Boards oversee management on behalf of the shareholders. Therefore, CEO succession is one of the board’s most important responsibilities. Without the right leader, even the most innovative companies will struggle. The succession process a board follows can be challenging and time-consuming. In a recent survey, more than half of board members say they need to improve their CEO succession planning. Boards can get caught off-guard when planning for a change in leadership. This hesitation can result from the incumbent CEO and many directors’ reluctance to address this critical topic. The following information can help ensure the hiring process is as efficient and effective as possible.
What Should Be Considered Before Beginning The Process?
There are several things to consider before beginning the process of finding a new CEO. The company should expect the process to take approximately six months. This will not only help with planning for any unexpected issues but can ensure that you have the time to find the right candidate for the position. In some cases, a company may benefit from using a search firm. These firms can help find qualified candidates that have the potential to do well in the role. Additionally, a firm can help determine if any applicants are not qualified before offering an interview. This will ultimately help streamline the process.
Where Can A Company Find Candidates?
The CEO should regularly work with the company’s chief human resources officer to create a strategy that will help the organization develop a robust executive talent pool. Many companies will consider hiring a new CEO internally instead of completing an external search. Internal candidates will have a deeper knowledge of how the company operates, will be able to gain trust from the employees, and can ensure a smooth transition. This is why CEOs that were promoted internally are often more successful than those bringing in an external CEO.
While companies may find it more effective to only consider internal candidates, opening the position to both internal and external candidates is important. Not only can external candidates bring new, innovative ideas to the company, but they can be the fresh set of eyes needed. If a company has a strong pool of internal candidates, it should still consider doing a “market scan” of external candidates. This ensures that the person that takes on the position will have the skills needed to be successful.
What Should The Company Consider?
Once the plan has been developed, and a candidate pool has been established, the next step is to evaluate each candidate. Each candidate should be required to provide a full resume with adequate background information and references that the company can call to gather more information. This will not only provide a fuller picture of the candidate but can also help get honest feedback on the candidate’s skills. Once the information is collected on each candidate, ensure that the company’s board receives the information.
What Are The Obstacles?
One of the most common obstacles to successful CEO succession is the lack of consensus about the company’s long-term strategy. The board should agree on a system that will guide the company’s long-term goals and develop the necessary skills and experience to lead the organization. This process should be developed early on in a CEO’s time at the organization but should also be dynamic as the market conditions may change. The board can’t identify the ideal candidate for the job without regularly reviewing the company’s current capabilities.
The board also needs to identify the characteristics that make a leader a good fit for the company. This process should include regularly reviewing the company’s culture and developing a strategy to help the organization grow. The board will also want to know more about the company’s senior talent throughout the process and the best methods to accelerate the internal candidates’ succession readiness.
Once a CEO has been appointed, and the transition process has begun, adequate onboarding is crucial to help them get up to speed on the company’s strategies and goals. Aside from having the right people in place, the board should be able to provide the new CEO with the necessary time and resources to make the transition as efficient as possible. Doing so can increase a company’s chances of having a new CEO who is successful.