There’s a new CEO in town

How important is a CEO to a company’s success?  How important is succession planning?  A large part of leadership is to plan for success and succession.  Sometimes a CEO or leader will announce a departure date into the future to allow for succession planning and transition.  At other times, the board and business must react suddenly to an event and replace their CEO.

Although many companies experience a change in leadership at the CEO position, 2011 has been brutal on CEO turnover.  No fewer than 11 companies have changed their leadership in the past 10 weeks: Campbell Soup, Pfizer, Google, AMD, Apple, DayStar, LeapFrog, Kenneth Cole, Oceaneering International, Allegheny Technologies.  With the shift in the economy, some companies are seeking leadership that can get the business through tough times, for other businesses that may have survived the storm, a new leader is wanted.

 With the rapidity and constancy of change at the top, why aren’t more companies doing succession planning?  Succession planning like diversity sounds like a good idea,  but for an idea to be “good” in business it has to show a positive impact to the bottom line.  Oftentimes, with succession planning there is no reward or measurement on building “bench strength”.  Most managers only get recognition if they can show they have a plan in place.

 Many companies do engage in the planning process of succession planning, it is called many things in the corporate world e.g. Talent Management.  Executives gather and rank employees seeking to identify who is “highly promotable” or “ready now”, and identify professional development or training to prepare individuals for the “ready now” status.

 However, when the opening arrives whether at CEO level or below, do companies USE the plan and promote internally or hire from outside?  If succession planning is to be successful and a process for development, coaching and professional development are key and must then translate.  Success would be measured as a high percentage of internal hires. 

 How did recent CEO-shifting companies fare on the internal v. external metric?  Most have internal successors.  It should be noted that two have internal interim successor which begs the questions if the succession was anticipated and planned.  For example, Kenneth Cole leadership falls back to its namesake after an external CEO moves on after 3 years.

Leaders that are identified as “high potential” often need coaching and cross-functional training and experiences in other areas of the business.  It is helpful for a finance person to get some sales management experience.  It is helpful for a marketing executive to obtain some operations experience.  But at the end of the day, personalities do matter.  If there are senior people who don’t support or sponsor your efforts, all the succession planning won’t help you if the CEO does not like you.