Finding the right CEO: Why boards often make poor choices

Although identifying and hiring the most appropriate CEO is critical to an organization's success, the succession practices of many large corporations often result in poor outcomes, as recent brief CEO tenures at Coca-Cola, G illette and Xerox testify. To better understand the dynamics affecting such a complex selection proces s, from 1995 to 2000 Harvard Business School professor Rakesh Khurana inter viewed scores of directors, executive-search consultants and job candidates about the methods that large corporations use when hiring a CEO. In the pr ocess, he discovered several common pitfalls that derail efforts to find th e right CEO. He observes that a variety of practices are nearly institution alized in many companies, and he explains ways to avoid them. Khurana also contends that boards can actively manage the following aspects of a CEO sea rch and greatly improve the likelihood that the survivor who emerges is bes t suited for the challenges of the job. Search-committee composition. Khurana recommends that the search committee consist of a diverse group, not only in terms of age and functional backgro und but also concerning knowledge of the company and its culture. The "CEO as panacea" syndrome. Boards must be sure to consider the contribu tions of other executives in company success; failure to do so will raise e xpectations about the performance of the incoming CEO to an unsustainable l evel. Adoption of outcome-oriented practices. According to Khurana, the practices most relevant to a successful outcome are discussing the company's strateg ic direction explicitly and early in the process; recognizing and defining search participants' roles and responsibilities (in particular, limiting th e roles of the outgoing CEO and the executive-search firm); and evaluating candidates in light of the position's requirements, rather than in relation to one another.