Podcast Ep 151 | I’m thinking about appointing my first COO or President, what should I do?

For many lead­ers hir­ing their first COO or Pres­i­dent can be a big change. Per­haps they’ve been run­ning the busi­ness for a long time with 6 or 7 direct reports, and need to move to the next lev­el, or begin tran­si­tion­ing toward succession.

No mat­ter how or why hir­ing your first COO or hir­ing your first pres­i­dent can be a big change, and comes with a set of unique challenges. 

This week we talk about this unique issue, and what to do if you’re hir­ing your first COO or President.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

00:13
Brad Giles
Wel­come to The Growth Whis­per­ers, where every­thing we talk about is build­ing endur­ing great com­pa­nies. My name is Brad Giles and today, as always, joined by my co host Kevin Lawrence in Van­cou­ver, BC. Hel­lo, Kevin. How are things today?

00:25
Kevin Lawrence
Things are good, Brett. Good to hear, real­ly, and look­ing for­ward to this episode. It’s some­thing that been hav­ing a lot of con­ver­sa­tions over the years, but in par­tic­u­lar the last year with a bunch of peo­ple about this.

00:37
Brad Giles
It seems a bit more com­mon late­ly and I don’t know nec­es­sar­i­ly I’ve got some wild the­o­ries on that which I don’t want to share today, but what I do want to share is word or phrase of the day. What might be on your mind today?

00:57
Kevin Lawrence
Sim­plic­i­ty. It’s hard to make things sim­ple. I’m just always inspired by sim­ple things. There’s a quote I’ve shared before by Mark Twain. I would have writ­ten you a short­er let­ter, but I did­n’t have the time. So sim­plic­i­ty. Sim­plic­i­ty. There’s ele­gance in it, there’s scal­a­bil­i­ty in it. I’m just always inspired by simplicity.

01:25
Brad Giles
Yeah, I think it was Ein­stein who said some­thing sim­i­lar words to the Effect. Any­one can make it more com­plex, but mas­tery is when you can make it sim­ple in a way that works.

01:39
Kevin Lawrence
Cool.

01:39
Brad Giles
For me, I don’t know if it’s a word or phrase. I saw the head of the Secret Ser­vice in Aus­tralia on the tele­vi­sion talk­ing about who they recruit and what are the attrib­ut­es. And it was real­ly inter­est­ing. He said that we need some­one who’s high IQ, some­one who’s high EQ and some­one who’s hum­ble. It was real­ly inter­est­ing just him describ­ing why it’s dif­fi­cult, why they reject so many peo­ple who want to become Secret Ser­vice agents, and just the incred­i­ble lev­els that they go to with psy­cho­me­t­ric assess­ments and a whole range of things to ensure that they get those kind of peo­ple. That was I get us a bit off the reser­va­tion com­pared to the nor­mal word or phrase, but yeah, what are they look­ing for? Because it cer­tain­ly trans­lates into what we do.

02:39
Kevin Lawrence
It is what’s exact­ly? We’re look­ing for the same thing?

02:41
Brad Giles
Yeah.

02:41
Kevin Lawrence
High EQ, high IQ and humil­i­ty, because humil­i­ty means they con­tin­u­al­ly get smarter and they’re gen­er­al­ly not a jerk to work with. That’s awe­some. Cool. Well, let’s dig into today. Today is, hey, I’m think­ing about appoint­ing my first CEO. O‑C-O‑O that is a Chief Oper­at­ing Offi­cer or Pres­i­dent or sim­i­lar title, but basi­cal­ly, how, what do I do? This is gen­er­al­ly a sce­nario where the CEO has been run­ning the busi­ness for quite a while. Many of our CEOs have run into busi­ness for a decade or two decades or three decades, and peo­ple get to the point where they got to be think­ing about suc­ces­sion or they just want some­one else to run oper­a­tional­ly so they can do oth­er things. Some go to do more char­i­ty work, some want to do oth­er busi­ness­es. Some want to work less or start anoth­er divi­sion, who knows? The point of it is I want to get that Pres­i­dent or COO in place so that I can be freed up for what­ev­er it hap­pens to be and hav­ing some­body else run the day to day of the operations.

