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By Ram Charan
CONTENTS Biography of Dr.Ram Charan Abstract Troubles How to succeed at succession? Conclusion .
He earned MBA and doctorate degrees from Harvard Business School.Ram Charan Dr. Charan was encouraged to pure it. After receiving his doctorate degree. Dr. he served on the Harvard Business School faculty . where he graduated with high distinction and was a Baker Scholar. He earned MBA and doctorate degrees from Harvard Business School When his talent for business was discovered. Charan was encouraged to pursue it. Charan's introduction to business came early while working in the family shoe shop in the small Indian town where he was raised. Dr. He earned an engineering degree in India and soon after took a job in Australia and then in Hawaii.Biography of Dr. When his talent for business was discovered.
Ram Charan is a highly sought after business advisor and speaker famous among senior executives for his uncanny ability to solve their toughest business problems For more than thirty-five years. DuPont. Thomson Corporation. Verizon. CEOs. Dr. Bank of America. and senior-most human resource executives often seek his advice on talent planning and key hires . KLM. Novartis. Dr. Honeywell. and MeadWestvaco. Charan has worked behind the scenes with top executives at some of the world's most successful companies GE. He has shared his insights with many others through teaching and writing Boards.
Choosing a CEO should be not one decision but an amalgam of thousands of decisions made by many people every day over years . and outside recruitment.Essence of the topic The CEO succession process is broken. Many companies have no meaningful succession plans. two out of five CEOs fail in their first 18 months The problems extend to every aspect of CEO succession: internal development programs. and few of the ones that do are happy with them CEO tenure is shrinking in fact. board supervision.
suggest that they not recruiters drive the search process by defining specific requirements and vetting candidates .How to find a CEO who will serve your company long and well? Develop a deep pool of internal candidates and keep it well stocked through a solid leadership development program. And if directors are considering outside candidates. Ensure that the board devotes sufficient time to CEO succession identifying promising candidates early in their careers and getting to know them personally.
As perennial performance powerhouses such as GE and Colgate-Palmolive demonstrate. The call for a new leader could come as soon as tomorrow . Start investing time and energy in your firm's succession planning today. nothing affects a company's future more than CEO succession.
partners. Booz Allen reports. In Europe. compared with 55% of insiders .Troubles? With Outsiders: External candidates are in most cases a greater risk because directors and top management cannot know them as well as they know their own people CEO selection is something of a batting average: Companies will not hit successfully every time. and strategic position. compared with 34% of insiders. New leaders import new teams and management styles In North America. 70% of departing outsiders got the boot. More consecutive outsider outs can have a devastating effect on employees. 55% of outside CEOs who departed in 2003 were forced to resign by their boards.
The problem manifests itself as a dearth of senior managers. Almost half of respondents to the CLC survey had hired a third or more of their senior executive teams from outside. insiders are not uniformly good ones. . With CEO development Many organizations do a decent job nurturing middle managers. With Insiders: Boards must remember that just as outsiders are not uniformly bad choices. but meaningful leadership development stops well below the apex. In certain situations. internal candidates actually present the greater risk. Rather. 45% of all respondents judged that it would take too long or be too expensive to develop successors internally. for which companies must increasingly shop in other neighbourhoods. but only 22% of those did so because they considered external candidates irresistibly appealing.
With Recruiters: • Executive recruiters are honest and highly professional. Just three recruiters control some 80% of the Fortune 100 CEO search market (a single firm claims fully 60% of it). • At the same time. and one or two people within those companies direct the most important searches. helping the search committee to get so they can extract the criteria they need while keeping requirements broad enough to cast the widest talent net possible. Recruiters must satisfy their clients yet also manage them. One reason is concentration. they can wield disproportionate influence in CEO succession decisions. Still. . board members' inexperience and consequent inability to precisely define their needs makes recruiters' task difficult.
small internal organizations that exercise a candidate's Practice & Learning muscle Though brilliant and articulate. the candidate has no experience running big businesses in general or this type of business in particular. create jobs large projects.How to succeed at succession? Bolster Internal Leadership Development: Very few company's leaders will ever be qualified to run the firm. The board is considering creating a deputy position in its largest division for him and making the current division head his coach granting the coach a bonus if he ensures his successor's success . more complex Practice & Learning centres. Move candidates through positions requiring responsibility for steadily larger. Spot promising candidates early then nurture them with the right on-the-job experiences. If company's not configured to provide such opportunities.
board must spend less time monitoring financial performance and more time planning for CEO succession and managing searches.Insist on Board Involvement Company find a strong CEO successor. Directors should also personally get to know rising stars inviting them to board meetings and dinners. The board should dedicate at minimum two sessions a year to hashing over at least five CEO candidates devoting at least 15% of board time to succession. and observing them in the natural habitats of their business operations . talking with them informally.
vision. recruiters approach searches looking for generic qualities such as character. and experience Conduct due diligence on outside candidates . directors must Articulate three or four non-negotiable aspects of talent. know-how. To guide recruiters. and change management abilities. and relationship.Put Directors not recruiters in charge Without effective direction from the board. team-building.
AT ALL LEVELS OF THE ORGANIZATION BE CLEAR AND FLEXIBLE ABOUT WHAT YOU NEED .Conclusion THE ROLE OF CURRENT CEO PLAYS VITAL ROLE TO FIND HIS SUCCESSOR MAKE SUCCESSION PLANNING A PRIORITY.
Sunil Adhikari .By.