CEO Succession

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CEO Succession

Companies need to have a succession plans in order to retain talents, to grow their business. But especially for the CEO. This is a most important issue; it is a going concern for the company.
The succession of the CEO should already be considered and incorporated at a high level in the policies when the company is created. All the owners and partners should agree on the procedures for such succession plan which addresses when and how to resign the CEO.

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		1 Nihad Almahrooq Consultant, Saudi Arabia
	CEO Succession Planning Succession planning is necessary for positions of this magnitude and for others as necessary. Especially when a stakeholder has a preamble intention; otherwise it is bad management and will have back fire effect.

		0 Olaomo Ezekiel Ademola Student (University), Nigeria
	Reasons for CEO Succession Planning CEO Succession planning is so essential for any organisation because of the following reasons: 1. Tradition: the successor must understand the organisation's ethics and traditions to a large extent 2. Policies 3. Mission Statement: 1. and 2. above should be clearly understood; the importance of the organisational mission statement must be well articulated. The successor must understand, appreciate, run with, and promote the mission statement of the organisation. 4. Other reasons depending on the organization.

		1 Ma Angeles C Fernandez B. Business Consultant, Mexico
	CEO Transition Planning When an organization is transitioning from one CEO to another, such process is always critical for any company. A smooth transition is essential to keep all stakeholders on the same page, such as investors, customers, employees. If this is not carefully prepared, planned, and executed, the message to the markets is very bad and also employees and customers become nervous. This may cause serious problems to the company. That is why I think that the Board should be completely involved and aware that it is its responsibility to oversee and lead this process.

		2 Jaap de Jonge Editor, Netherlands
	Opt for a Novice or Experienced CEO? Executive recruiting firm Spencer Stuart performed research among 800+ S&P CEOs appointed over a 20 year period. CEOs with earlier experience as CEO are outperformed in the medium and long term by the ones without it. Why? Related LearningHow to Choose the Right Type of CEO Based on your Company's Situation? Chief Executive Officer Knowledge Center According to the researchers, the CEOs with earlier CEO experience tend to fall back on the playbook from their last job, are overly concerned with cost-cutting, and are less adaptable than first-timers, who have a longer-term orientation, focus more on top-line growth, have a more curious, flexible mindset, and also stay longer in the role. So boards are wise to not fall in the risk avoidance trap of focusing on the seemingly safest choice of the CEO with role experience (unless short-term results are looked for). Certainly in current times of rapid and major changes. Source: Claudius A. Hildebrand, Cathy Anterasian and Jordan Brugg, "Predicting CEO Success: When Potential Outperforms Experience"

		1 Jaap de Jonge Editor, Netherlands
	CEO Succession: Increase of Division Heads According to the ongoing Spencer Stuart study on CEOs mentioned in my previous comment, in 2020 77% of new CEOs of S&P 500 companies were internal candidates. Interestingly, in 2000 76% of those internal promotions used to be COO before there appointment. In 2020 that last percentage decreased to 38%, while 36% of internal promotions are now former division (SBU) heads and 9% former CFOs. According to Claudius Hildebrand, head of CEO Data and Analytics at the recruiting firm, the big increase of former division heads is due to less leadership focus on operations and execution as was the case in 2000 with popular concepts like Kaizen, TQM, and Six Sigma. Divisional leadership positions are perceived as combining experience with a full P&L responsibility with managing complexity and experience in spotting strategic opportunities and market trends. Source: Hildebrand, C.A., Stark R.J. and Charlesworth S., "The Last Mile to the Top: Future CEOs Who Beat the Odds" as referred in HBR Jan-Feb 2022, pp. 17-20.

		2 Jaap de Jonge Editor, Netherlands
	Board Responsibility in CEO Succession Boards should ask their CEO at least annually for a shortlist of ±3 potential successors (if one were needed right away), as well as who will be ready in say 1, 3 and in 5 years. The shortlist should include brief PROs and CONs per person in the eyes of the current CEO.

		1 Jaap de Jonge Editor, Netherlands
	CEO Succession A good idea is to proactively bring on a few highly engaged (motivated, knowledgeable) long-term directors and empower them to lead the CEO succession process. Fernandez-Aráoz, Green, Iqbal, and Nagel, “Making Family Businesses Great in Perpetuity”.