03:43
Kevin Lawrence
I just want to define a term because every­one has their own terms. Often in the world the CEO has the title of Pres­i­dent and CEO. In sim­ple terms, no mat­ter what you’re doing, the CEO’s role has the strate­gic part, which I would say is more CEO and then the Pres­i­dent part that’s more oper­a­tional. Now, I’m mak­ing this real­ly sim­ple and real­ly what we’re say­ing in this episode is this is about peo­ple that want some­one to take the oper­a­tional part of the CEO’s role from them and so that they can be freed up to be more strate­gic and work on for­ward or oth­er things. That could be a Pres­i­dent, that could be a CEO. It could be called a lot of dif­fer­ent things, but some­one to strip away a lot of the CEO’s oper­a­tional responsibility.

04:36
Brad Giles
In Aus­tralia it might also be called a Gen­er­al man­ag­er. In oth­er coun­tries there are oth­er terms. Broad­ly, what you’re say­ing is we’re try­ing to say the day to day run­ning of the oper­a­tions, sales, oper­a­tions, account­ing, finance, what­ev­er it is, we’re get­ting those areas to report to this per­son and then the CEO or the chair or what­ev­er. How­ev­er you delin­eate that it’s the first time that you make that split where you used to be run­ning every­thing and now you’re split­ting your role so that some­one else is going to run oper­a­tions. It’s a tough gig.

05:14
Kevin Lawrence
Yes, and tough some­times get­ting the right per­son and tough mak­ing the change inside the CEO’s head who’s used to hav­ing his or her hands on all the levers and involved in every­thing. Gen­er­al­ly it is some­thing that becomes more and more desir­able by CEOs after they’ve been doing it for a long time and at some point they’re ready. That’s when we start talk­ing about it. So that’s what we’re dig­ging into today. And it’s inter­est­ing. I go back 15 years, maybe more, but one of the entre­pre­neurs I worked with built a great com­pa­ny and he got to the point he was kind of tired of it. There were some issues with the busi­ness part­ner and a bunch of things. His solu­tion was to sell the busi­ness, which I nev­er felt right, but he was going to sell it and move on and do oth­er stuff. He tried to get a Pres­i­dent a cou­ple of times.

06:10
Kevin Lawrence
It did­n’t work. One, he hired him because he had a real­ly fan­cy degree from a fan­cy school, but that did­n’t work. Anoth­er one had all the per­fect indus­try expe­ri­ence. That did­n’t work. Final­ly, he end­ed up with a junior per­son on a team who had grown in the com­pa­ny over a decade. Giv­en this guy a chance, gosh, he had to be in his late thir­ty s at the time. It was a sol­id com­pa­ny and this per­son in the end became the pres­i­dent, has been the pres­i­dent ever since. It’s at least 15 years. The CEO has been freed from 90 some­thing per­cent of the day to day for well over a decade. And it works very well. He just had to learn a bunch of things and fig­ure out a bunch of things and obvi­ous­ly get the right per­son. That’s kind of what we’re look­ing at. That’s the, that’s the move.

06:58
Kevin Lawrence
You’re not out of the busi­ness. You’re not sell­ing the busi­ness. You’re just get­ting some­one to run it. The pres­sure can be on the weight of the shoul­ders of the younger per­son who’s ear­li­er in their career. You can use your brains more than your brawn there’s.

07:11
Brad Giles
One of the most suc­cess­ful coach­es that we know of is a guy called Mar­shall Gold­smith. He wrote a book called What Got You Here won’t Get You there. That’s a rel­e­vant phrase to what we’re speak­ing about. Because if you’ve found­ed the com­pa­ny, if you have hand­picked all of the peo­ple around you, it’s real­ly hard to not stick to those same habits that saw you suc­ceed. To have some­one else who’s going to want to do things their way, per­haps over­com­ing that is a real and present chal­lenge. You might say, s***, but I’ve had enough. I real­ly just want to get out of this.

