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
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