Russell Reynolds Associates: Beyond Presumptive Nominees - The Benefits of Strategic CEO Succession Planning
Approximately five years before the CEO of a major European insurance company planned to retire, the board began considering potential candidates to fill his role. Eight internal executives rose to the top, and subsequently went through in-depth assessments of their strengths, weaknesses, and psychometric profiles. A year before the end of this process, only two executives remained in the running.
The two had very similar profiles, with a few key differences. The more experienced candidate had been a top choice for years; he knew the company history inside out and would have had no trouble executing on the strategy as it then stood. The less experienced candidate checked fewer boxes but showed much greater psychological potential to broaden his leadership mindset and adapt to the competitive landscape the company would face in the future.
If the board had to make its decision immediately following these assessments, it would have almost certainly chosen the more experienced candidate. With time on his side, however, the sitting CEO chose to help the less-experienced, more innovative candidate close his experience gap by putting him in charge of the company’s most challenging business line and coaching him to success. By teaching and training next-generation talent, the incumbent CEO was able to increase the number of viable options for the board to consider as a replacement. Ultimately, the less-experienced executive flourished in his new role and was appointed CEO by the board.
Why do so few companies tackle succession planning? As governance experts have aptly noted, it is similar to funeral planning: inevitable, but rarely urgent – until it is too late.
Read the full article from Russell Reynolds Associates, which addresses these topics:
- 2 key actions that set thoughtful CEO succession plans apart from unplanned CEO replacements
- The benefits of effective CEO succession planning
- Barriers to success
- A CEO succession planning timeline