Came as a piece of shock. I was just 43 years old, so retirement was not on my radar and I was only in the CEO position for two months. Succession planning seemed premature.
The lead director explained the reasoning: “I am unanimously approved as CEO, Harry, but we are not going to sit, waiting to be surprised if something has to happen to you.
It is the No. 1 responsibility of any Board of Directors: Leadership succession. Even if the current CEO does a great job, the Board of Directors must ensure that there is a plan if the unexpected – the euphemist “hit by a bus” scenario.
To one recent survey Of more than 200 public executives in the US, 34 %described succession planning for CEO and other C-SUITE executives as “top priority for 2025” -Ahead of AI strategies (25 %) and geopolitical risks (10 %). However, despite the importance of this issue, councils can sometimes bypass the discussions or provide a brief supervision of the CEO succession process.
A possible succession reason does not take full attention to the Board of Directors is that CEOs are often reluctant to discuss it. As a result, succession design can easily be postponed to another era.
Based on my personal experiences as a member of the Board of Directors, as well as presentations I have made to organizations such as National Association of Corporate DirectorsI see three factors that help that can stop or even undermine CEO succession programming. Here are three reasons CEO successive design gets overwhelmed.
1. The CEO has no real confidence.
Self -confidence-One of the four principles of values-based leadership-is essential for every leader. Knowing your strengths and recognizing your weaknesses, surround yourself with a strong group of people whose talents and skill sets are complementary to yours. However, a chief executive who has no true confidence can resist the provision of excessive visibility and access to potential successors.
As I was observing in my previous article on malfunction and what to do for it, Setting clear expectations It supports good governance. One of the expectations is that the Managing Director will develop people in the organization so that there is a leaders’ conductor developing for top roles. With this expectation they understand from all parties, the failure of the Managing Director to develop leadership candidates could have significant consequences, from reducing their bonus to the loss of their work.
2. The CEO believes they are irreplaceable.
This is the opposite scenario: a CEO who is confident at the point of benefits. With an attitude of “no one could potentially replace me”, this CEO type does not see the point of succession design except for a “check the box” exercise. This is a recipe for a failed succession.
A case: Managing Director of Disney Bob Iger has been criticized for handling succession. First, Iger had to give up Disney in 2011 but His term expanded Many times – until he left the role of CEO in February 2020 and succeeded by Bob Chapek. But Iger, who assumed the role of the executive president, and Chapek, who was supposed to have chosen to succeed him, clashed. At the end of 2022, Chapek left Disney and Iger returned again as CEO. This term had to end in 2024, but now extends to 2026.
Now, with Iger leaving again, there is some indications that succession will be different this time. For one thing, the The Board appears to be more responsible of succession process.
3. The table sleeps on the switch.
The company is doing well and there is a good CEO in its place. Why worry about succession right now? The reason is simple: the unexpected and even the unthinkable can happen. Preparing for such an event is the sign of exemplary governance. Consider McDonald’s Corp., who has long admired for the development of its leadership. This force allowed the company to endure two unexpected successes CEO: When James cantalupo died suddenly of a heart attack and, six months later, when his successor Charles Bell resigned due to terminal illness. The loss of two CEO in one year under such conditions is unthinkable, and yet this was this very faced with this company Fortune 500. Fortunately, a strong candidate was ready to enter: James skinnerA long -term employee of the company who owned the role of CEO for almost eight years.
Surviving what could be a leading crisis, and even thriving in such turmoil, it didn’t just happen. As Korn Ferry case study Concerning McDonald’s noted: “The succession conductor produced by Skinner had begun to be reshaped six years earlier. The catalyst for change was commanded by the Board of Directors … [with] A succession plan that will detect two successors for each basic point – “a ready, a ready future”. The future candidate had to be ready in two years. ”
How has the visibility of the succession has changed
The good news for organizations today is the greatest visibility of CEO succession candidates in front of the Board of Directors. In the last two decades, a growing number of board has become more vocal for the desire to interact with company executives covered as potential CEO successors. For example, these executives may be invited to the dinner preceding the quarterly meeting of the Board of Directors or may participate in some of the discussions on the Board of Directors meeting.
This is a major change from the past, when the CEO can ask one or two of these executives to make a brief presentation, no more than 30 minutes in length, at the quarterly meeting of the Board of Directors. After that, these executives did not see or hear from.
Today, the greatest visibility with the Board of Directors helps to facilitate the overall leadership development in the company. For example, in addition to managing the succession of CEO, boards also want to learn more about how company executives are covered to take on key roles, such as head chief financial director, marketing chief and chief official. With a greater range and depth throughout the development of leadership and succession planning, the Board of Directors can help ensure that the company has the right people in the leadership pipeline. And this is good news for all involved.
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This article first appeared in Tower.
