since we decided, and the business hasn't fallen apart! It's doing well. More importantly, we've set up a good foundation for future growth.

So, my main takeaway here is: if you do something for the first time in your business, always hire professionals to help you. Sometimes, this will yield unexpected but more promising results.