March 2020 update on CEO succession planning
In March 2020 we experienced unprecedented website traffic to our CEO succession planning pages. It seems likely this traffic was driven by the uncertainty of the Covid-19 situation. Since then, traffic has been sustained at a higher volume indicating increased Board interest in CEO succession planning. In response, this 8 minute video provides a timely overview of our CEO succession planning process and the learning from working with our clients.
Five CEO Succession Planning Challenges
Just about every week, there is an announcement about a Board appointing an interim CEO or manager to run the company until a successor is found. That this is a key indicator an organization’s succession plan is not working.
From my perspective, I see 5 common challenges for Board’s and their organizations regarding CEO succession planning.
1. CEO Succession planning is seen as an HR process run by the HR department.
In successful companies (GE does it well), the CEO succession planning process is integrated into business processes and reported upon quarterly.
2. Roles and responsibilities of the CEO are not clear between all the stakeholders.
Focusing on having everyone understanding their roles and responsibilities in the succession planning process enables organizations to hold all the stakeholders accountable for the viability of the business future.
3. The CEO Succession planning process is seen by many Boards as a yearly exercise or one that is not done because the effort is seen as too much.
The reality is succession planning is a continuous process done many times throughout the year. This continuous work allows Boards to be prepared to effectively deal with sudden or unexpected loss or departure of key people.
4. Many senior leaders have learned not to expect every member of their team to have common succession planning goals.
The differing goals amongst the leadership team do not promote effective results. Boards need to ensure that the succession planning goals are clear and specific so they can measure the effectiveness of the leadership team in sustaining the company’s future leadership.
5. Board aren’t clear if their succession planning efforts are to focus on filling vacancies or fulfilling the company’s strategic direction.
Boards that focus on developing the talent for the company’s future are ensuring the talent management efforts are aligned and support the strategic objectives. When a Board is able to announce the CEO replacement or a new member of the leadership team at the same time as a departure, it is a clear signal the Board is actively involved and handling their succession planning oversight and understanding the risks to the corporation and their shareholders’ value.
This blog was originally written by Charlie Regan in 2014. It was updated by Jim Crocker in 2019.
Boardroom Metrics works with Boards and CEO’s on CEO and Leadership Team succession planning. This CEO Succession Planning Template is a popular download that we use to focus Boards on the important criteria for their next CEO. Download it here.
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