Closing the Barn Door

Mark Lonergan, July 12th, 2011

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:

  1. 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?
  2. 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?
  3. 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.

Les­son Learned

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.

Mark Lonergan

Founder & Managing Partner, Lonergan Partners

Specialties: Board & CEO placements

650-413-6006

[email protected]

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