May 2012 has seen two high profile Australian CEOs let go from their jobs—Mark Selway of Boral and Bill Wild of Hastie. The inevitable question of succession has arisen for both companies, but it may also prove to be a timely reminder for other companies to ensure they are on top of succession plans for CEOs and other executives.
A report released by SHL in March surveyed 46 different Australian CEOs and found that under 50% had effective succession plans in place to identify and groom staff for potential senior roles.
“In the current job market, CEOs have been led to believe that replacing top talent is simply a matter of finding candidates with the right skills and qualifications,” said Eugene Burke, SHL’s UK-based chief science and analytics officer.
Yet replacing a CEO is not always so straightforward. Successful succession processes for CEOs can “inevitably” take up to 2-3 years, Nick Conigrove, a director in the Hay Group Business Solutions Team told HC.
Conigrove recommended five key tasks to be undertaken when developing a succession plan:
- have the whole board agree upon the strategy and implications for the new CEO role (3-6 months)
- define the role profile in light of the agreed strategy (3 months)
- assess internal and external candidates against the role profile (3-6 months)
- agree upon and execute development plans for internal candidates, to prepare them for the position (12-18 months)
- once the new CEO is in place, the outcomes of the earlier steps can be used to develop a transition plan for the successful candidate
Utilising a process such as the one above can mean the difference between a successful CEO transition and a failed one.
Conigrave also has some important reminders about the nature of selecting a new CEO:
- the board must be unified on the CEO’s future role
If the board has differing views on the CEO’s future purposes in the company, it is more likely that incorrect candidates will be assessed—and ultimately selected—for the role.
- the roles of the current and future CEO are not the same
The roles and responsibilities of a CEO are relative to the company’s needs and strategy at a given time. Attempting to replace a successful CEO with a carbon copy is unlikely to be successful, as it may not be compatible with the company’s present vision or the state of the market.
- By Tom Goodwin