The average CEO stint is just shy of seven years. Whether or not your organization is on the cusp of change, a cogent and effective succession plan should be part of your overall strategy.
This is especially true as we emerge from the shadow of the pandemic; many CEOs who put their career transition plans on hold during that period of uncertainty will be looking to exit in the coming year.
Chain of Command
A gap in the chain of command can be catastrophic and all the more so when it is at the upper echelon of leadership. It is a very real prospect when there is a sudden and unplanned departure, as may occur when a CEO is terminated, passes away, or steps down during a crisis.
There should be triggers within a good succession plan that enact a series of changes automatically when this happens. That should include a revised chain of command, with every individual concerned given a detailed list of their updated roles and responsibilities.
Some companies may prefer to appoint a new person to the role almost immediately while others opt for a period of transition under an acting CEO. It is important to get the news out quickly that this is a deliberate plan of action taken with special considerations in mind. Otherwise, the public may misinterpret it as confusion at the top, which is never helpful for your bottom line.
In or Out?
The other major decision is whether to hire internally or look for the best candidate from outside the company. Each approach has its advantages and the decision is usually closely related to the reason for the erstwhile CEO’s departure.
Internal promotions are often the better choice when the organization is looking for continuity. It helps if the outgoing CEO and their successor have worked closely in the past and share a similar vision.
Some companies parachute in a candidate from outside because they want to show investors and stakeholders that they are serious about implementing concrete and meaningful change. This is a viable tactic for all businesses as research indicates that external personnel outperform their in-house counterparts.
While the needs and concerns of the organization may seem paramount at such a critical juncture, do not let them overshadow legal and regulatory requirements. Always ensure that any decision to promote or hire a candidate is based on their abilities and talent, and not just a box-ticking exercise in appeasement.
If you are preparing to hire a new CEO and are not quite sure what the right path might be, reach out today.