“A person who does not worry
about the future will shortly start to worry about the present” is an ancient
Chinese proverb.
Unfortunately, still rare
occurrence is leadership succession which is and should be too important to
ignore.
A company CEO is irrevocably
gone. Who will take his position? Or, the top executive is attracted by your
competition. Is there anyone new ready to fill the role? What would you do: you
may end up with an empty C-suite or, even worse, get an under qualified person
to fill the job because simply there is no one better to take it over.
Transition period in the top
management position may present quite hazardous times for companies. If the
previous CEO has had significant and sound results a worry about his
successor’s ability to maintain the same momentum will inevitably arise. To
avoid a future crisis in leadership succession there should be developed and
implemented plan for leadership succession beforehand. This should cover planned
process of leadership transition but also the unplanned ones. Important
functions will thusly in large amount continue uninterrupted.
Increasingly large and
globally integrated companies take leadership development and CEO succession
extremely seriously. In one study of more than 200 CEO successions the
researchers found out that in contender succession turnover among senior
executives has a positive effect on a company’s profitability but in an outsider
succession it has a negative impact. So, companies face two ways to fill the
empty position: with internal process of development of a specific candidate or
hire externally and choose the best free one on the market.
Developing leaders
internally takes time and effort from current CEO and as well from human
resource department. A study from five years ago, published in FORBES, shows
that by revenue largest American companies hired eighty new CEOs from outside and
only half of them were promoted from within. On the other hand studies show
that these homegrown candidates are more likely to be successful than external
candidates. According to a 2012 study by professor Bidwell at the
If the above data are to be taken seriously, why do so
many boards wind up looking for new a leader outside the company?
Is it because CEOs love their job so much that they
identify themselves with the role, in it they engage their personality traits,
their ego, their power? And therefore they are not able to see a possible
candidate succeeding them, is this at the heart of (nonexistent) succession
plan they should help to prepare. In
this way of thinking, an outsider seems to be less “dangerous” than an internal
one.
The
choice of hiring the best candidate for top management position(s) will definitively
depend also on the team surrounding the current CEO and the way all their skill
sets complement one another. And what skills a CEO should have?
In the CEO Magazine survey,
the top five characteristics valued in leaders were presented as:
- Strategic thinking – cited by 50 percent of respondents,
- Execution – cited by 40 percent of respondents,
- Decision Making – cited by 33 percent of respondents,
- Technical Competence/Expertise – cited by 33 percent of respondents,
- Team Work – cited by 30 percent of respondents.
Eweryone makes beforeplans,but" life is life",and we are forced to do our second or third planes,most of them!
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