Howdy GirdleyWorld!
A few weeks ago, I wrote about how to set up a CEO’s bonus structure (read it here!). By popular demand, here’s my followup:
- How to hire a CEO for your business
Let’s dive right into it!
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My method
I’ve done this a few dozen times now. And it’s a super important hire. But here’s the thing:
It doesn’t have to be complicated.
For me, hiring a CEO happens in 4 stages:
- Prepare your mind
- Build a great offer
- Find the right person
- Let them be great
Let me unpack those a little.
Step 1: Prepare your mind
You’re looking to move from owner-CEO to just owner.
“I’m ready!” you say. “It's time to buy another company and start a HoldCo and do more Michael Girdley things!”
But stepping back from being CEO is surprisingly difficult.
Because nearly everything about being an “owner-not operator” is the opposite of when you’re the CEO.
Changes to prepare for
Here are just a few:
- Less control. As owner-CEO, you get the final say in decisions and direction. When you become owner-only, you’re the coach and not the player. Sometimes a CEO will do things you wouldn’t.
- More risk. As CEO, you made the call on risky decisions. As an owner, someone else is signing the checks.
- Less visibility. As CEO, you are in touch with your business every day. As owner, you’ll need systems like audits and a supervisory board to monitor what’s going on.
- Vision & culture. As CEO, you set the vision and culture, then sell everyone on it. As owner, you have to let the new person set their vision and model the culture they want. If you don’t… you’ve hired a GM and not a CEO.
- You’re not the problem solver. As CEO, the buck stops with you. As owner, you must have discipline to let the team do their job. You have to ask, “How can I help you solve it?” (Or else you have two CEOs.)
These are not easy pills to swallow. A lot of people struggle with this shift.
(My theory: the kind of person that starts a company has a hard time giving up control.)
But until you’re ready to give up control, you shouldn’t be hiring a CEO. They need to do their job. And you need to let them.
Step 2: Build a dream offer
Too many job descriptions are nuts and bolts about the job.
Frankly… that’s stupid. Lead with what’s in it for the candidate.
Why do they want your role? Authority? Autonomy? Leadership?
Speak to that at the top of your job posting.
And don’t be afraid to use emotion: CEO is the dream job for many people.
What to pay?
You’re competing for potential CEOs with what they can earn in the open market.
In the end, your opportunity has to be better than their alternatives. Not just in money, but in personal growth and experience.
I get asked for rules of thumb on what revenue % a CEO should earn.
But generally I consider rules of thumb to be lazy thinking. Instead, ask: “What do I need to offer to be the best opportunity for a candidate with many choices?”
There’s no shortcut to doing research.
Use comp to align interests
What do you want from your company as an owner?
Structure your compensation to reflect that.
I like as much of the comp to be as variable as possible. (For an example, check out my CEO bonus framework.) Ideally, when the CEO wins, you win.
Step 3: Find the right person
Stick to your process
If you don’t think you have a hiring process, you still have a process…
It’s just guaranteed to suck.
It doesn’t have to be complex. It just has to be intentional.
I use the same three-page process for any hire, CEO or not. And by sticking to my guns, I get a decent hit rate. (I’ll link it at the end.)
This is not the time to improvise.
The full court press
I see some people run half-hearted processes. I don’t get it.
When I hire for a CEO role, I go hard.
That means telling everyone about it, putting it on every job board, and going broad to build a strong funnel of candidates.
Grit is #1
I’d rather have someone inexperienced in my industry or role… but with a TON of grit and give-a-shit.
There are too many “been-there-done-that” people who don’t give 110%.
All my big wins in hiring — they care as much as an owner would.
One great way I’ve found candidates with grit: cuspers.
That my word for people “on the cusp”: an operator just about ready for the job, but not quite there yet. They’ve got something to prove.
Chips on shoulders put ships in pockets, as they say.
Be slow to hire
I’ve run hiring processes for three months or more.
And if nobody is a “hell yes”... we start over again from the beginning, tweaking the offer (comp, role, pitching) to see if we can make it work.
Step 4: Let them be great
Give them space
In my early operator hires, I spent a TON of time on training and onboarding.
Then I learned they preferred I get out of their way. They build their own path to get up to speed.
(Unlike regular employees, this was nice!)
If you have to… do it in reverse
Numerous times I’ve run across an amazing operator, then went out to find a company to suit them.
Great deals are easier to come by than great operators.
When I meet someone with great potential, I get stoked!
And that’s it!
I learned most of these lessons the hard way… so you don’t have to!
And by the way: if you want to see my standard hiring process, you can download it here.
My ask: if you liked this content, share this with a friend!
(And if you’re that friend: subscribe here!)
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Things that caught my eye this week
Appetizer: If there’s one thing I love, it’s wins. So we started a #wins channel at Scalepath (the CEO peer group I started). I love seeing a nightmare day turn around like this:
Main: Greg Isenberg has a contrarian take on why you should meet your heroes. I was also on his podcast recently!
Dessert: My Subaru joke (which I proudly drive) was the most popular thing I tweeted all week. Go figure.
I want to write the newsletter you want to read — so hit reply and let me know what you’re interested in! What questions do you have?
Until next week,
Michael
