If your board hasn’t reviewed its company succession plan since the coronavirus outbreak began, it’s time to make it a high priority on the board’s agenda.
In his annual letter to investors, Larry Fink, CEO of BlackRock, notes that succession planning is a responsibility his board has diligently attended to.
“While I have no intentions of leaving BlackRock anytime soon, I also will not be here forever,” he wrote. “I have worked closely with my Board of Directors over the last decade to ensure we have a thoughtful plan and process in place for not only my successor, but every senior leader at the firm who plays a critical role in BlackRock’s day-to-day activities.”
Succession planning for the board and “every senior leader at the firm who plays a critical role” is even more important now that the coronavirus epidemic has taken hold. Every company is making major adjustments to deal with the new reality that the virus has unleashed on business and the world economy. These adjustments may require the board to reconsider who it has in mind to serve as directors and to lead the company into the future. Here are some issues boards should consider when reviewing the succession plan:
How significantly has the company business model changed and who is best suited to navigate those changes into long term growth? The coronavirus has caused significant layoffs across many industries and shut down lines of revenue for many companies. It has also created new business opportunities for companies that offer internet-based services. Will the board be overseeing the same company it was before the virus hit?
Boards must examine how the coronavirus has affected their business and reassess whether the leadership it has in place right now is the right leadership for the company once the threat of the virus has subsided. It may be easiest to keep the current leadership in place, but the board will likely have to defend that decision to investors.
Is there a candidate pipeline that can replace everyone on the board and the management team? Unfortunately, because this is a health emergency, the health of everyone on the board must be considered in relation to what’s best for the company. While everyone is at risk of contracting the coronavirus, older board members may be at higher risk. Making sure key members of the board and management team are guarding their health is important. Having candidates in mind who could take their place should the unthinkable happen is a necessity.
Boards should conduct a thorough review of the skillsets of each board member and identify candidates with similar skills that could take their place. They should also determine skills that the board might be missing, but will require in order to emerge successfully from the downturn, and then identify candidates with those skills to add to the board.
Also, once the board has mapped out a plan to keep the company competitive as it navigates the effects of the coronavirus outbreak, it will need to determine if the current CEO is the right person to execute that plan. The board should then select an alternate CEO candidate to execute that plan. It should also select potential replacements for all positions that are key to the sustainability of the business.
How will the company replace its workforce? All companies will likely make changes to its workforce due to the effects of the coronavirus outbreak. The board will have to determine what the company workforce will look like when things start to go back to normal. It must also determine how it will build its workforce for the future. Since many people who are furloughed or laid off during this emergency may look for other opportunities, there is no guarantee the same workers will return after the emergency is over. Furthermore, many companies may decide not to rehire all workers they lay off, so the board must have a plan in place to replace worker productivity, if not the workers themselves. Some companies may use innovations in technology to succeed the workers lost during the coronavirus outbreak.