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CEOs and board of directors are often unprepared for the difficulties of succession. With so much at stake for different stakeholders, politics and emotions come into play and can derail the effort.
Conducted effectively, the succession process creates a smooth transition from one CEO to the next with positive outcomes for the company and all stakeholders concerned. While every succession situation is unique, an effective process generally proceeds through four phases:
Situation assessment–deciding the timing of succession, determining the criteria for selection, and developing the candidates
Engagement–when the CEO and board determine their respective roles, whether an external search is needed, and what the impact will be on the senior team
Search and selection–Decisions need to be made about how public or private the search is, its scope, intensity, duration, and whether or not to use search firms. It’s critical to avoid either searching for a corporate savior or ignoring evidence that a significant change in leadership direction is required.
Transition–creating a connection between the new leader and employees, key customers, analysts, and other stakeholders.
To manage the process for more productive results and a higher return to investors, CEOs need to plan carefully; be objective in their assessment of the company’s leadership needs; pay attention to the rational, political, and emotional elements of the process; and thoughtfully craft a plan for their transition.
Authors: Roselinde Torres, William Pasmore
Source: Mercer Management Journal
Subject: Corporate Governance
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