Enlightened Corporate Governance

Board Succession Planning Services

Succession planning processes exist to guide the board of directors through the steps needed to ensure that the board identifies the best qualified candidates for the CEO position and then make sure that they are properly developed and positioned for succession when the time comes. Therefore, before developing an executive succession plan, the board first must develop and implement a comprehensive succession planning process.

Succession planning should be conducted in a methodical manner. For an experienced executive, establishing the process, identifying the obvious candidates, and completing the replacement tables are very basic steps of thoughtful planning. However, identifying and developing the CEO’s potential successors inside the corporation are much more difficult tasks. Like athletic coaches, business leaders must master the art of talent identification and development.

Succession Planning Challenges

1. Define the competencies and characteristics the board believes are required for the next CEO. The board should develop a profile that specifically identifies the skills, experiences, and attributes the directors believe will be necessary for the next CEO to have. The board also should define the desired personal leadership skills and individual personal attributes.
2. Decide whether an insider or outsider CEO will best serve the long-term interests of shareholders. The answer to this question usually is a function of preparedness and necessity. The succession plan should include a comprehensive evaluation of the talent within the company and also include candidates from outside the company.
3. Planning the successor’s personal development. The board must ensure that the CEO develops a comprehensive development plan for his or her potential successors. These development plans should be tightly linked to clear criteria established by the board for the next CEO at the time the development plan is made. Additionally, the personal development plans and personal performance plans should be inextricably coupled.

To learn more about our Succession Planning products and consulting services, and how XCEO partners with boards in their efforts to develop an effective succession plan, click here.

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