I was recently asked by the Board of a large public technology company to discuss that company’s succession plan, a process that started with the current CEO out of the room. The company had received a real shock four months earlier, when their CEO was nearly lured away to a larger competitor, a move they stopped with a counter-offer and a new contract for the CEO. Crisis averted, the Board was looking for answers to protect themselves and their company in the future.
I have only three questions for Boards when we engage on the process of CEO succession. They’re worth repeating here:
- Who are the extraordinary executives you already have inside the company? Have you benchmarked these execs against others in your market? What objective measures do you use to determine their status as exceptional execs?
- Who on the Board is specifically charged with responsibility for staying close to these execs? How well do you know them? Do they participated in Board meetings? Analyst conferences? Company events?
- What is your plan for developing those people so that they’ll be ready when the time comes? What cross-functional and cross-geographic assignments have they had? Do they have coaches? Do they have mentors on the Board and in the CEO office?
The answer for my client was the same as it is for many public companies today. The next-level of senior management was poorly equipped to become CEO of that or any other company. When the incumbent leaves, the board will almost certainly need to use a firm like Lonergan Partners to recruit their next leader from the outside.
Succession planning starts with staffing the organization with amazing people, folks ready to be groomed for promotion. It cannot start after the CEO has tendered his resignation.