Over the past decade there have been many articles written on the topic of CEO succession planning. When clients ask me for some reading to stimulate their Board’s thinking on CEO succession, these are the ones I usually recommend. The content of these four articles is as relevant today as the day they were published – if not more so. They are all well written and worth reading from start to finish. Below is a short synopsis outlining the key messages of each, along with a link to the full article. I hope these articles will contribute to your thinking about the work your board needs to do to manage a successful transition.
- Ending the CEO Succession Crisis, Ram Charan – Harvard Business Review February 2005.
Charan says that most boards are not doing a good job of CEO succession planning. He makes the point that the Board should drive CEO succession planning, while the CEO should provide consultation. He stresses the fact that the Board and company leaders need to develop a deep pipeline of leadership talent over many years to have a chance of producing some strong CEO succession candidates. He suggests that the Board define the 3-4 non-negotiable skills, experience, or know-how that they will look for in the next CEO. Charan goes on to say that the Board should conduct a rigorous process to assess internal and external candidates and the Board and the HR Committee should spend significant time on leadership development and succession planning every year.
- CEO Succession planning: The Big Hand-off, Theresa Tedesco, Financial Post magazine, October 29, 2009
In this article, Tedesco uses the results from numerous surveys and refers to well known stories to support the idea that boards are not prepared for CEO succession. Like Charan, she too says that boards need to take control of the CEO succession process, devote more time and due diligence to the issue, and not rely too much on the incumbent CEO to lead the process.
- Holes at the Top: Why CEO Firings Backfire, Margarethe Wiersema Harvard Business Review December 2002.
Though this article is focused on the poor track record of boards in hiring a new CEO after firing the old one, a key point Wiersema makes applies to all CEO successions: the need for the Board to understand the strategic position of the company and identify the key skills that will be needed in the next CEO. Wiersema cites some good examples of boards that did not do this and so, as a result, picked the wrong CEO.
- Changing of the Guard, Geoffrey Colvin – Fortune January 8, 2001
This is the story of how the GE Board picked the successor for Jack Welch. Though it contains much of the Welch zeal and colour, this article makes several points that all boards would do well to apply in their own succession process such as:
- The Board started the succession process many years before the succession was expected to occur.
- The Committee and the full Board spent many hundreds of hours identifying and tracking over time a long list of possible internal candidates, and winnowed that list down over the years.
- The directors spent many, many hours getting to know the candidates through direct observation and lengthy debate. They saw the candidates in the formal boardroom, at board social outings, and in their organizations
- The Board was very deliberate about the job experiences each candidate needed to develop in order for them to be stronger succession candidates