In The Hot Seat: CEO Succession Planning
IN THE HOT SEAT
Just dropping a candidate into the CEO chair is no longer a tenable way to set them up for success, says Michelle Loader, managing director of executive search and talent development firm Fisher Leadership.
CEO succession planning has never been harder, or more important. With CEO turnover increasing and the COVID-19 pandemic creating a talent shortage, departing CEOs are more likely to be succeeded by newcomers to the top job. Boards looking to stay ahead of succession planning need to reimagine what a successful candidate might look like. In a dynamic business environment, role requirements and capabilities need to hone in on the essential human skills and invest in support for skills that can be effectively coached. “Historically, much of the process has centred on matching past qualifications to find the right person to sit in the chair,” says Fisher Leadership managing director Michelle Loader. “In today’s environment, we need to overlay multiple data points to try to anticipate future performance.”
CEO candidates know that they need to constantly reinvent themselves in a digital-first, hybrid working era with so many competing priorities. Succession planning is fast catching up. Here are three innovative trends that boards can leverage:
1. Align role and candidate criteria to a future capability framework
When boards make decisions about a new CEO, they traditionally assess for technical skills and experience, inadvertently reducing the diversity of the potential talent pool. However, Loader says this is starting to change and boards are becoming more open-minded about cross-sectoral and left-field CEO candidates. By conducting a holistic appraisal of human skills, experiences, attributes and cognitive ability, boards are able to cast a wider net and to become more informed as to predictive intelligence.
2. Plan for change by appointing an interim CEO
Boards need to think laterally about having an emergency CEO plan in place. Loader notes that 25 per cent of CEOs have left their roles in the past two years in unexpected circumstances. Fisher Leadership’s Gig Executive business affords companies time to appoint the right long-term CEO. Increasingly, organisations are using Gig Executives in place of management consultancies, to undertake change initiatives, or to build in-house capability to set the incoming CEO up for success.
3. Build a holistic onboarding program
According to Fisher Leadership, only about 10 per cent of CEO placements have a concrete onboarding program to support them in their new role. Onboard coaching provides new executives with a safe space to think out loud and undergo rapid development of any targeted capability and knowledge gaps. This support can make the difference in getting a CEO up to speed at pace, building trust and getting buy-in.
The challenge to find the right CEO has increased as the pressures and demands on leaders have grown. Boards themselves juggle ever more issues — Loader says there are up to 22 topical issues in the decision-making room right now. As a result, directors are turning to executive solutions firms like Fisher Leadership as trusted advisers throughout the CEO succession life-cycle. “We’ve lived through two years of intense disruption, and CEO succession planning requires a more robust level of discussion from boards,” says Loader. “Having the right person, in the right chair, at the right time, requires every solution to be on the table.” Letting plans for the hot seat go cold is a risk that no board should be willing to take.
Source: AICD Company Director Magazine, June 2022 edition