Effectively Managing CEO Succession

Most corporate boards make two critical mistakes when it comes to CEO succession.

First, their boards fail to make it a continuous point of discussion, and so it devolves into a reactive, episodic exercise that typically excludes any semblance of creativity, risk-taking and inclusion.

Second, they fail to understand that CEO succession is the business process most subject to internal and external influence, politics, ego and reputation building.

Over the years, numerous studies have revealed that a surprisingly high number of global corporations lack a formal, ongoing plan for CEO succession. Others don't even have a crisis plan for dealing with an emergency involving immediate succession for the CEO - the proverbial "hit by a bus" contingency plan.

Correcting this requires actual board governance, and a demonstration of the board's serious intent to institutionalise CEO succession discussions on the board meeting agenda, make it a priority and do more than pay the topic lip service.

Boards must also realise just how influenced CEO succession is by their member Directors, by the outgoing CEO, by candidates for the role, current executives, executive search consultants and other advisors, such as those who perform board evaluations.

For this reason, the board must ensure it doesn't cede control by handing the process over entirely to any one of these parties. Rather, it must orchestrate a process that is inclusive yet one that also clearly defines the contributions and roles of each party.

CEO succession is clearly a case of quality in, quality out. You simply can't maximise quality and maximise your succession options when all you can do is scramble to react or simply don't understand all the different influences on the process and the result.

As passionate experts in the executive search and leadership consulting industry we build leadership teams for our clients every day. Learn more about TRANSEARCH International and our wide-ranging approach to leadership acquisition and management assessment.

Navigating To The Boardroom. Thriving When You Get There

The call to serve

For many global executives, an appointment to the corporate boardroom as a non-executive director marks the pinnacle, defining moment of their business careers. The call to serve in such a critical governance position is an invitation many accomplished leaders deserve, but few actually get to savour. It is, most often, the result of exceptional business performance, purposeful relationship building and career planning, and a reputation forged by hard work, commitment and a superb reputation.

Yet, the historic profile of a compelling board candidate - and a successful non-executive director - continues to morph into a far more complex and time-consuming role than ever before. The non-executive director's role is the subject of growing scrutiny by activist investors, the media and politicians alike. If getting to the boardroom isn't enough, thriving once you get there is a challenge only the most accomplished and determined global executives will realise.

Existential threats

The potentially existential threats to today's corporate boards - and the historic view of effective corporate governance - come in a variety of forms these days. These include:

  1. Bids by activist investors to gain access to the corporate proxy, essentially using it as a vehicle to nominate their own director candidates
  2. Mounting threats posed by cyber-security breaches, often targeting corporate records of customers' credit card and personal data, and exposing companies and their directors to damaging media headlines and extensive data recovery and other costs
  3. The increasingly complex nature of corporate finance, including the shell game of classifying corporate revenue under a variety of labels, leading to the obfuscation of the facts and confusion among directors
  4. Challenges related to effective CEO succession and compensation, which can turn from highly politicised, somewhat "untouchable" topics for sitting boards to an organisational crisis faster than most directors realise
  5. Being seen as disconnected from stakeholders.

Calls for reforms in corporate governance have moved some governments to legislate the composition of today's non-executive boards, reserving a required quota for female directors. Further, calls to diversify today's boards continue to mount and put those boards built purely on "the good 'ole boys club" under increasing pressure to seat new members who reflect the company's consumer base.

The rules of the game are changing

A stellar reputation, superb business acumen and experience, and exceptional relationships are still very much the same things that can take your executive career to the non-executive board. But the job description is changing. The non-executive's role has become a time-consuming responsibility, and one that requires an increasing amount of homework, independence and due diligence just to keep up with the pace of change and reform.

The human, interpersonal dynamics that shape the very function of today's boards remain critical to success in the boardroom. So, too, does the open-mindedness that moves that silent voice inside to remind you - either as a new director or a veteran of the boardroom - that the rules of the game are changing and those best able to adapt are the ones most likely to thrive in the future.

As passionate experts in the executive search and leadership consulting industry we build leadership teams for our clients every day. Learn more about TRANSEARCH International and our wide-ranging approach to leadership acquisition and management assessment.