How to Develop a Good Management Succession Plan
by AccountingWeb on
By the Change Management Group To implement a successful CEO succession plan some critical steps should be followed to ensure a smooth transition to new leadership:
- Involve the Board of Directors. The board must not abdicate its responsibility or leave the decision to the incumbent CEO.
- Develop specific criteria for the new CEO. Directors must set criteria that are more than simply conceptual in nature. The criteria must be enough to distinguish one candidate from another. Criteria must also be forward-looking and reflect the company's strategy.
- Involve experienced, well-trained HR staff members. To get the greatest advantage out of this step, the company must have HR staff experienced in designing 360-degree reviews to provide real advice to senior level executives.
- Build candidate lists from outsiders as well as insiders. Some companies have done well with handpicked successors; however, a functioning board of directors will review both internal bench strength and external candidates, if only to get an accurate measurement of the company's succession planning.
- Review multiple sources. For both outside and inside candidates, boards must look to multiple sources. Good COOs, for example, do not always make good CEOs. Excellent CEOs for a particular company may come from any number of industries. The board must also be careful to use headhunters sparingly and rely on its own judgment.
- Interact directly with candidates. Some companies have taken technology too far, reducing or eliminating much of the human interaction that characterizes good succession planning. Interaction, often in the form of interviews, meetings, presentations and peer evaluations should start long before the incumbent announces his or her retirement.
- Design an ongoing succession planning process. Boards should always have a plan in place and should begin their work years ahead of an expected CEO transition. Senior staff should be evaluated quarterly by a sub-committee of the board. This process gives them the chance to bring in high-quality talent at middle levels and evaluate candidates for the most important roles.
All material contained herein copyright John C. Bruckman, Ph.D. ©2000-2004
You may like these other stories...
A top accounting guru’s compelling new measure for profitabilityA big challenge for investors is piercing management's feel-good, “it's all great if you leave out the bad stuff” earnings metrics to...
There is increased optimism about the US economy among business executives, as more are anticipating modest growth in recruitment, staff training, and targeted capital spending in the next year, according to results of a new...
To read more articles by Jeff Davidson, click here.One of my teeth is moving behind another, and it may cost me $6,500 to fix. I’m also facing obstacles professionally and personally. Even if I resolve the six to eight...
Upcoming CPE Webinars
BAR is an acronym for: Boundaries, Authority and Role. This simple tool will provide participants with a solid understanding of leadership essentials to improve their performance.
This material is designed to provide a start-to-finish overview of how to plan and complete high-quality small audits efficiently.
In this session Excel expert David H. Ringstrom, CPA shares numerous techniques that you can use to work with charts more efficiently.
Key Accounting and Reporting Issues for Nonprofits No. 1: Overview and Statement of Financial Position
This material focuses on non-profit organizations organization, accounting and reporting.