PHILADELPHIA, PA, April 15, 2009 – While selection of the CEO may be the single most important decision any board of directors makes, new research from Hay Group, a global management consulting firm, found that today’s CEOs feel their role in succession is more important than ever. The research, which was published in the March/April issue of Chief Executive magazine, found that CEOs play a critical role in partnering with the board on succession planning, developing a pool of candidates and mentoring candidates to the point that they can successfully step into their shoes. The research will be discussed in depth at a panel of CEOs and board members in New York City tonight.
Hay Group’s research was based on interviews with nearly 20 sitting CEOs. The interviews, conducted during late 2008, uncovered six dominant themes:
1. Develop internal candidates
Nearly all felt it was incumbent on the CEO to ensure that there was an internal candidate pool developed for the board to consider so as not to be forced to go outside the company. While there are situations where an outside candidate may be preferable, most felt that the learning curve for an outside recruit can be steep and the progress of the company may slow while a new CEO from the outside learns the culture and the people.
2. Mentor CEO candidates
In interviews conducted by the authors of the article, CEO Succession Planning in Practice, by Hay Group consultants Beverly A. Behan, Jeff Kirschner, PhD, and Susan M. Snyder, many CEOs pointed out that one of the most critical roles they play in succession planning involves mentoring internal candidates and preparing them for leadership.
3. Manage ‘horse race’ dynamics
When asked what worried them the most about CEO succession, most CEOs expressed concerns about creating a ‘horse race’ dynamic and losing valuable executives who were ultimately unsuccessful in securing the top job, or who choose to leave because they feel they are ‘out of the race.’ “Starting the process early and handling it professionally – including assessment and development opportunities for all candidates – can help minimize the negative impact,” says author and Hay Group consultant, Susan M. Snyder.
4. Provide the board with meaningful exposure to candidates
The CEO needs to find opportunities to give the board meaningful exposure to internal succession candidates. “Attending board meetings, one-on-one meetings with board members, events and having board members visit CEO candidates at their worksites are all ways to give board members more exposure to the possible future CEO,” says author and Hay Group consultant Jeff Kirschner.
5. Giving candidates board experience
Working with the board is probably one of the most essential components of any CEO’s job. Yet most internal candidates will have relatively little board experience. As such, building a succession candidate’s capabilities in working with a board was viewed as a critical area that CEOs need to focus on in preparing their successors. Beverly A. Behan, author and Hay Group consultant notes, “Many of the CEOs we spoke to found that if they wanted to give their successors the opportunity to sit on the other side of the board table – namely the experience of sitting on another company’s board – they needed to become actively involved in helping them to find a board seat.”
6. Five years out is not too soon to start
Interviewees emphasized the importance of starting early in terms of CEO succession planning – at least three to five years prior to the anticipation of the actual change in leadership. In fact, many of the CEOs interviewed indicated that they began working with their boards on CEO succession planning only shortly after taking on the CEO role themselves.
For more information or to arrange an interview with one of the authors, please contact Mitch Kent via email or at +1.215.861.2315.
About Hay Group
Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.
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