How to Move Succession Planning Toward the Top of the Agenda
CEO turnover is high, but staff leaders and boards still resist talking about CEO departures. A little planning, and a dose of realism, can make the conversation easier.
The urge to change jobs these days is no different in the top spot as it is elsewhere in an organization. According to a March report from Challenger, Gray & Christmas, CEO exits jumped 29 percent from 2021 [PDF], in keeping with an elevated rate of Great Resignations exits. That underscores the importance of succession planning, something organizations don’t enjoy thinking about. CEOs don’t necessarily want to discuss their departure, and boards that already spent a lot of energy on their last CEO hire may be inclined to back-burner the conversation. But to be realistic about their organization’s futures, it’s worth the investment in time.
In an MIT Sloan Management Review article, “The CEO Is Leaving. Now What?,” a pair of UK consultants map out some of the preparation that executives and boards can do to ease the succession-planning process. Assuming that the CEO’s departure isn’t a firing or otherwise abrupt, it’s crucial for the CEO and board to work in tandem. “While the CEO might prefer to personally announce their departure at a time of their choosing, it risks making the company board look weak, given that the departing leader is preempting one of its most important prerogatives: the power to decide who is chief executive,” they wrote.
Agreeing that the departure is going to happen—and even the timing of it—doesn’t ensure the process will go smoothly. A certain amount of awkwardness is to be expected, but CEOs can help by doing some prep work. In 2018, association leadership coach and strategist Cynthia Mills, FASAE, CAE, recommended that CEOs assemble a “transition document” that “literally outlines everything that’s in your head that you just know, and that you’ve forgotten you just know.”
That process can be helpful in outlining the responsibilities that the CEO is leaving behind, but the MIT Sloan article authors note that the CEO should not just recognize their responsibilities, but prepare to pass them on to somebody else. “Let go of longer-term, strategic goals and focus on day-to-day management—on ensuring that things do not go wrong,” they advise.
It’s also a good time for the CEO and board to have a conversation about whether the transition should involve a permanent or interim executive. Indeed, 2021 research by the ASAE Research Foundation revealed that interims led to smoother transitions. If an association needs a reset, the article notes, interims “can provide fresh eyes and expertise to start the organization down the path toward change,” and help a permanent CEO settle into the role.
However an association decides to handle its CEO transition, perhaps the biggest change it can make on behalf of its future to shift its mindset—to acknowledge that a “permanent CEO” will likely not be permanent. A time-limited contract might formalize that point, but the MIT Sloan authors suggest that the framing can also be informal—that boards and CEOs can work under the assumption that organizations change and relationships are worth revisiting over time. If that “informal term limit” is five years, the board and CEO can “agree on goals for that time frame.” And the process can start on the day of hire. “If a company has recently installed a new CEO, it might not be too early to start thinking about their departure,” they wrote.
If you’re a CEO who’s changed jobs, how did your organization successfully handle the transition? Share your experiences in the comments.
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