How to fire a CEO
Posted on March 28, 2009
Filed Under Strategy |
You have created an above-average successful company that seems to be growing without showing any signs of recession, while most of your competitors are slowing down. In any case, you have the feeling that the growth is starting to become overwhelming, and that you cannot reach every member of your crew and have the need of postponing again and again the meetings with your subordinates in order to give priority to strategic decisions, something that you don’t really enjoy.
You have now reached a stage where you, as General Manager or founder, find the necessity of hiring someone that can cover the lack of managerial skills, or even track record, that you have. After a deep search using your close and not-so-close professional contacts, Headhunter agencies, Web 2.0 (or even 3.0!) tools and in-company staff, you seem to find the appropriate person, that one that will give the final push to the trajectory of the company and help it find a stable path.
After taking the decision and reposition yourself as a -for example- Marketing Director, the new guy starts getting involved with the daily responsibilities included in his job description and trying to adapt himself to the rhythm of your company.
Weeks pass and no progress is done. On the contrary, your people seem to be concerned and unhappy about the new management lineup. In any case, never forgetting recording the performance points where the CEO could improve and organizing regular feedback meetings, you decide to wait a bit longer. At the end, you needed several year to set the pillars of the existing business… why would he be able to know and improve everything in just a few weeks?
Some months after that, and even after a constant and close follow-up, the internal situation has worsened, and you are aware of the fact that the results are not sky-rocketing as expected, but plummeting rapidly. The decision is taken: you and your board choose to let the CEO go.
In order to do so, do not forget following these steps:
- Make sure that the CEO is the cause of failure, and not miscommunication;
- Proceed in a way that protects you from large legal costs while protecting the dignity and future of the CEO;
- Consult and employment law specialist in order to determine what are your responsibilities and legal rights regarding payments, notices, causes, etc.
- Determine what will be the package that the CEO will be offered, and when will he leave the company;
- Determine who will be the next manager of the organization. Develop a CEO plan, identifying candidates and the terms and conditions of the contract;
- Plan the strategy for finding a new CEO.
And remember, firing your manager may have severe effects in- and outside your company: your company´s popularity and credibility in the eyes of the public will diminish, and so part of your revenues; extra costs will appear due to his or her leave and the search of new candidates, and you will have to run again through several months of internal instability. Think twice before hiring and firing a CEO!
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