As CEO, you have a vision and plan to deliver results, handsomely rewarding shareholders and employees alike. And while that may look like success to many, including you, the reality is that it won’t be enough to create a truly enduring legacy.
Your legacy is about more than bottom-line results. It’s about how you leave the company—meaning in the strongest position possible, fit for the future, and, crucially, in the capable hands of a well-chosen successor.
After value-creation, you could say that an enlightened approach to succession planning is one of the most important things you will do as CEO.
Succession planning is legacy-building.
Legacy-building succession planning requires your personal engagement early in your tenure as CEO. It requires a robust process that leaves little to chance, one that is intentional, well-thought-out and affords opportunities to develop your successor, or even better, several successors the board can eventually choose from.
Legacy building means starting early
Surprisingly few CEOs take on succession planning headfirst.
Understandably, they are consumed by their jobs, intensely focused on the here-and-now. ‘We’ll get to it later – there's plenty of time,’ typically is the hedge. Succession is the furthest thing from their minds, or from the board’s mind for that matter, so long as things are going well.
And let’s be honest, some may even dread the thought. It’s a little like staring down the well of one’s own mortality. No one likes reminding that the end will eventually come to all of us.
But the most likely explanation is that most CEOs and boards simply fall into the trap of underestimating what’s required to put together a purposeful and robust succession plan.
They leave it to the last minute, when the clock is ticking ominously and it’s already too late.
Don’t let those miscues undo your legacy. Be bolder. Be more farsighted than that. Your company and your shareholders deserve and expect it, so put trepidation aside and take succession planning firmly by the reins.
And that means working closely with your board and advisors to find and develop potential successors ready to meet the future needs of your company.
If by the end of your tenure you’ve failed to deliver stellar successors, your many other achievements as CEO will be diminished, and your legacy will be tarnished.
A multi-year effort
Enlightened CEOs insist on an early start to succession planning, sometimes five or six years before they plan to retire.
They work with their advisors and board to develop a forward-looking success profile that serves as a touchstone for assessing their current talent.
They assess their internal succession candidates with an eye to development and with a focus on the skills, experiences and competencies they will require as CEO.
They invest in an “outside-in” approach to development, complementing internal experiences with masterclasses that expose them to the issues and experiences they will encounter as CEO. As a benefit of staring early, internal candidates have the opportunity to experience multiple developmental assignments during the process.
Enlightened CEOs assess whether their senior talent pipeline for succession is sufficiently diverse and, if not, recruit diverse talent into their organizations with sufficient time to integrate and develop them.
While their focus is primarily on developing internal talent, enlightened CEOs also keep their eye on the best external talent, not only for benchmarking purposes but also, if needed, to recruit fresh talent with unique experiences essential to the future of the company.
An early start, a thoughtful and comprehensive plan crafted together with the board, rigorous and regular assessments of internal candidates, an outside-in approach to development, and an openness to enrich and diversify their talent pool through external hires—these are the hallmarks of enlightened CEO succession planning.
Getting your board on-board
Enlightened CEOs get their board engaged in succession planning early.
Just as some CEOs can be reluctant or slow to embrace robust succession planning, so do some boards fear the unintended consequences of succession planning, like spooking investors or setting off distracting internal horse races.
But these are tired and misleading shibboleths. In truth, investors and regulators expect and require companies to have well thought out succession plans.
And the highest-performing and most progressive boards start thinking about their next succession as soon as the current CEO is selected.
The first step in getting the board more deeply involved is getting them aligned around a forward-looking success profile.
Ironically, the greatest value the board brings to CEO succession planning is its distance from the day-to-day. We surveyed over 1,000 board directors and found that the best boards take a more macro view: not only are they paying attention to the here and now, but they are also looking at least five years into the future to figure out what your organization needs to be ready for.
The board needs to be able to recognize this and find a way to combine the company’s short-term, immediate needs with its long-term, future goals. There is an element of prophesying here. But, like the best predictive analytics software, it’s prophesying rooted in data and logical inference based on trends and patterns.
Selecting the right CEO is probably the most impactful decision a board can make—and to do it well, they must achieve consensus on what ‘right’ is. They should focus on clearly identifying the traits a CEO will need to navigate change of all stripes: political, cultural, technological, industry trends, buying behaviors, and so on.
There is no need to pick a frontrunner early. The board should consider optionality: having a few candidates ready to step up depending on what is needed at the time when you step down.
Once your board has identified internal candidates (and benchmarked them against the best external talent), you and the CHRO can start working with them to fill in any gaps in their abilities and experiences. And, from there, to set the candidates—and the company—up for success.
But you have to start early to do it. If your board is not already thinking about CEO planning, then they’re already behind the curve—and you need to take steps to change that. It may be the board’s responsibility to select your successor, but it is your responsibility to work early and proactively with the board to develop viable successors.
Succession as a strategy
For most companies, CEO transitions present challenges. Executives get nervous, internal stars who did not make the cut may move to competitors, and stock prices can wobble.
A strong succession planning process and strategy can prevent that. By starting early and working with the board through a deliberate process geared for success, you can avoid a rocky transition and keep your company strong even through change.
For the enlightened CEO, collaborating on an intentional transition is not just a way to protect share value—it is how you ensure an enduring legacy.
The next step to safeguard your legacy
An intentional transition starts with a robust plan. See what it looks like in real life and learn about other organizations’ journeys with our new guide to CEO succession planning.
Written by: Justus O’Brien, for Russell Reynolds blog.