Simplify the CEO hiring process by using the Rule of 3 to achieve a smoother leadership transition

Rebecca Schalm

In The Secrets of Great CEO Selection, Ram Charan advises hiring committees to remain flexible, test for fit, and prepare for imperfection, these timeless strategies are even more relevant today as organizations navigate an increasingly complex landscape.

Having recently gone through a CEO selection process, I learned firsthand how vital it is to enter the final stages with at least three viable candidates. All too often, selection processes narrow down to one or two options, which limits flexibility and increases the risk of a failed search. Following Charan’s advice, aiming for three final candidates – whether for a CEO role or any key position – ensures a more robust process, whether you’re hiring a CEO or an entry-level manager.

Why three? First, it forces an open mind. Identifying three strong candidates requires a thorough search, pushing you to explore beyond the obvious choices. This broadens your perspective and ensures you’re focused on core capabilities rather than less important qualities. The idea of a “perfect” candidate often falls away when you consider multiple options, helping you prioritize the most critical aspects of the role.

Navigate the complexities of CEO hiring with the Rule of 3 approach for a successful leadership transition
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Second, bringing three candidates into the final round allows you to assess fit more effectively. My recent experience showed that candidates who initially seemed like outliers became serious contenders after more in-depth interviews. By expanding the pool, we discovered that traditional “paper” evaluations didn’t always align with the real-world needs of the position. However, this strategy does demand more effort from the selection committee. It’s easy to delegate the initial screening to a recruitment firm, but hands-on engagement in the interview process pays off in finding the right fit.

Finally, considering three final candidates helps plan for imperfection. No candidate is flawless, and by discussing potential trade-offs and accommodations for each, the board can be better prepared for different outcomes. In our case, having three candidates allowed us to engage in proactive scenario planning, enabling us to address 90 percent of the issues that arose during the transition.

In today’s volatile environment, planning for three finalists also acts as a safeguard. Unexpected events – whether personal, professional, or external – can derail even the most promising candidate. By ensuring a three-horse race, you’re better positioned to handle the inevitable challenges that arise, avoiding the need to restart the search from scratch.

This approach remains a solid strategy for navigating leadership transitions in an unpredictable world.

Here is my cheat sheet on how to use the ‘Rule of 3’ to make better hiring decisions:

  1. Identify three final candidates
  • Broaden your search: Aim to have at least three strong candidates in the final round. This forces you to look beyond the obvious choices and dig deeper for talent.
  • Avoid tunnel vision: Expanding the candidate pool helps you focus on key capabilities and move away from the idea of a “perfect” candidate.
  1. Test for fit
  • Conduct in-depth interviews: Evaluate how each candidate’s experience, skills, and personality fit your organization’s culture and needs.
  • Challenge assumptions: Be open to candidates who may not initially seem like a perfect fit on paper but could excel in the role when assessed more comprehensively.
  1. Plan for imperfection
  • Discuss trade-offs: With three candidates, it’s easier to identify and plan for the areas where each might need support or development.
  • Scenario planning: Engage in proactive discussions about how your organization can adapt to each candidate’s strengths and weaknesses.
  1. Safeguard against unexpected events
  • Prepare for the unexpected: Having three candidates ensures you’re not left scrambling if your top choice declines the offer or another unforeseen issue arises.
  • Maintain flexibility: A three-horse race allows you to pivot quickly and still make a strong hire if things don’t go as planned.
  1. Leverage the rule of 3 for decision-making
  • Compare and contrast: Use the three candidates to benchmark against each other, allowing for more informed and balanced decision-making.
  • Minimize bias: The Rule of 3 helps reduce bias when hiring by encouraging a more diverse and thorough evaluation process.

Rebecca Schalm, PhD, is founder and CEO of Strategic Talent Advisors Inc., a consultancy that provides organizations with advice and talent management solutions.

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