07:56
Kevin Lawrence
Yeah, easy to say, hard to do.

07:59
Brad Giles
Exact­ly. I had a CEO, same sit­u­a­tion, founder that I worked with prob­a­bly, I don’t know, $15 mil­lion busi­ness. She want­ed to appoint a gen­er­al man­ag­er so that she could have a fam­i­ly. She need­ed to do all the fam­i­ly stuff, right? She’d been run­ning real­ly hard for all of her career and she could see, this is my time. She appoint­ed a gen­er­al man­ag­er after two months. One of the key met­rics of the new gen­er­al man­ag­er, or COO, was to report week­ly finance num­bers. After the first two months, she real­ized that this per­son had­n’t logged into their account­ing pack­age once, so did­n’t have any idea what­so­ev­er about the account­ing side. I guess there’s a thing that we say when it comes to hir­ing, which is hire slow­ly, right? Make sure that take the care, hire slow and fire fast, as the old adage, right? You’ve got to make sure that you’ve got the right person.

09:15
Brad Giles
It’s ever so impor­tant in this sit­u­a­tion if you’re hir­ing rather than promoting.

09:21
Kevin Lawrence
Oh my gosh, that’s a whole there’s some things you need to be clear on what the role is and what’s the delin­eation between the CEO’s role and this role that you’re hir­ing. You got to have the right per­son and then you got to have the right tools and sys­tems as well there’s a lot required on it. The main thing is like Collins bul­lets and can­ni­bals. You want to do lots of tests. I had a client in the US. This is about the time, just over 100 mil­lion of rev­enue, excel­lent busi­ness, and the CEO want­ed a pres­i­dent. So the head of sales was excel­lent. He was great. He was a machine. He was a beast. Like, he would not but not only had the high IQ and the high EQ and was hum­ble, he was an ex mil­i­tary guy. The guy was just awe­some. If he said some­thing would hap­pen, it happened.

10:11
Kevin Lawrence
There was­n’t. This is the per­son who became the pres­i­dent, right? Work­ing with the CEO and with this guy, every­thing looked like it would be right with this guy, but we just start­ed giv­ing him more respon­si­bil­i­ty, one thing at a time. Head of sales, then he had mar­ket­ing and cus­tomer ser­vice. That was dialed in and it took a while. And then Next gave him oper­a­tions. The CEO held on to one real­ly sen­si­tive part of oper­a­tions. He had all sales, mar­ket­ing and all oper­a­tions. And then the CEO had finance. This per­son thrives until they hit close to a bil­lion dol­lars. It just cranked it. The key is some­times the CEO still keeps finance as a direct report, and some­times they don’t depend, again, depend­ing on the struc­ture. The thing is that the CEO thought he had the right guy. They had a great part­ner­ship, and they just kept test­ing it to see, and it kept work­ing and working.

11:13
Kevin Lawrence
The effec­tive­ness con­tin­ued to scale, and so they con­tin­ued to do it. There’s oth­er sit­u­a­tions where that does­n’t work. I had anoth­er one where we did some tests and we had two exec­u­tives that we thought would be and were five years old. We want­ed to start test­ing ear­ly. We had some con­ver­sa­tions with the CEO and I sat down with them. I was doing some coach­ing with them. We gave them projects just pure, hey, here’s where you need to grow, and here are some projects that can get you there and some edu­ca­tion you could con­sid­er to help enhance your knowl­edge. And we did not know. We had no clue. They were both, like, in our mind, equal con­tenders. Who in three to five years could be close? Well, one per­son just scaled and skilled. The oth­er per­son did­n’t move an inch. And again, we could­n’t have pre­dict­ed it.

12:04
Kevin Lawrence
Tru­ly, if you were to be a bet­ting per­son, you would have bet on the guy who did­n’t move an inch before it hap­pened. It would shocked me, actu­al­ly. The main thing is let the real world expe­ri­ence real world projects and chal­lenges and see how they do. The sec­ond, the one who did thrive, he could take over the job now and with some extra support.

