Succession: Are You Ready?

Part of Harvard Business Publishing’s “Memo to the CEO” series, the book packs a good deal of insight into a highly readable, almost chatty package. At 125 pages, it is a little gem, an indispensable handbook in the spirit of William Strunk Jr. and E.B. White’s classic “The Elements of Style.” Despite its often philosophical tone and provocative style, Goldsmith’s book is eminently practical. It reads like a personal letter from a candid and trusted friend who clearly has the interests of its CEO audience at heart.

The book guides the CEO methodically through the process of making the decision to leave, preparing for the transition, choosing and developing a successor and, finally, passing the baton. Its principal instructions to departing CEOs are: be sure you know what you want; maintain your dignity; help your successor and your organization succeed; leave a positive legacy; and move on in a healthy, productive way.

Making the Decision to Leave

An authority on how leaders can achieve positive and lasting behavioural change, Goldsmith clearly knows the CEO psyche and deals upfront with the weighty issues of ego and motivation. He bluntly advises CEOs who are considering their exit to confront any demons they may harbor. “Being a ‘used-to-be’ CEO isn’t the same,” he warns. “To be honest, it isn’t even close.” Your sense of happiness and self-worth may be much more wrapped up in wealth, perquisites, status, power and work relationships than you are willing to admit, he says. “If you cannot make peace with losing [these things], don’t retire!”

Nor should CEOs be seduced by the mythical allures of rest, relaxation and more quality time with family, Goldsmith says. While these are necessary for a healthy life, they are not enough to sustain a post-CEO life, he warns.

“If retiring and playing golf were really more fun than being a CEO, you would already be retired,” Goldsmith writes. “You will probably have too much drive and ambition to be a successful ‘retiree.’ ” While his experience is unquestionable, Goldsmith is not entirely convincing on this point. He skirts the issue of what is to be valued in life, and correctly so; it is the subject of a different book. This fundamental question aside, Goldsmith encourages CEOs to consider their post-CEO options early and realistically, well before they leave their current posts.

“Don’t get overly enamored with yourself when you start looking for the next great challenge in life,” he writes. “[It] might not be as easy as you think. Get real offers — with real salaries, real job descriptions, real co-workers and real board members.” Realistic decisions cannot be made based on vague, idealized scenarios, he observes.

Choose the Right Successor

Goldsmith also gives some tactical advice on the topic of choosing and developing a successor. Frequently, but not always, a successor should be chosen from within the company, he says. External candidates do make sense if the organization is seeking a dramatic change in corporate culture, it is facing a sea change in market conditions or it does not have the luxury of time to develop a new chief executive.

However, hiring a name-brand CEO from outside who does not know the internal workings of a company, nor possibly its industry, is risky, Goldsmith warns. Failure can be costly in terms of money, morale, the integrity of internal operations and the company’s reputation. Choosing and developing a successor from within is more likely to produce continuity of vision and send the right message throughout the company.

“[It] shows that you, as CEO, have made the same effort to develop internal talent that you are asking from everyone else,” Goldsmith says.

Goldsmith also underscores the importance of the input of key stakeholders — the board, peers, employees and major customers — in choosing a successor. While acknowledging that these stakeholders’ judgments may be based on incomplete information and their own agendas, Goldsmith cautions that their lack of participation could derail a new CEO’s chances of success.

Indeed, Goldsmith emphasizes the need for any successful candidate to be highly attuned to the political aspects of assuming the CEO mantle. Carelessness about what they say to whom and how they say it or about their demeanor in meetings can undermine otherwise stellar performances. “As the world has changed, the role of the CEO has changed,” he says. “The bad news is that you are under far more scrutiny and pressure than ever before.” With the advent of the Internet, disaster is just a blog post or cellphone-camera upload away, he says.

This highlights a potentially disturbing aspect of what it takes to become a top executive today. That is, sensitivity and deference to constituencies may be overemphasized such that they trump ability and job performance. But, this concern too strays beyond the scope of Goldsmith’s book. While issues of succession inevitably introduce questions about future leadership, the focus here is on how a CEO can step aside while protecting her own and her organization’s best interests.