The changing of a CEO or other top-level executives is a daunting process for any organisation. These members of the organisation are paramount for implementing strategy and leading the rest of the workforce. Regardless of whether they choose to leave or are pushed, an organisation is left vulnerable if there is no process or person to provide a seamless transition in leadership and strategy.
Great CEOs can define an organisation. So, when they leave, it’s no surprise the boardroom and investors are somewhat concerned.
However, CEO and executive succession doesn’t need to be a fork in the road and an obstacle for growth. Instead, if handled correctly, can allow for a natural evolution into new leadership as well as new opportunities and development.
Although most would agree having a CEO succession plan ready is a wise idea, the reality is that very few organisations are actually prepared for such a day.
But, what’s actually meant by the term “succession plan”?
What is a Succession Plan?
A CEO succession plan refers to the process of transitioning between one CEO to the next. This is also relevant for other executive positions in the boardroom.
There is no “one size fits all” succession plan that an organisation can follow – instead, it is dependent on the specific requirements of that organisation as well as the market. This means the term can be quite ambiguous as the requirements, processes and investment will vary from one organisation to another.
Many reports have identified that poor succession planning can literally wipe billions off shareholder value for some organisations. In fact, there are very few events that pose such a threat to shareholder value than change in leadership.
Due to this, succession planning helps steady the ship during executive movement and helps limit any challenges during this period.
Executive Succession Planning Strategies
Understanding the progress of talent in the marketplace as well as in your organisation, and consequently formalising this into actions and processes, is an important part of succession planning. The right talent must be given the skills and experience needed for continual growth. Or, a thorough understanding of marketplace talent and its value must be acquired. This then must be aligned with organisational aims and direction. One of our core competencies here at Edward Drummond is helping organisations understand the value of talent and helping them find this top talent, even in crowded markets.
Successful succession planning should identify and illustrate where new leaders are emerging, both internally and externally. Only by doing so, will an organisation be fully ready to capitalise on finding the best successors to current executives.
Hiring a successor who has proven but outdated skills and approaches may not allow an organisation to flourish in the coming years. With an increasingly globalised economy and rapid advances in technology, CEOs and executives who show signs of thriving in future marketplaces may be a better choice than more traditional and “safe” replacements. As a result, many organisations can see succession and changing in executive personnel as a chance to realign themselves with future trends and opportunities that they may not currently be utilising.
Organisations must also value research and knowledge of the marketplace, both in terms of talent, but also opportunities and risks. This is something we pride ourselves on here at Edward Drummond, and ensure our clients are never faced with unexpected challenges or problems. Through processes such as market mapping, due diligence, benchmarking and expert witness, we can help provide valuable takeaways for boardrooms and executives to consider.
Tips for Succession Planning
Great hires are a necessity in any organisation, at any level. Hires in the C-Suite are no different. A new CEO or executive will be someone who represents the organisation wherever they go. As a result, they must share the values and culture of the organisation and be the biggest advocator of its services or products.
It’s less about a battle between internal Vs external candidates and more about finding candidates that can deliver the results needed by an organisation – wherever that candidate may currently be.
Organisations that have high employee retention rates often have a big advantage as they can see up and coming talent progress and experience new roles and responsibilities. This is a huge benefit when thinking about future organisational employee charts. Having a high retention rate is also very useful when creating a culture within an organisation that a CEO is required to lead.
Although things are likely to constantly change and evolve in an organisation, giving executive succession attention and thought, will ensure an organisation is better prepared for any possible change. Being able to be proactive is an advantage in all aspects of business.
The boardroom and its executives should also look to work closely together and gain experience of each other’s roles and talents. The members of this team should share compensation and responsibility as evenly as possible to create a truly dynamic and proactive team. This helps create a powerful C-Suite that is better attuned with others in the organisation. For example, having the CFO and CIO understand each other’s role, strengths, and even weaknesses, means that any trouble or challenge facing the organisation, such as CEO succession, and they can collaborate much more effectively.
Need Help Finding Top Executive Talent?
CEO succession planning and other challenges facing the boardroom, often come down to finding and acquiring the top talent in your market.
We help our clients find top talent in the marketplace to help them progress and grow. Whether that’s C-Suite executives or sought-after technical talent, we have a proven record of getting results.
If you’d like to learn more about our services and if we could help your organisation through acquiring future leaders and technical executives, or through one of our consultancy services, please don’t hesitate to get in touch.