12:29
Brad Giles
I’m sor­ry, Kev, close it up.

12:31
Kevin Lawrence
No, it’s good.

12:35
Brad Giles
The thing is, there’s an old say­ing which is fail­ing to plan is plan­ning to fail. And it’s so impor­tant. This is such an impor­tant role. So under­stand­ing that, like, don’t rush it. There’s been sit­u­a­tions that I’ve expe­ri­enced where there’s been a sense of urgency to close a can­di­date because they think that the can­di­date needs has mul­ti­ple offers on the table. The can­di­date wants to make the right pick. Absolute­ly. And and so do you.

13:15
Kevin Lawrence
Yes.

13:16
Brad Giles
So so don’t rush it. If it’s a can­di­date sit­u­a­tion, even if it’s not com­ing back to fail­ing to plan, there’s a GM that was appoint­ed prob­a­bly 25 $30 mil­lion busi­ness that we work with. GM was appoint­ed exter­nal­ly, went through a very rig­or­ous detail, and the CEO was very head­strong per­son, which is its pros and cons. I’m not debat­ing in that either way. We made it real­ly clear to both the can­di­date, the nom­i­nat­ed can­di­date and the CEO, this is what fail­ure looks like. There’s a high­er chance that we’ll fail than suc­ceed. One of the biggest things is hav­ing a super clear line in the sand, which is, this is what you own. And that is what you own. Don’t cross be very clear about that so that when you’re not step­ping in each oth­er’s toes so that this per­son can have auton­o­my in their role. Sure there’s onboard­ing and I wrote a book about onboarding.

14:23
Brad Giles
Called onboard­ed. Beyond that, you want to be real­ly clear and give the per­son own­er­ship and autonomy.

14:31
Kevin Lawrence
Yes. There’s some prin­ci­ples, like Brad’s allud­ing to in terms of how do we gen­er­al­ly approach it pret­ty sim­i­lar­ly, and it’s bet­ter to start soon­er so you’re not in a pan­ic like that. Ide­al­ly, you’ve got inter­nal peo­ple who can grow into the roles. That’s the ide­al sce­nario when it’s pos­si­ble. Like I said, that’s the­o­ret­i­cal­ly idea. I love bring­ing in some rock stars from the out­side. If you can bring in real good rock stars because they can bring stuff your orga­ni­za­tion does­n’t have, they bring new capa­bil­i­ties. Gen­er­al­ly, we want to start at least three to five years out, and we start by draw­ing the chart that we want. You’re prob­a­bly going from 4567 direct reports, gen­er­al­ly down to three. Ide­al­ly, we go, say, six direct reports. Ide­al­ly get it grad­u­al­ly down to three. Even that can be two steps, right. You might clus­ter the sales and mar­ket­ing and cus­tomer, and then you might clus­ter all the oper­a­tions one at a time as you dial it in.

15:30
Kevin Lawrence
Even­tu­al­ly you might go down to one or two. Start three years out and with emp­ty box­es, just what the jobs are, not peo­ple’s names. Names will dis­tort your think­ing and then think about know­ing you, what would work. Every CEO likes it dif­fer­ent. As I said, keep in mind, there could be two, three, four moves to get there. Once then you can look at the exist­ing team and con­sid­er if they can be devel­oped into the roles and assume that there can be a grace­ful tran­si­tion if they can’t and there is a plan. You got to have a lot of faith and if there is a pos­si­bil­i­ty, then and you ide­al­ly and we have one orga­ni­za­tion, 1000 employ­ees and, we’re doing this with them and we are assess­ing all of the key exec­u­tives, and we’re doing a full top grad­ing inter­view and a full 360 assess­ment and then com­ing up with a full devel­op­ment plan.

