Firing a CEO: The 4 Questions Every Board Should Ask When the CEO Needs to Go

Firing a CEO: The 4 Questions Every Board Should Ask When the CEO Needs to Go

So you’ve made the decision that a change needs to happen at the CEO level, and heaven knows it’s painful! You rely on the CEO as quarterback of the team. It feels like the chief executive is indispensable. But you signed up for service on the board of directors. You know that while corporate governance is a general and varied responsibility, the shareholders trust the board to choose the right CEO. It is, perhaps, the board’s most important decision.

Of course, you’ll go through a permanent search that will be thorough, even if internally focused.

But what happens if you need to fire the CEO and find a new leader right now? Having a CEO exit with no CEO succession plan in place can create a leadership vacuum. The resulting instability within the organization can cause major issues and harm company performance.

The need for a new Chief Executive Officer, the right Chief Executive Officer, is urgent.

After a CEO dismissal, the first thought for many public companies is to look around the boardroom table to see who’s brave enough to be named interim CEO for Sarbanes Oxley compliance.

But, where’s the guts in just appointing a placeholder to keep the seat warm?

The modern world now presents you with a far more robust choice: a true interim CEO. A veteran executive who’s been there, done that. Who is expert at jumping into companies going through points of change. And who is accountable for action and results.

When considering whether to bring on a placeholder versus a true interim CEO until you can hire and onboard a new permanent CEO, here are the questions to ask at your next board meeting.

1. Will the Interim Be a Placeholder or a True Interim CEO?

This is the most critical of the board’s decisions: The former CEO is out, who’s in?

Choosing a CEO from among the members of the company’s board is a seriously short-term approach. That person typically does little more than keep the seat warm.

Contracting with a true interim CEO, however, means you’ll have an experienced leader ready to provide strategy and execution. A true interim will rally the management team and work with the board to assess the organization, identify strengths and weaknesses, and help define what skills, focus, and abilities you will need in the long-term CEO.

In short, hiring a true interim to run the company during the executive search for a new CEO ensures the new CEO will inherit a stronger foundation.

2. What Skills Do We Most Desire in an Interim Leader?

The answer to this question depends on the particulars of your organization, whether it’s a large company with a deep bench of executive talent or a small business with limited resources. But the bottom line is that the fresh perspective a true interim leader brings can take your organization to new heights.

Ask yourself:

  • Are there clear KPIs in place?
  • How is the executive team held accountable?
  • Is there clear communication among the senior executives?
  • What does retention look like?
  • Are there untapped market opportunities?

Whatever the answers, there is a skilled, experienced RED Team CEO who meets your needs and can be onsite at your organization, ready to lead in as little as 48 hours.

3. How Long Will the Interim CEO Be on the Job?

It is not unusual for an executive recruiter to take many months, sometimes even years, to identify the right new CEO for an organization. You need more than a seat-warmer if it takes that long to find a new leader.

A true interim CEO’s performance can be the difference between a company that merely survives the executive vacuum and one that thrives. An experienced CEO working as an interim executive can identify weaknesses and work to clean them up. He or she can rally all of the stakeholders — employees, customers, vendors, and board members — to keep the company moving forward.

And, once you’ve signed an employment agreement with a new permanent CEO, the interim leader can even stay on to mentor the new CEO to get them up to speed faster.

4. Do We Want a True Interim or Really a Test Run?

Sometimes companies think they should try before they buy. It could work. But it could backfire during the executive vacancy.

An interim CEO who believes the job is a test or trial run could prove less likely to choose the toughest route or to take necessary risk. Decision-making that rocks the boat might be the best thing for the organization but feel too risky for someone auditioning for the CEO job.

Choosing to contract with a true interim CEO avoids that dilemma. A RED Team interim CEO is working under contract for a defined period. The interim’s job is to do what’s best for the future of the company.

Once that work is done, the true interim will move on to the next challenge.

Are you ready to bring in a highly qualified interim CEO? InterimExecs can help. Reach out to us.