To help Directors who are considering a change in the CEO role, we’ve published this comprehensive checklist to prompt your thinking and help to proactively identify issues.

The questions below provide comprehensive coverage across:

  • Considering the challenge ahead
  • Defining the position
  • Defining the criteria for success
  • Who to involve
  • Designing the process
  • Conducting a preliminary selection
  • Interviewing
  • Building board agreement
  • Finalising the process
  • Contractual and performance considerations
  • Induction and early support

The questions are designed to start you thinking about issues that you may have noticed but not yet considered addressing as well as to help you to notice issues of which you may currently be unaware. The answers are not necessarily good or bad; they should reflect the current and desired state of your unique board, organisation, and competitive situation.

Don’t ask all of the questions. Trust yourself to recognise and ask the most important ones. You can return to the list at intervals to consider your progress. For example:

  • When you, personally, first think about changing the incumbent CEO
  • When the board as a whole first thinks about changing the incumbent CEO
  • When you officially start the process of search and selection
  • During interviews and decision-making
  • During contract negotiation
  • During induction and early support

At the end of the check list, we have listed some references that you may wish to investigate for additional reading on the topic. We have also included some suggestions for putting the ideas that result from considering the checklist into action as you start the process, after the shortlist, after the long list, during negotiation, and in the new CEO’s first 90 days.

Considering the challenge ahead

 
1. What are the reasons that have led you to consider that it may be time to change your CEO?
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2. Are the reasons for change shared and agreed by all directors?
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3. Is the incumbent aware that the board is thinking about a change or will this come as a shock?
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4. Is there speculation (or agitation) outside the boardroom about a change of CEO?
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5. Does your current CEO wish to leave, have they left, are they at the end of a pre-determined period of employment, or will you need to remove the CEO mid-term?
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6. What are the terms in the current CEO contract? What costs will the company incur in termination, recruitment, and disruption?
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7. Are there impediments to changing the CEO in the external environment?
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8. Is there an agreed succession plan? Have you identified internal candidates who may temporarily or permanently fill the role? Do you want to follow the plan or do you want to make a fresh plan to suit changed circumstances?
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9. If you are likely to have the role vacant, will you use an acting board member or executive to provide leadership during the transition or will you recruit an interim CEO for the transition?
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Defining the position

 
10. Every board, company, and CEO role is unique. Do you have a clear list of what powers are delegated to the CEO and how those powers are used in practice? Can you make a list if required?
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11. What do you want the CEO to deliver in the first year and beyond?
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12. What do you want the new CEO to do different to the current or former incumbent?
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13. What are the key relationships with the board, board committees, shareholders and other stakeholders, and the CEO’s direct reports?
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14. What information must the CEO provide to the board? At what reporting frequencies?
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Defining the criteria for success

 
15. What are the two or three most critical aspects of the strategy that the new CEO must be able to understand and lead successfully? Does the whole board agree on these?
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16. What are the two or three most important leadership characteristics that your new CEO should have? How will you define and measure these? Does the whole board agree on these?
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17. What are the two or three most important talents that the successful candidate must possess? How will you define and measure these? Does the whole board agree on these?
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18. What are the two or three most critical relationships that the new CEO must nurture? Does the whole board agree on these?
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19. What are the two or three most important achievements that the new CEO must attain in the first 90 days, year, and strategic plan period? Does the whole board agree on these?
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Who to involve

 
20. Does the board have the time and skill available to run the recruitment and/or selection process or do you need an external expert to help?
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21. Will the whole board oversee the process, or will you use a committee or taskforce
 
1? If a committee or taskforce who should be on it?
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22. If using an external resource, how will you verify that they have appropriate experience, expertise, and time to dedicate to your process?
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23. Are there any conflicts of interest that need to be managed?
 
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Designing the process

 
24. Does your process have an identifiable first stage of generating interested candidates and then a separate second stage of selecting the best candidates from the people who expressed interest?
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25. How important is confidentiality at each stage of the process? Will you advertise the role in publicly available media or on ‘job boards’ that are available to qualified candidates?
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26. Will you involve the current CEO or senior executives in the process? If so, when and how? How will you prevent any involved staff from ‘recruiting their own boss’?
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27. What is the acceptable timeframe for the process? Will the required people be available within the likely times of their involvement?
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Conducting a preliminary selection

 
28. How will you describe the position and success criteria so that these can be conveyed to potential candidates?
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29. Who will review written – or brief verbal – expressions of interest? What skills and/or support will the reviewer require?
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30. How many expressions of interest are required before the preliminary selection commences? Will you accept late entrants to the process or will you close when the slate is complete?
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31. How will you verify any information that is provided to prevent time wasting further in the process?
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32. How will you safeguard against bias in evaluation of candidate fit with your criteria?
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Interviewing

