Succession planning is one of the most overlooked responsibilities of the company’s board.
That’s why the sudden departure of the CEO causes many a company to plummet—stakeholders lose trust, stocks go down, operations slow down, management loses direction.
Like an annual fire drill conducted so everyone knows how to behave during emergencies, an emergency succession plan should be reviewed and updated every year.
And yet, when I asked many board members about their organization’s succession plan, in most cases, all I got was a hasty checklist of people to contact and potential candidates. Even more disturbing, some boards didn’t have one at all.
When asked why they didn’t have a plan, the typical response was, “In an unexpected emergency, the board will convene to discuss how we’re going to fill the absence quickly and decisively.” Sounds like a script their PR team gave them.
By that time, any planning they do will be too late!
A REAL emergency succession plan consists of these steps:
1. Identify the current direction of the company, and decide if you want to continue that route or head a different way.
Before identifying the ideal skills and persona of the interim CEO, the board must first agree on the company’s direction. Remember, no amount of skills or experience will help, if it’s not in line with the company’s long term vision.
This is where personal agendas and the power dynamics of the board can affect the company. If they can’t set aside their differences, or can’t agree on the direction to take, they’d have a much more difficult time choosing a candidate.
After coming to terms with the company’s strategic direction, it’s time to discuss the profile of the ideal interim CEO. Create a job description, and then list the required skills, leadership history, and industry experience—all this should be based on where the company is headed.
2. Who in the executive team can get the people’s support?
While selecting the interim CEO is the board’s responsibility, the candidate’s acceptance in the role isn’t. After getting formally appointed, the new CEO must get the confidence of stakeholders and management.
When this doesn’t happen, upper management tends to question—and in some cases, rebel against the CEO’s decisions, which then lead to more confusion and political unrest within the company. On the other hand, when a chosen CEO gets the support of investors good things can happen.
Whoever you were grooming to be CEO under normal circumstances isn’t always the best choice. The would-be CEO may have been trained to continue his predecessor’s legacy, but what if the company wants to chart a new course? What if this candidate doesn’t have the skills you need, or what if the stakeholders doubt his ability? They may be a great choice if there is a long lead time to take over the CEO role, but not a great choice in a time of quick change.
3. Finally, decide on the interim’s tenure. How long will the interim CEO stay in position? The typical tenure of an interim CEO usually depends on how long it takes to find a permanent hire, and how much time is needed to get the new CEO up to speed.
In short, most interims are company baby sitters.
Not all the time though. Sometimes, interim CEO’s do so well they become the permanent CEO.
So that’s another thing to consider: Will the interim be eligible to assume a permanent role? If so, what does he have to do for that to happen? Creating performance benchmarks might help in this case, so is a voting session with board members.
No one enjoys the hurry up we have to make a decision routine. There is a way to avoid that or at least minimize the impact when it comes to succession planning. Losing a CEO can be catastrophic for an organization when unexpected and unplanned.
Start today by downloading 7 Steps to Successful Succession Planning. Read it and take the steps outlined. You’ll be in better shape should an emergency happen.