16:27
Kevin Lawrence
Whether they get the job or whether they con­tin­ue to grow in your orga­ni­za­tion for the future. We’re doing an incred­i­bly thor­ough process on eval­u­at­ing four I think there’s three exec­u­tive roles plus the CEO’s replace­ment as well. Again, and we start­ed this five years ago, it’s insane­ly thor­ough, and we’re doing it from the out­side to get rid of the orga­ni­za­tion­al bias. They know enough to know that if they do it them­selves, it’s going to be hard­er. That’s just the basic and of course, then you recruit if you need to and then onboard­ing all that oth­er stuff. Even just get­ting to the point, you got to engi­neer this and reverse engi­neer it with a lot of time. And again, none of it’s rock­et sci­ence. It’s just try­ing to make it high­ly effec­tive with the least amount of risk you can based on how much time you have.

17:16
Brad Giles
Yeah, take your time. Based on how much time you have. Take your time. Right there’s. One CEO I worked with, he had a sec­ond in com­mand appoint­ed, and there was a five year tran­si­tion before this per­son ful­ly stepped out into an exec­u­tive chair role, where they only come to month­ly meet­ings. It took a long time, and it was a very grad­ual thing that might not be right for you and your cir­cum­stance, but you want to reduce the risk. I guess the part of the thing that we did­n’t cov­er in those prin­ci­ples is pride. If you’re look­ing at it, you want to make sure that your team will be proud to report to this new COO pres­i­dent, GM, who­ev­er it is, because they’re pos­si­bly poten­tial­ly proud to report to you. That absence of pride can cre­ate a real issue unless that’s there for how­ev­er it comes from.

18:19
Kevin Lawrence
Yes, and you need to look at the pride a year into the per­son being in the role ini­tial­ly. It could be an absolute mess. As we’re talk­ing here, I’m think­ing about a cou­ple of things that popped to mind on this too, Brad, is that War­ren Buf­fett does­n’t have a lot of hands on man­age­ment in the com­pa­nies that he owns. One of the things that he requires from each of his CEOs annu­al­ly is for them to tell him who the suc­ces­sor is if some­thing hap­pens to the CEO basi­cal­ly every year, to know who that per­son would be, even if it’s a short term fill. When we do tal­ent reviews with orga­ni­za­tions, one of the columns is Next Role. Like what’s the role? We’re groom­ing every per­son for the key peo­ple and suc­ces­sor. Who is that suc­ces­sor in the back­fill. Even if you don’t plan up to give up your CEO role for a long time, you should be know­ing your suc­ces­sor any­ways and always think­ing about it.

19:22
Brad Giles
And that’s the per­fect the­o­ret­i­cal approach. Every role has a suc­ces­sor. I spoke about that in my book Made to Thrive. Sure, every role has a suc­ces­sor. It mit­i­gates risk. If you can do that, then that’s awe­some. Some­times you can’t, but that could be the sim­ple thing. Think out one, two, three years, let’s appoint a suc­ces­sor and who is it for you and how do you val­i­date that they are the right per­son to step into you? Because some­times it can bet­ter or more effec­tive if you appoint from within.

19:56
Kevin Lawrence
Not always, but some­times if you can, it’s ide­al. Again, that’s the­o­ret­i­cal­ly ide­al. I like that, Brad. It’s the­o­ret­i­cal­ly ide­al to be able to do that. It can be great for the out­side. If you are look­ing at the out­side, that’s why you have to spend a lot of time net­work­ing and meet­ing peo­ple look­ing for it. One of my clients just found an amaz­ing per­son to step into this role. It was inter­est­ing. I had a con­ver­sa­tion with one of his key exec­u­tives who just joined Fresh Per­son in. I’ve been want­i­ng to push a pres­i­dent into this com­pa­ny. I know it would be good for the CEO. I know it would be a few years out longterm we had a con­ver­sa­tion, well, this guy just came avail­able, let’s talk to him. He’s five times ahead, like five times the size of busi­ness that we have or my client has.

