4 Questions to Jump-Start Your Board’s CEO Succession Planning
Given the crucial importance of CEO succession planning, how can boards make sure they get it right? These four questions can help create a useful framework:
1. What will be the requirements for success in the next CEO?
The requirements are dictated by the future business strategy, so look beyond the success formula of the current CEO. When it comes to CEO selection, it’s not a question of an abstract set of general qualifications, but rather a set of capabilities that equip the future CEO to deliver on the right strategic priorities for that company, at that time. The critical factor is matching the individual’s competencies, experience and personal leadership skills with what the organization requires in a leader at a given time and looking ahead to the future.
2. Who’s in the running to become CEO?
You probably have multiple future CEOs in your organization if you think three generations out. Ensure plenty of time to determine the leading contenders—they may not be who you think they are. If identifying and promoting internal candidates is the goal, we recommend starting five years ahead of a planned transition. When there are no strong internal successors, the board can significantly reduce the risk of new CEO failure by bringing a successful external candidate in early—years prior to a planned succession—to learn the ropes and allow the organization to gain a level of comfort and confidence before he or she takes the helm.
3. How do I know if these candidates have the right stuff to be CEO and what the gaps are?
You’ll need input beyond the current CEO and CHRO. It’s important to distinguish between the hard-wired dispositions, motivations and interests that make people who they are and the learned competencies and experiences that describe what they do. While the “who” are more “set,” they are correlated with best-in-class CEOs, and self-awareness can be enhanced to apply them more effectively. Given sufficient time, deficits may not necessarily mean putting the kibosh on a given candidate, but may represent an opportunity to bolster skills and experience that will be needed to tackle a CEO agenda.
4. Once we’ve identified gaps in essential skills and experience, what can be done to remedy deficits in time for succession?
Accelerated opportunities to use skills on the job will be essential, and don’t neglect the harder-to-assess leadership skills crucial to success as CEO. Senior executives who have been identified as future leaders may require individually tailored programs that will provide the growth and broadening experiences they will need to round out their development and prepare them as potential CEO successors. Depending on a company’s strategy and the future CEO profile, that may mean experience in specific markets or product areas; cycling through other functions; or a coach to work on personal leadership skills. When succession is within sight, accelerated development support can help close any remaining gaps.