CEO Succession Planning : Ensuring Leadership at Top

Need of succession planning

Pressure of stakeholders to be equipped with successor in any dire circumstances Situations can be:
Incapacitating illness or sudden demise of CEO Unsatisfactory Performance Surprise departure Normal Retirement

CEOs: Part of the Job from Day 1

Primary assumption is that the future is going to be different from the present Hence, Succession planning must begin with a well thought out strategy of where the market place and business are going

How Boards must lead the way

Involvement of Board is critical Reluctance of CEOs to plan their own obsolescence Exposure of potential candidates to boardBoard meetings and social gatherings

Retention of successors
Link his performance appraisal and compensation formula to the current CEOs and revising compensation to reflect changing responsibilities Packages tied to profitability

Incentives
Financial Psychological- Job satisfaction Organizational- More authority to exercise leadership

Developing a succession culture

Strong Involved boards Continuous exposure of top mgmt to board Encourage Next generation CEOs to gain exposure to outside board service, to the media and to the investment community Form executive committees to develop executives View SP as ongoing and real time process

Conti
Take out human drama- Make teams Link CEOs compensation to succession plan Pay Directors in stock & Equity & hence ensure Personal investment Periodically calibrate likely internal candidates for CEO against comparable outside leader Develop succession culture

Benefits of Diversity Focused succession Planning

Identifying individuals from diverse groups Diverse view point into decision making process Facilitate congenial work environment Multicultural environment