Partner Article

Finding a new CEO needn’t be challenging

Finding the right CEO or chairman of the board can be a protracted and frustrating exercise.

With blue chip companies, such as Microsoft and Glencore Xstrata, one would think that suitable candidates would be lining up. Whilst that may be the case with some organisations, it is not the lack of suitable candidates that is always at the heart of the issue.

Often, it can be down to boardroom dynamics and shareholder considerations. The more high profile the organisation, the more media coverage the search gets, often resulting in ridiculing coverage.

It’s hard to find a CEO search play out more publicly than Microsoft’s. Despite having some well-known executives presumably shortlisted for the CEO position - names such as Nokia CEO Stephen Elop, Ford CEO Alan Mulally and Qualcomm’s COO Steve Mollenkopf to name just a few - the head of the company’s cloud computing division, Satya Nadella, finally got the nod after a five-month search. Why such a high profile case and why did it seemingly take so long?

Five months is actually not a long time to find a senior executive such as a CEO or CFO. Even though succession plans will have identified suitable candidates (both internally and externally) events can change in the blink of an eye.

Take the case of Stephen Elop. I can’t recall reading a series of articles specifically highlighting aspects of the selection process that were so unfavourable to a candidate; in this case Elop. Furthermore, these reports were thought to be based on highly detailed leaks from within Microsoft. This is unprecedented.

Mollenkopf may well have featured in Microsoft’s succession plans, but following news reports of his being in the running, it was then announced that Qualcomm had appointed him as their own CEO. Coincidence?

Glencore Xstrata’s search for a new chairman is a bit different. Ex BP boss Anthony Hayward was appointed Interim Non-Executive Chairman in May 2013 and the search for a permanent chairman of the mining giant continues.

Having created the world’s fourth biggest mining company following Glencore’s merger with Xstrata, billionaire South African CEO, Ivan Glasenberg, suffered a major setback when shareholders prevented Xstrata’s chairman Sir John Bond becoming chairman of the combined group.

It is no secret that Glasenberg is pumping for Hayward to take control of the boardroom but, in his own words, the company wants to do the selection process properly and doesn’t want to rush it. It has been suggested that additional comments from Mr Glasenberg in the press have been designed to put some pressure of Mr Hayward to accept the permanent position.

Certainly, investors are getting tetchy at the length of time it’s taking to fill the position of board chairman. Not surprising since the company’s pending equity stake in Russian oil company Russneft has been raised as a concern by investors worried about possible international sanctions against Russia over the escalating tension between that country and Ukraine.

There is no question that some searches can take an inordinate amount of time but with sound succession planning and the expertise of executive search consultants the process can be made more straightforward.

This was posted in Bdaily's Members' News section by Tyzack Partners .