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Posted: March 05, 2012

The CEO search: Board members, beware

Thoughtful succession planning is critical

Tracy E. Houston

Growth is the cornerstone of corporate strategy.  Leaders who can drive corporate growth while motivating the workforce are in high demand.  That said, finding the next CEO can be a daunting challenge for the board.  Whether the precipitating issue is an impending retirement, nonperformance or just that the skill set is no longer a match – CEO succession planning is generally one of the most important decisions that the board of directors must make.  Not undertaking  succession planning or not undertaking it deliberately and thoughtfully can result in serious threats to a company's health.  Moreover, if the board does not step up to the plate and do its job, shareholders will – as seen in a number of recent headlines.

With this in mind, I sat down with Jill Tietjen. She is an outside director on the boards of Georgia Transmission Corporation of Tucker, Georgia and Merrick & Company of Aurora, Colorado.  Her board experience includes five CEO leadership transitions.

What are the pitfalls around CEO succession planning that directors should be aware of?

Typical issues and pitfalls around CEO succession planning that boards face include:  strategic vision, a founder whose skills don’t fit the going forward need, the age of the bench strength, cultural fit and denial.  Here are some ways to look at these issues and pitfalls from the perspective of a sitting board member. 

What got you here won’t get you there

Moving an organization through the environmental challenges to achieve a vision requires strategic thinking and an ability to visualize an organization at a different place in its development.  What this means is that the types of actions that got an organization to its present state are often not the actions that will get the organization to that vision.  If your current CEO can’t visualize how to move the organization forward, it might be time to think about a replacement.  A corollary to what got you here won’t get you there is that doing the same thing that you are doing and expecting to get a different result is the definition of insanity. 

But it’s my baby!

Maybe you are in an organization where the founder is the CEO.  This founder has had amazing success from idea conception to implementing that idea to creating the organization that you are now affiliated with.  However, it might be that it is time for new thinking and someone with different skills.  But it’s his (or her) baby!  The emotional cost of replacing the CEO is significant and even the suggestion of replacement might be fought tooth and nail. 

We’re not getting any younger

As you look around the organization, what are the ages of the people who might be in line for the CEO position?  Hopefully, not all of the possible candidates are 60 years old!  Succession planning needs to address key leadership positions up and down the organization – to ensure that over time the bench strength is being developed in a staggered fashion – not everyone is the same age.  The thirty and forty somethings will someday, in the not-too-distant future, be candidates for senior management, executive and C-suite positions.  They need to be trained and ready. 

I say poe-tay-toe, he says pah-taw-toe

Sometimes the cultural fit with a CEO or potential CEO just doesn’t feel right – this relates to values and personality of the candidate.  If an organization’s values say that teamwork (or any other area) is important then it is very important to have a CEO who values and rewards teamwork (or the other areas).  In succession planning efforts, it is critical to identify the type of culture the organization has or wants to have going forward and ensure that the CEO believes and values that type of culture.  Just like in any merger or acquisition – culture might be the key to the success or failure of the CEO selection. 

Denial is not only a river in Egypt

Make sure that the members of the board and the search committee have their eyes and ears open.  Just because a certain candidate is the favorite or board members have pre-conceived notions, doesn’t mean that you will find your way to the right answer.  Putting blinders on – another way of expressing being in denial – may mean that all potential candidates are not identified and that the right candidate isn’t selected as the new CEO.  Denial can also lead to groupthink – where critical issues and concerns are not addressed. 

Any last bit of wisdom for directors?

Succession planning is a process that is critical to the long-term success of organizations.  Pay attention to the dynamics in your organization to ensure that the CEO has strategic vision, the CEO isn’t being kept on as the founder past his/her time of being effective, you are grooming leadership at all age levels, there is a cultural fit, and you are considering all possibilities – not being in a state of denial.  With your eyes and mind open to all of these considerations, your succession planning doesn’t have to be dreaded!

Jill S. Tietjen, P.E. is the President and CEO of Technically Speaking, Inc.   Jill is available to speak on the topic of CEO succession planning. She can be reached at:  jill@techspeakinginc.com

 

 

Tracy E. Houston, M.A. president of Board Resource Services, is a board advisory consultant and executive coach headquartered in the Denver area. She conducts board evaluations and assists boards with a variety of issues that increase effectiveness. She can be reached at hello@eboardmember.com  or  http://www.eboardmember.com
www.eboardmember.com ;eBooks: www.amazon.com/author/www.eboardguru.com


 

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Readers Respond

Tracy -- These are very valid issues, of particular importance to smaller companies whose boards are often friends and family of the founder. Much heartache could be avoided by boards addressing each of these points regularly, both when contemplating new hires and when evaluating their existing organization. By Michele Bremer on 2012 03 05
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