Succession Planning
- Impact Boards EM
- Feb 24, 2022
- 2 min read
Kieran Moynihan
Managing Partner, Board Excellence
In the gripping TV series Succession, viewers are captivated by the fascinating plot lines and rollercoaster journey as the Roy family grapple with the succession challenges after the CEO and patriarch, Logan Roy, suffers a decline in health. As his four children scramble to secure their positions, viewers are enthralled by the machinations, the plotting taking place in the shadows of the boardroom and the impact on the company as a power-struggle and gripping succession battle plays out. While family business succession planning can be particularly challenging, a significant number of boards of directors struggle in this area, from listed companies on the stock market to private companies and nonprofit and charity boards.
For a significant number of boards, CEO succession planning is a thorny and often taboo subject that can cause significant tension between the CEO and the board. Many boards do not have a proper CEO succession plan and are vulnerable to significant disruption in the event of an un-planned CEO departure. In one example I have seen, a company was severely impacted by the sudden exit of a CEO who had stonewalled the board for many years on developing potential successors within the executive team. The CEO – out of self-interest and paranoia – had consciously failed to develop the two executive team members with genuine CEO potential with the result that they left. In consequence, the board had to scramble into a rushed external search process for a CEO which ended badly. The new CEO that they hired lasted only 12 months and the company suffered significant damage, both internally and externally. This case represented a dereliction of duties and a serious failure by the board to protect themselves, the shareholders, employees and stakeholders. Over the years, I have lost count of the number of board chairs and non-executive directors who have indicated to me how much they struggle with ‘grasping the nettle of CEO succession planning’ and – in some cases – facing up to a dominant, controlling or difficult CEO who is frustrating the board’s efforts to put a proper plan in place.
During my career, many CEOs have shared with me their genuine, heartfelt angst at the thought of discussing with the board the idea of a new CEO running the organisation in the future. The vast majority of CEOs fully understand why a CEO succession plan is needed and that the board have a formal legal/fiduciary responsibility to do this. Nevertheless, they find it very difficult to internalise that – despite the incredible leadership and contribution they have made, often over decades, and the depth of the relationships they have built with the board chair and non-executive directors – the board and relevant committee are happy to plan for the next CEO. As a former CEO, I empathise strongly with this; board chairs and committee chairs with strong emotional intelligence do too, enabling them to engage sensitively with the CEO.
Read the full article here. Succession Planning
