CEO Succession: Five Common Boo-Boos
from January/February 2008
by Ron Connaught
Nearly 47% of companies in a recent sample make what Thomson Financial identifies as a mistake in planning CEO succession—they fail to include their entire boards in the process. A 2007 survey by the research firm found that while 53% of the 60 directors and governance experts who responded said their whole boards were involved in CEO succession, 38% said it was a committee function at their companies.
Most of the rest described a mix, with subcommittees reporting to the full boards in some cases and full boards reviewing committee work in others. The Thomson report, authored by Glenn Curtis, the company’s research director, also found that 43% of boards make the mistake of dealing with CEO succession only when they have to, rather than planning ahead.
The three other succession-planning blunders that the survey found boards and companies often commit:
• Failure to maintain a viable pool of internal candidates
• Failure to communicate, inside and outside the company, why the current CEO is leaving and what the successor will bring to the table
• Selecting somebody who isn’t a good fit.
Finding a candidate who does fit the corporate culture, in fact, is the biggest single challenge in identifying and hiring a new CEO, according to the survey.
