Nowadays, too few companies are prepared for the succession of their CEO. Even when they are, only one human resources director in five says that they are satisfied with the plan in place. There is no more important responsibility for a board of directors than ensuring the continuity of the business, preparing for the future and being ready, when the time comes, to replace the CEO.
Identifying and supporting the pool of potential candidates for a CEO post requires meticulous preparation over several years.
The need for effective leadership is vital and all studies show that a good corporate culture and organisational environment is needed to develop and retain leaders in companies.
The advantage of having a well-prepared succession plan is that it ensures a swift and smooth transition from one CEO to the next. Plenty of groundwork still has to be done even to reach this point.
First of all, the conditions needed for identifying internal and external candidates have to be put in place. The list of candidates must be reviewed at least twice a year. After that comes the phase of supporting internal candidates. The current CEO and all board members are closely involved in this second stage and must spend time drawing up a schedule to prepare for and select a candidate for the post of CEO. At the same time, active monitoring of external candidates must be started.
The final choice between an external and an internal candidate is often a delicate one. Board members may have conflicting opinions, all of which need to be taken into account. Consensus must be built in a meaningful way and everything must be done to ensure that this is possible. A successful succession plan results in consensus on the ideal candidate.
In North America, 55% of outside CEOs who departed in 2003 were forced to resign, compared to 34% of insiders.
AW Executive and its experts can advise you on every step of preparing a succession plan. Our experts are here to help you ensure the long-term success of your company. Avoid pitfalls and feel confident in preparing for the future. Whether you want to assess the effectiveness of your company’s succession plan or start drawing one up, we are here to help.