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.

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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 evolutionpartners.com.au and Kevin is at lawrenceandco.com hope you have an awesome week and hope you find that amazing talent you need to keep growing.