The economic impact of Covid-19, supply chain disruptions, increased shareholder activism and fears of a possible global recession are challenging corporate boards to rethink their C-suite succession strategies. Of chief concern is how boards should approach CEO succession planning.
Panelists Kim Williams, Board Chair EW Scripps and board member at Weyerhauser and Xcel Energy, Scott Stephenson, retired Chairman, president and CEO of Verisk Analytics and board member of public Service Enterprise Group (PSEG) and Doug Reynolds, Executive Vice President, DDI shared their thoughts about the board’s role in CEO succession during Corporate Board Member’s 18th Annual Boardroom Summit in New York. Below are key takeaways.
• Ultimately, the selection of the CEO is the most important job that the board has. The panel suggested that the board should enlist a third party to help identify the characteristics and criteria that they would like to see in their next CEO. The process of determining the next CEO should be deliberate and collaborative—involving the current CEO.
The board and the current CEO must be collaborative in selecting internal and external candidates, and be willing to enlist others outside the organization to help. Board members must be willing to have no-nonsense discussions about the readiness of specific candidates to take on the CEO job. The board should also consider providing opportunities for top candidates to gain experiences to help them grow into the position.
• CEO succession should be on the board agenda every meeting. Boards should have a subcommittee dedicated to the succession process which makes recommendations about what should be done to groom the next generation of C-suite executives—including the CEO. There should be an agreed-upon long-term succession strategy that puts key candidates in the right positions to test their abilities.
• Ask, “Where is the organization going?”; then create a profile of the type of CEO that can take you there. Selecting the next CEO requires anticipating the future. Starting with a benchmark of the current CEO’s performance, chart what has been done well and what needs to be done better. Create a profile of your desired CEO’s performance, get the board aligned with that profile and then determine how the options you are considering for CEO stack up against that profile. Consider the internal and external candidates and ask what can be done to prepare them to better fit the profile for your new CEO.
• Consider transforming your current CEO into the CEO of the future. If your current CEO is excellent at certain things but needs to be stronger at others, perhaps the relationship between the CEO and board is strong enough to convince the CEO to work on those areas that need improvement. This will likely take a personal/friendship relationship with one or more board members to finesse this situation, but it may be worth the effort. Find out how the current CEO sees the future and try to align that thinking with the attributes the board wants in the next CEO. Then give the current CEO time to make the adjustments.