First Rule of Succession Planning – Have a Plan

I had a chance to talk with Hart Energy’s Joe Markman recently about one of the touchiest – and most important – jobs in the c-suite and the board room: succession planning. The just-published article is an interesting read and captures the sensitivities that businesses face ensuring seamless and consistent leadership.

Markman writes:

A lot can get in the way of a smooth, orderly transition. Sometimes it’s office politics, such as nepotism precluding a search for a qualified leader. Sometimes it’s conventional politics, such as new Brazilian President Luiz Inácio Lula da Silva choosing the CEO of state-owned Petrobras. And other times, it’s considered a conversation to put off for another day.

Indeed. I was happy to share some of my insights in the piece, which explored the right tactics (have a plan early …) and the wrong ways (wait until your CEO gets hit by a bus to start a search). Berry Corp’s Trem Smith described picking a successor as the No. 1 job of a business leader, and I have to agree, although it should not be a task left solely to the CEO.

The following are some excerpts from the article:

Boards without a plan in place when a CEO departs often turn to an internal choice just to keep the company going as is. That person, Ahmad said, may or may not be the best to lead the company. And that thinking ignores the complexity of choosing an executive to lead.

“It takes a long time,” he said. “It’s not easy. You don’t call the search firm one day and have a CEO candidate the next. So, my thought is, really, the earlier, the better.”

The article includes plenty of examples of how businesses can get it wrong. GM’s iconic CEO Jack Welch was allowed to hand-pick his replacement. During a process that stretched six years, Welch reportedly created an internal horse race for the position. After pitting executive against executive, there was a mass c-suite exodus when the selection of Jeff Immelt was announced.

More recently, Bob Iger returned to lead Disney in November after his handpicked successor, Bob Chapek, left after less than two years on the job. Iger reportedly undercut Chapek’s tenure by sticking around, hovering in the wings and acting almost like a shadow CEO. Igor is now tasked with – once again – selecting his own successor.

Click here to see the article.

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