If you had to select one founder to hire a chief executive to help run their business, then Alistair Shepherd of HR tech firm Saberr would be high on the list. Shepherd founded Saberr in 2013 using its software to help business teams work better together by combining the right mix of employees.
After impressing tech giants such as Microsoft with the concept, Shepherd began to seek investment. During this search he was introduced to Tom Marsden, a veteran of the human resources industry, who had been toying with creating a similar business to Saberr.
“Having spent 20 years in the industry, Tom is steeped in HR knowledge,” Shepherd says. “I thought it would be great if he joined us as CEO. I felt that Tom would know how to approach potential clients and better understand their pinch points. I didn’t have the knowledge of the industry or the seniority buyers from big companies want to see. We were all in our 20’s and Tom brought us maturity.”
After going through a Saberr analysis profile Tom joined, as CEO, in 2014. “It’s gone very smoothly” Shepherd says. “We’ve created a new product with more growth ahead.”
Managing complexity
Hiring a CEO at the start of a business is one scenario. Another is recruiting a CEO to take over the day-to-day handling of an established business as processes, employee management and regulations become more complex. The founder will be able to step back and concentrate more on strategy and innovation.
“Typically, a business will have around 50 employees and a £10 million turnover when a founder looks to hire a CEO,” says Andrew MacAskill, MD of executive search firm EO Executives. “The founder recognises that they have become a growth bottleneck. They can’t cope with the extra scale, stress and pressure and, as a result, productivity declines with high employee and customer turnover. Founders need to have self-awareness that to continue to expand they need senior leadership to help.”
It can be a difficult emotional step to take. “Founders see their business as their baby and find it hard to trust a potential CEO. They have put blood, sweat and tears into their business. It’s scary letting go,” MacAskill states.
Prepare for exit
Another big driver for bringing in a CEO is to help a founder prepare for exit. A buyer might be keen for a founder to stay on after an acquisition. But if there is a CEO and management team already in place and doing an effective job, a founder may be able to leave and bank their money straightaway.
“A buyer will see the business is not just about you. It is a no-brainer if you are looking to exit,” MacAskill says.
Identifying and recruiting
So how do you find the best person? The first task is determining exactly why you want to make the hire and what roles and responsibilities the person will have. Aside from executive recruitment, word of mouth and social media can be effective in identifying the best candidate.
“Avoid the most common errors of looking for a ‘mini-me’ because you won’t be bringing in any new skills or someone you know will be compliant and you can dominate,” MacAskill advises. “Get someone who shares your values and will be a critical friend. They need to feel comfortable enough to challenge you and make their own decisions.”
Entrepreneur and business broadcaster David Selves agrees: “What you never need is a “Yes” man. You need someone who is a free thinker and will add another dimension to your thinking - but respects you as the final decision maker. Ultimately you are the boss,” he says. “The CEO also needs to be able to lead and instil confidence, upwards to you and downwards to staff.”
Communicate
Shepherd says communication is key. “When Tom and I started we were explicit with each other that we would never hide behind decisions and not talk. We have a lot of disagreements, but we discuss and find a way forward. There is never a tussle for control or one seceding to the other,” he explains. “I bring the technology and vision piece and he brings the customers and business piece. It’s been an absolute delight.”