Odgers Berndtson Offers Solutions to Managing CEO Succession Pitfalls
Here are four practical tips that may help you prepare:
- Think deeply, and honestly, about what your next CEO should look like. A common mistake is to look for a CEO with strengths similar to the previous CEO, when what you may need are different skillsets or capabilities. Get this out of the way early by asking every Board member to list the top five challenges they feel the next CEO will have to tackle, and by offering your own thoughts on the leadership qualities the next CEO will require. Make this dialogue with the Board a quarterly topic of discussion.
- Invite senior team members into the process by providing them with a leadership assessment, and using that assessment as the basis for creating a robust development plan. Share with them the qualities you’ll be looking for in a future CEO, and explain where they stand against those.
- Provide opportunities for potential successors to spend time with the Board, and to handle difficult assignments, like an M&A. Board and investor exposure is key to their growth and potential success as CEO.
- When the time comes, lay out a clear communication that outlines the Board’s reasons for selecting the new CEO. Invite your Board to spend as much time with the unsuccessful candidates as the chosen one.
A classic case of CEO succession done right is how Jack Welch, who himself had been chosen to head up General Electric in 1981 after a thorough internal search, prepared his own succession. Welch started with a list of essential qualities an “ideal CEO” should possess, and sharing those with the Board. He interviewed the top 500 leaders across the company, and submitted a shortlist of 23 to the GE Board who appointed Jeffrey Immelt. He is still in the role today.
Almost 40 per cent of newly appointed CEOs leave within their first 18 months. Regardless of how bright and competent your new CEO is, it wont hurt to provide them with an executive coach, at least for year one. The role of CEO is one that few people are prepared for. So many appreciate the added support once they finally step up to the plate.
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