Corporate Governance
Succession planning
Overseeing the successful succession of the CEO is one of the board’s most crucial responsibilities. Well-developed succession plans are multi-faceted, consider both short-term challenges and the long-term direction of the company, and identify the skills needed for a leader to successfully navigate both.
Effective boards develop succession plans for the anticipated retirement of a CEO over multiple years. They focus on how the succession timeline aligns with the long-term strategy of the company and determine the attributes and experiences needed in a leader to achieve that strategy. They also spend time with potential CEO candidates while tracking their development and suitability for the CEO role.
Equally important is the board’s succession plan in the event of a crisis or unplanned departure of a CEO. These plans aid the board in evaluating the readiness of potential internal and outside candidates, and outline the management team’s and board’s immediate actions and responses.
In any succession scenario, there is no substitute for a well-prepared board with a clear picture of the company’s long-term strategy and the type of leader needed to achieve it.
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