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Selecting an Interim CEO

By: Robert T. Van Hook, CAE
Source: CEO Update
Published: May 11, 2006

A CEO departure can rock an association to its foundations, with its members looking for stability and a quick succession plan to upright the organization.

But quick answers can be hard to find. In the past, the most common response was for the a board to appoint an existing staff member as interim CEO. The board may consider a good staff member who can "hold the fort" for a few months while they conduct their executive search. A board may also believe an internal interim CEO won't cost much.

Such thinking may be "pennywise and pound foolish" and might waste the positive opportunities that their executive departure offers. Executive transitions are great times to make changes in the organization.

Increasingly, associations are engaging professional interim executives when they are not ready to recruit and they want to take advantage of the positive opportunities for improvement offered by the transition. An outside interim executive can both provide competent management and see association operations with "fresh eyes." The resulting changes help get the organization ready for the new executive.

Transition Leadership
Professional interim executives are leaders with expertise in stabilizing unsettled organizations and can quickly assessing the details of an association's operations. Their primary role is to get the organization ready for a new leader. A professional interim CEO can ensure that the organization continues to move forward, and they can deal with problems that arise during the transition period. In addition to association management skills, they apply process leadership skills to advance the transition process. Professional interim CEOs provide transitional leadership and manage the transition process.

Professional interims also give the association an opportunity to experience a new perspective and leadership style. They are often able to work with the board and staff to break old or emerging habits, model new behaviors, and identify potential pitfalls for the organization. The result is often a much improved organization with a positive attitude and focus on the future.

And they are invested only in the positive outcome of the transition and search process - not in future work or higher compensation. In order to preserve a degree of objectivity and perspective, professional interim executives insist that their engagement contract contains a prohibition against becoming a candidate for the permanent CEO position.

Internal Caretakers
It makes sense to appoint an existing staff member as interim CEO in larger organizations or in stable associations. Conditions are ideal for an internal interim when the association has six months (the average time to recruit a new CEO) during which:

• There are no or few pending major events, decisions, or activities, such as a large conference, a software implementation, or a major legislative initiative;
  
• The internal interim will not apply for the permanent CEO position;
  
• The association's momentum is so strong that it can 'coast' operationally for several months;
  
• The organization is on sound financial and operational footing;
  
• The association has a strong strategic plan that has been articulated by the board and is being implemented with operational plans and execution;
  
• There is no major staff, board, or member unrest; and When major decisions or changes can be postponed until the new executive is on board.
  

Serving as interim CEO is hard work, especially during a transition. Boards should be clear with the internal interim about compensation arrangements. The outgoing executive might have a role in advising the board that the internal interim CEO should be fairly compensated for serving in a challenging role. And the board should be sure to maintain positive ties with the interim CEO, otherwise, the employee they leaned on in a transition could later become a disappointed and disgruntled staff member.

Avoid the Pitfalls
Selecting the best form of interim management can help create a successful executive transition. Boards often seem in a hurry to identify a senior staffer in whom they have confidence to appoint as interim executive.

If selecting an internal candidate, boards must be sure to adjust the workload of the staffer whom they 'honor' with the interim appointment. Existing staff members have full-time jobs before they are burdened with the additional work as internal interim CEO. Holding two positions simultaneously often means that they do neither job well, and there is a high possibility of burnout for the both the staff interim CEO and for other staff who attempt to cover the internal interim's previous duties.

It's important to remember that an internal staff member who becomes an interim executive may be unprepared or unqualified to perform in the CEO role. If the internal staffer is the deputy director, COO, or CFO, the person is often in a position that requires an internal perspective and a more narrow set of competencies than a CEO, such as providing vision and strategic approaches to situations.

More importantly, the internal interim's relationship with their colleagues is greatly altered. They're no longer just a colleague, they now must serve as a supervisor to people they once dealt with as peers and probably friends. The smaller the organization, the larger this issue becomes.

Another dangerous dynamic is created when the internal staff member serving as interim CEO believes they are also qualified to be CEO. If the interim CEO does a good job in the position, but does not get the permanent position, they may be disappointed, which could create an unhealthy environment.

The announcement of a CEO's departure is the beginning of a period of transition for the whole organization - the board, staff, membership, and other stakeholders. While in one sense it is a crisis, the board has to replace the CEO, engaging an experienced outside interim executive offers a great opportunity for the association to take stock of where it is, where it wants to go, and what kind of staff leader it needs to help it get there.

Robert T. Van Hook, CAE is president of Transition Management Consulting, a company placing interim executives in associations and nonprofits. He can be reached at rvanhook@TransitionCEO.com or 202.244.3163.