"Obviously, this decision was a hard one for me to make. Why talk about this today? It gives us the time to make a strong transition," said Bill Gates when announcing his departure from a day-to-day role at Microsoft Corporation.
CEO succession gets a lot of attention because leadership transitions affect organizational continuity and robustness, talent retention, customer retention and shareholder returns. Boards of Directors are focusing on building a process that creates visibility, accountability and greater control and alignment for all involved.
Here are six things to do in structuring a leadership succession planning process:
1. Start early. At least a minimum of three to five years prior to the expected CEO transition date. It is even better if your start as soon as the new CEO takes charge---when it's less personal.
2. Know what you need. Directors are becoming more definitive about the qualities they expect in the CEO. These expectations are driven by strategy and the strategic requirements for the organization. It is essential that the board and CEO work together to review and discuss the selection criteria. When directors work with management to define strategic requirements, everyone gets in tune with the process.
3. Create the right experiences. Firms with a clear talent development strategy have an edge in developing a good pool of candidates. The next CEO candidate might be in his or her 40s, and his or her successor could be in their early 30s. Giving the potential candidates assignments to broaden his/her experience develops the versatility of the future leaders---and pressure-tests them for additional responsibility.
4. Build talent architecture. Succession planning, talent assessment and talent development are "in." More explicit and well-managed talent management processes include multigenerational or pipeline thinking, strategic external sourcing and specific development opportunities for the top executives. The processes blend strategic engagement, education, feedback, mentoring and executive coaching.
5. Stay connected. Consistent "get-to-know-the-candidates" in a range of settings provides informal connection and helps directors understand the capabilities compared to the expected and required strengths. Onsite visits provide directors with a better sense of who the candidates really are.
6. Use the process to build influence and capability. Staying connected creates alignment. Engagement and knowledge improves the ability of all parties to contribute and make a difference. The effectiveness of a CEO succession process depends a lot on what the CEO is doing or not doing. If the CEO is not out ahead of the succession process, the board has to ask that it be done.
Source: Consulting July/August 2006