CEO succession planning can be a significant challenge for leaders and organizations. The process of identifying and developing internal candidates to fill key leadership positions, including the role of CEO requires careful consideration, a long-term perspective, and proactive efforts from leaders to ensure a seamless transition and continuity in leadership.
According to Deloitte’s Managing Director Maureen Bujno and Managing Partner Carey Oven, the board’s role in CEO succession planning is a unique role and one of the highest-priority activities in which they engage. In a recent article, they propose the exercise of reflection about key questions for the board around CEO succession planning:
- What candidate qualities and characteristics should boards look for when selecting the next CEO?
- What about the process of CEO succession planning—what is the board’s involvement relative to other stakeholders?
- What is the best way to manage communication with candidates who aren’t selected?
- For those who are interested in CEO positions, what are the best ways to be competitive?
With this in mind, some helpful elaboration points are:
The CEO is typically a key figure in an organization, and their departure can create a leadership vacuum. Identifying and grooming suitable candidates to take over the CEO role requires careful evaluation of skills, experience, and leadership potential.
Identifying individuals with the right skills and potential to become future CEOs can be difficult. It requires a deep understanding of the organization’s needs, strategic direction, and long-term goals. Assessing leadership abilities and potential can be subjective and complex
Development and readiness
Once potential successors are identified, they need to be developed and prepared for the CEO role. This involves providing them with the necessary training, experiences, and mentoring to enhance their leadership capabilities. It takes time and resources to groom individuals for such critical positions.
Internal versus external candidates
Organizations must decide whether to promote an internal candidate or look externally for the next CEO. Both options have pros and cons, and leaders must carefully evaluate which approach aligns best with their organizational goals and requirements. This decision can have a significant impact on the organization’s culture and future direction.
Timing is crucial in CEO succession planning. Leaders need to anticipate and plan for potential CEO transitions in advance. Unexpected departures or sudden leadership changes can create instability and uncertainty within an organization. Planning for both expected and unexpected scenarios is a complex task.
Managing stakeholder expectations
CEO succession can have a significant impact on various stakeholders, including employees, shareholders, and external partners. Communicating the succession plan effectively and managing expectations is essential to ensure a smooth transition and maintain stakeholder confidence.
“The shifting geopolitical and economic context of today’s operating environment means prioritizing different qualities, such as openness to innovation, humility, and agility. Thus, as both board members and companies have become more adaptive, so too has the candidate selection process. As a result, some boards might consider casting a wider net and designing a selection process around multiple competitive candidates”, the authors conclude.