20:42
Kevin Lawrence
We want a con­ver­sa­tion led to a meet­ing led to this. Now, the guy has a poten­tial he might be com­ing in as the pres­i­dent from a con­ver­sa­tion, because were look­ing three to five years out. We were ask­ing peo­ple about who they knew, and even, for exam­ple, this CEO. He want­ed to meet some­one who was the pres­i­dent of a com­pa­ny that was a few bil­lion dol­lars in the same min­istry. He want­ed to meet them, to see them, to under­stand the rule and instant­ly he might actu­al­ly be hir­ing him.

21:11
Brad Giles
So I don’t love that.

21:14
Kevin Lawrence
I don’t love that much of love about that.

21:18
Brad Giles
Well, I don’t know if the first thing that you should do is to go and talk to peo­ple in the mar­ket because then you can get can­di­date lost. Right? I think the first thing you should do is to build a job score­card or a role score­card. The first thing you should do is.

21:37
Kevin Lawrence
To I love it when we disagree.

21:40
Brad Giles
Well, let’s go back to the title. I’m think­ing about appoint­ing my first COO or pres­i­dent. What should I do. I think you should think about what you want to do and that means build­ing a score­card for yourself.

21:53
Kevin Lawrence
Sure. The­o­ret­i­cal­ly perfect.

21:56
Brad Giles
Yeah. You should build a score­card for a gen­er­al man­ag­er, COO pres­i­dent. Like, what are you going to do and what are they going to do? Because unless you know that, how are you going to know that the can­di­date that you’re falling in love with is going to be any­where near what you need?

22:13
Kevin Lawrence
It’s fun­ny. We’re get­ting close to the end. When an ide­al per­son comes along, when a rock star per­son in the role that you want, he did­n’t have the score­card done. We know what the role is, we know what the account­abil­i­ties are, but the work isn’t done. An ide­al can­di­date comes along, first thing I want to do is meet them and start to explore it.

22:36
Brad Giles
How do you know they’re ideal?

22:38
Kevin Lawrence
What’s that? Because they did the exact job in anoth­er orga­ni­za­tion that was five times the size. Now, before you hire them yes. At this point, when there’s a hot prospect, that’s the entre­pre­neur­ial part of me. When there’s a great oppor­tu­ni­ty, we’re going to go and see what we can do with it. We’re still going to do an eval­u­a­tion and do it right if we’re going to take it some­where, but we’re still going to get to the same place. My cre­ative entre­pre­neur­ial side, some­times if we have to approach it back­wards, I think it’s okay. Cool.

23:11
Brad Giles
Well, every per­son­’s sit­u­a­tion is dif­fer­ent. Seek your own advice.

23:16
Kevin Lawrence
Exact­ly. We want to get to the point where we agree. We want to have that clar­i­ty. Absolute­ly. And know specif­i­cal­ly what we’re expect­ing. Yeah. And I try to fol­low it. Fol­low the process. 90%. Some­times you got to be a lit­tle entre­pre­neur­ial, but it is dan­ger­ous. Very good. We’re still doing it. Ver­sus a score­card just back­wards. All right, well, this has been the growth. Whis­pers. Thanks for lis­ten­ing. As always, lots of ideas. As Brad said, seek your own advice. We’re giv­ing you ideas and thoughts to help you thrive in these key parts of your job and your com­pa­ny and the dif­fer­ence you’re try­ing to make. This has been Kevin Lawrence here in Van­cou­ver and Brad Giles down there in Perth. If you haven’t yet, sub­scribed sub­scribe and rate the show. Hope­ful­ly you think it’s awe­some and give it a five. If you have ideas that would make it bet­ter, please let us know.

24:13
Kevin Lawrence
For the YouTube ver­sion. Just go to YouTube, search the growth whis­pers and to reach Brad or Kevin. We both have week­ly newslet­ters. We both have firms that help orga­ni­za­tions to thrive and build endur­ing great com­pa­nies. You can get a hold of Brad and his team at evo​lu​tion​part​ners​.com​.au and Kevin is at lawrence​and​co​.com hope you have an awe­some week and hope you find that amaz­ing tal­ent you need to keep growing.