30 April 2010

Succession--A Strategic Decision

The selection of an organization’s chief executive officer, or CEO, is the most important decision a board makes. 

Boards carry the ultimate responsibility when it comes to deciding who will serve in this vital role. They need to make sure the CEO and leader will be one and the same. 

Beyond the CEO 

What is leadership succession? 

Succession planning or management is an ongoing process that boards, with the help of their chief executives, can use to create an environment for leaders to succeed from the very beginning of their terms until the cycle is repeated with their successors. (BoardSource) 

While the board cannot run the process, it can make sure it’s in motion. The need is for a wider focus than succession at the top. It’s getting the right person in the right place at the right time throughout the organization. Succession is a continuous process—a journey, not a destination. 

Planning for the future requires an ongoing effort to nurture those who show potential for increased responsibility. The board can ask periodically if this is being done and what are the results. Succession is strategy. The two are inextricably linked with the organization’s long-term goals and objectives. 
Avoiding a Bad Start 

According to our studies, the four biggest mistakes or misjudgments made by boards in the CEO search process are: 

1. Not being ready with a good plan so the search gets a timely start. 

2. Not clarifying what kind of leader the organization needs for the next 8 to 10 years. 

3. Not understanding the strengths, abilities, personality, leadership style, etc., of the top two or three candidates. This is essential in order for the board to project how this person would fit the culture of the organization and its various constituencies. 

4. Not letting go of any operational duties picked up during the transition once the new CEO is in place. 

Board Options 

Boards have at least two options in the search process: 

Option No. 1 

Conduct the search from within the board using the policies and procedures in place for this purpose. A “search committee” is the most frequently used term to oversee this work. 
The board is responsible for: 

1. Communicating to the search committee all input positive or adverse. 

2. Considering cultural nuances which influence the selection process of the CEO. 

Option No. 2 

Retain the services of an executive recruiter or consultant who specializes in this type of search. Even if this option is chosen, the board must retain the final say over the process. 

For those who wish to engage an executive recruiter, there are several things to keep in mind: 

• There is a need for an effective working relationship with the consultant. 

• Search is a consulting engagement and not just a recruiting activity. 

• Executive search may or may not result in the hiring of a CEO. It’s misleading for anyone to guarantee that a position will be filled as the inevitable conclusion of a search assignment. 

• The search is to help the candidates and organization discover whether there is a potential fit between their capability and the need at this time. 

Nature of the Leader 

What is the key to a successful search? 

Finding the one individual who stands out from the rest—whose unique skills make this person central to the organization’s success. While lists are never long, there may be several qualified persons for the position. However, the goal is to match qualifications with cultural fit. 

Even in turnaround situations. A record of accomplishment, style, and adaptability are all very important. But the real question is what can a candidate immediately contribute? Things to keep in mind… 

• Identification of duties 

• Responsibilities 

• Qualifications 

• Cultural nuances including fit What’s so important about a person’s fit? A close match with the organization is essential for legitimizing the selection process and internal working relationships. 

• Do the candidates have the right kind of experiences? 

• Will they live the purpose and mission? 

• If a turnaround is needed will the candidates have the emotional strength and discernment for this strenuous task? 

• Is there likely to be good chemistry with co-workers? The board? Customers? Lacking criteria by which to make a decision could lead to almost anyone who strikes the board’s interest being chosen. 

From a distance, nearly any individual can look good. Someone who makes a strong impression can be a terrible choice. Appearance, talent, and performance are not the same things. As studies show, human behavior is highly repetitive. 

It’s worth noting that frequent past behavior is the best predictor of future behavior. The way someone has acted, their past results, emotional responses—all these behaviors will repeat themselves in the new assignment. Leopards don’t change their spots and neither do individuals once they are in a place of authority and responsibility. 

In some cases, a delay in deciding on a new leader is better than a decision made in haste —even if imposing temporary hardships on the organization. This is why interims are an option for a board. 

Final Thought 

You don’t just hire a CEO; the organization gets a philosophy of life and worldview. These don’t always show up on paper. This personal dimension may not come up in the interviews either unless you are intentional with the questions. It’s worth taking time to know who the candidates are, not just what they have done in their previous assignments. 

Are the individuals the board is considering capable of learning, growing, and changing? How they continue developing as individuals, not just executives weigh heavily on their likelihood of future success. Better to think about this before the final decision rather than after the fact.