CHAPTER 03 CEO Succession Trends and Best Practices
Succession Planning as an Ongoing Process: Governance Best Practices in CEO Succession Planning The key to an effective CEO succession plan is ensuring that it remains an ongoing process. Given the significant consequences that can accompany a leadership change, the best succession plans include both a long-term plan and an emergency plan to manage the risks and legal obligations associated with a sudden and unexpected departure. Here are some tips to keep top of mind: – Set up a committee. Establish a board committee charged with oversight of CEO and C-suite succession planning, and ensure the board’s mandate and the committee’s charter accurately reflect their respective responsibilities. This will help to ensure that the issue receives the requisite attention and does not fall through the cracks. – Create a working plan. Determine what the succession planning process will look like in both the short and long terms, including the search process that will be implemented (i.e., whether internal or external), the competencies required of a successor CEO, whether external advisers will be retained to provide an unbiased review of potential successors, and other procedures and milestones. Regularly review and update the plan in the context of the company’s evolving strategy and goals. – Listen to stakeholders and consider leaders’ perspectives. Discuss CEO succession plans, changes and developments on a regular basis both with board members and with the current CEO. Address the issue at quarterly board meetings rather than merely at an annual strategy session. Regularly solicit feedback from a variety of stakeholders, many of whom likely have their own expectations for the company and its leadership. – Maintain and update evergreen lists of internal and external candidates in real time. Whether the company plans to groom internal candidates or search externally, it is necessary to ensure there are people responsible for tracking candidates’ performance and progress and for monitoring market events that may influence these candidates’ willingness or availability to be considered in the future. Have contingency plans if the most logical successors are uninterested or become unavailable.
Given the significant consequences that can accompany a leadership change, the best succession plans include both a long-term plan and an emergency plan to manage the risks and legal obligations associated with a sudden and unexpected departure.
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Davies | dwpv.com
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