The following is an excerpt from my article, What Happens When CEOs Leave?, published in the Winter 2009 issue of M World, a publication of the American Management Association.
The baby boomer retirement crisis, which is no longer just looming but well under way, makes CEO departures an increasing reality—a reality that apparently has yet to sink into the minds of those responsible for making succession decisions. This is evident because companies are still not creating the adequate bench strength they need behind retirement-eligible CEOs.
Since boards share responsibility for organizational health, governance, and succession, it is part of their job to guide succession planning—not in the sense of micromanaging but as partners with the leadership team. A prerequisite for succession planning is a board whose contribution is balanced—neither taking a hands-off, onlooker approach nor meddling, which will be perceived as a lack of trust in the CEO. A board that takes its governing role seriously and has candid, honest communications with senior leadership will stay alert to:
- An impending departure of the CEO
- Growing dissatisfaction within the senior leadership team
- A CEO who is getting off track or is making mistakes reading the
company’s markets
The biggest mistake companies make in developing leaders is a one-track approach when they move one individual from position B to position A. The individual appears successful on the surface and, through superb presentation skills, has cast a spell on superiors. Soon after the promotion, however, it becomes apparent the individual lacks the most critical leadership skills. If that person happens to be the CEO, it can be fatal for the company.
Two actions can prevent promotions due to this “enchantment factor.” One is creating a talent pool. The other is thorough assessments. When a dynamic executive waves a magic wand, which leaves everyone enchanted, say “Time out!” First evaluate the individual’s entire repertoire—not just technical abilities, but leadership and people skills—through objective assessments such as a 360-degree feedback instrument and careful observation. The strengths and weaknesses identified in the assessment guide the creation of a realistic development plan as part of a comprehensive succession planning process to build meaningful and sustainable bench strength. Again, keep the advancement process competitive by identifying and developing all similarly talented individuals, not just one who happens to stand out.
