One of the most fundamental corporate responsibilities for firms, executed by the board of directors, is to engage in CEO succession planning. Powerful succession planning is a hallmark of high-performance organizations.
When you engage in CEO succession planning, it is best to have a solid plan of action you can implement. Flexibility and constant forward-looking revisions are key components of a succession plan. It is also critical that you have devised and are following a proven plan.
Typically, succession planning is coordinated over a five-year period. During our decades of working with various companies – including public and private firms around the world – our company has developed a highly successful process for CEO succession planning.
CEO Succession Planning
The first foundational activity is to exhaustively compile the roles, obligations, talents, and responsibilities of your future CEO. All those factors must directly relate to your company's future strategy. It is more important to understand your future critical path than it is to simply remember your past track record.
Then, it is imperative to identify internal candidates and develop a management development plan for each candidate.
These development plans need to have objective achievement criteria defined along with firm timetables. The development progress of each prospective future CEO will require active, ongoing, objective monitoring.
Finally, having a fallback plan consisting of tracking some external candidates will give your organization the flexibility you need should your internal candidates fail to develop properly.
While it can be destructive to bring in an external executive as CEO, it is occasionally proper and necessary to do so. However, a clear internal process combined with management development planning for your current executives will, in all probability, eliminate the need for outside talent.
Implemented properly, your internal CEO succession planning process will contribute to a well-established corporate culture. Additionally, your existing high performers will always feel that there is a progressive, open path to future advancement. Furthermore, they will clearly see that there is an opportunity to assume a major leadership role within your firm.
With global competition stronger than ever, the best competitive advantage may be keeping and growing your own future leaders so that the best human capital stays with you.
FPL Advisory Group is a global professional services firm specializing in executive and director recruitment, compensation consulting, and organizational, financial & strategic consulting. For more than 20 years, FPL’s consultants have acted as trusted advisors to senior leaders at companies throughout the real estate, healthcare and financial services industries. If you would like to explore whether our assistance would be valuable to your company, please call our office today.