Our Take: Planning for Success
The CEO succession planning landscape is likely to change significantly in the post-COVID-19 era. First, we may see a more competitive market for senior talent as several CEOs permanently exit the labour force following the trials and tribulations of navigating their companies through the pandemic. Second, we can expect an increased focus on ESG-related metrics in CEO evaluations. As the data shows, the succession rates between better-performing and worse-performing companies have narrowed, suggesting that factors other than financial performance, stakeholder engagement, and diversity and inclusion are becoming increasingly important to boards and stakeholders. Finally, boards must continue to be vigilant in investigating whistleblower complaints and swiftly dealing with CEO misconduct, given the disastrous consequences that failing to do so can have on investor confidence. As the demands on senior management now extend beyond the focus on quarterly earnings, boards must take the time to reassess their current strategies and better position themselves for the fast-changing future. It is essential to have a transition planning process that is not only robust enough to weather the volatile environment, but also clearly communicated to maintain investor confidence.
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Governance Insights 2022
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