Putting a new CEO in the driver’s seat of any organization is risky. This one individual has more impact on the success or failure than anyone else. So picking the right person is critical.
David Gibbons of Korn Ferry and Paul Gryglewicz of Global Governance Advisors describe a few ways to mitigate this risk. The first thing they suggest to do is define the organization’s destination and its roadmap to get there. In other words, what is its five to ten year strategic plan? Having a clear plan in place before switching drivers certainly minimizes one of the unknowns in the CEO succession process.
Each strategic plan is unique to each organization. Some plans look as straightforward and uneventful as the 401 Highway while others resemble old logging roads, with their white-knuckled twists and turns, and their catastrophic punishments awaiting the errant. High-technology firms and social media companies are two examples of this latter category.
Once the strategic plan is defined, the next step is to perform a ‘needs analysis’, defining the skills and talents required in the next CEO to make sure he or she aligns as close as possible with the plan. By defining this CEO profile, organizations can then set about finding suitable candidates.
Where are they to be found? In two places – internally and externally. In the past, many organizations either selected one of the vice presidents, typically the most senior of the lot, to fill the slot. Or they hired an outside search firm.
Today, more organizations are implementing their own ‘talent pipeline’ programs to identify high potential employees and start grooming them as early as possible for leadership roles. This program typically extends well beyond the CEO and other C-level executives to include several management tiers. Some include many non-managerial candidates as well, conceivably spreading out to every employee. By doing so, they ensure the pipeline is adequately stocked with capable candidates who can comfortably fill any vacancies that may crop up – be they anticipated or precipitated.
These leadership development programs vary depending on the level at which the candidate currently resides. For example, a C-level executive is groomed quite differently than his or her immediate reports, and so on throughout the organization. Each person is trained to assume positions deemed to be immediately ahead of him or her as well as promotions into completely different departments and divisions. This is particularly important for those organizations that are geographically dispersed.
Having a leadership program gives the organization a common vocabulary for talking about what it requires in its leaders at all its various levels. It also establishes a consistent discipline for assessing leadership potential and actively managing the talent pipeline for the organization as a whole – thus managing succession for all key positions.
It is highly recommended this plan, including the strategic portion, be reviewed and recalibrated on at least annually in order for it to keep pace with other variables such as industry trends, market dynamics, competition, technology, social media, regulatory changes, workforce diversity, transparency, etc. As these change, so too must the strategic plan and subsequently the talents and skills of the leaders.
It could happen that there are no suitable candidates internally, particularly if the organization is in trouble and needs to make a significant change in its leadership platform and/or its strategic direction. The good news here is there are plenty of capable candidates available, and they come with no history with the organization, thus no debts to repay and no baggage, allowing them to start with a clean slate. This is useful for organizations in which significant changes must be made in order to get the organization out of the ditch and back on the road to success.
The potential not-so-good news with hiring outside talent is the candidates are relatively unknown and therefore a higher risk.
It’s worthwhile keeping an eye on good external candidates though, even during the non-hiring phases as they can serve as benchmarks for their internal counterparts. And, if the need should ever arise whereby no suitable internal candidates immediately available, this external pool serves as a prime secondary source.
Organizations with formal CEO succession processes in place tend to be those that have made leadership development a priority. They take leadership and employee development seriously, baking it right into their cultural DNA. Its presence can be found in their vocabulary and their processes. They speak it and they do it. They know their success hinges on them having the right people in the right positions, all executing on the right strategy. They know the value of having qualified drivers in each position and they wisely invest to create the best.