 
33. Who will conduct interviews at each stage of the selection process?
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34. Have you created an interview proforma that investigates the criteria fairly for each candidate?
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35. Have you prepared responses for the questions that good candidates will ask of the board or consultant?
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36. How long will the interviews take and what feedback will be gathered and given to the candidates following their interviews?
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37. How will you verify the information that is provided by the candidates during their interview?
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Building board agreement

 
38. When your interviews have delivered a preferred (or two preferred) candidates, how will you involve the whole board in making a responsible decision?
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39. Do you want to have informal one-on-one meetings between directors and preferred candidates, panel meetings, or just a conversation with the person who has led the process?
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Finalising the process

 
40. At what point will unsuccessful candidates be informed of the results of the process? Who will provide any feedback if requested?
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41. At what point will the senior executive team meet the new CEO? What information will be given to the CEO about each of his or her direct reports and their performance?
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42. Who else needs to know? Do you need to announce to the stock exchange, major shareholders, key regulators, customers or other?
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43. How will you ensure that the confidentiality of unsuccessful candidates is protected after the process has finished?
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44. What have you learned through this process that might be useful as a procedure for future recruitment processes?
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Contractual and performance considerations

 
45. How will the success criteria identified during the recruitment process be incorporated into the CEO employment contract?
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46. What policies and regulatory constraints will apply to the CEO?
 
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47. What notice period is reasonable?
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48. Will there be a probationary period? If so, how will success be measured during probation?
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49. How does your proposed remuneration compare to the new CEO’s current or former remuneration and to the market in general? Do you need to make any changes before you make an offer?
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50. What bonus, long-term, short-term, or variable compensation exists and how will it be triggered?
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51. Is your CEO an officer who reports to the board or a Managing Director who has a voice and a vote on the board?
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52. What scope exists for the new CEO to negotiate the package of remuneration and other terms (such as holiday times, lengths, etc.) ?
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53. What is non-negotiable for you?
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Induction and early support

 
54. What information does your new CEO need to receive and how long will it take to absorb and assess?
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55. Who should your new CEO meet, in the first week, month, quarter, and year? Have you started to schedule those meetings? Who will accompany the CEO to those meetings?
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56. Is there any information about the previous incumbent that the new CEO should, or should not, be allowed to access?
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57. Who will mentor the CEO on interfacing with the board (usually this is the chair) and who will mentor them on interfacing with the executive team?
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58. Is it appropriate to appoint a mentor to assist the new CEO to become proficient in the role? If so, what are the criteria for the mentor? Should this be a director from your board or an outside professional?
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59. Who is responsible for helping with the administration arrangements?
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60. Which operations must the CEO visit to avoid the appearance of being ‘remote’?
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Taking action

As you start the process:

  • Review questions 1 – 23 and consider which are relevant to your board and current situation
  • Engage the board in a conversation about questions 1 – 23 and gain agreement on the process and the people who will be involved. Minute that as a decision of the board

After the long list of candidates has been presented:

  • Review questions 10 – 19 and consider if the candidates proposed are sufficiently close matches to give the board a reasonable slate from which to choose a new CEO. If there is any doubt review your criteria for success and the position description. Engage the board in a discussion and decision about whether to extend or change the process or to proceed with the current slate of candidates.

After the short list of candidates has been presented:

  • Review questions 10 – 19 and consider if the proposed shortlisted candidates meet your board’s needs.
  • Review and consider the recommendations and ranking provided by the people involved in making the short list.
  • Review your responses to questions 31 and 37 and ensure that verification has taken place. If necessary, obtain attestation to this fact.

During negotiation:

  • Review questions 45 to 53 and ensure that the response to question 53 is understood by everyone involved in negotiating.

In the new CEO’s first 90 days:

  • Ensure that questions 54 to 60 have been answered and that they are incorporated into the plans for induction and onboarding of the new CEO
  • Provide close support from the board and appropriate senior executives to ease the transition
  • Review the responses to questions 15 – 19 with the CEO and ensure that he or she is aware these will be actively monitored
  • Ensure that milestones towards the achievements in the response to question 19 are clearly identified, understood, and monitored.
  • Be ready to offer support or to terminate within the probation period as required by the new CEO’s performance.

Recruiting a new CEO is possibly the most impactful thing that any board will do. Be prepared to invest time and effort into getting the recruitment, and the all important early days, right.

Additional reading and reference sources

AICD Director Tool - CEO succession planning, Australian Institute of Company Directors, 2021, available here.

Executive Appointments and Disappointments, John Colvin, Justine Turnbull and Mark Blair, Australian Institute of Company Directors, 2013

Evidence-Based Recruiting: How to Build a Company of Star Performers Through Systematic and Repeatable Hiring Practices, Atta Tarki, McGraw Hill, 2020

Setting the Tone from the Top, Melinda Muth and Bob Seldon, Australian Institute of Company Directors, 2018