Developing a CEO succession plan may seem a distant concern for an incumbent with no immediate plans to leave, but a lack of one can have implications for the health of a business. “A CEO can make or break a company” notes Clem Chambers, CEO of financial market website ADVFN. “When Steve Jobs first left, Apple nearly went bust within a few years. A company is often the manifestation of a CEO and an unplanned-for change is unlikely to end well.”
Who should design the CEO succession plan?
So who is responsible for creating a CEO succession plan? Some believe it is the chief executive themselves. “Succession planning should start on a CEO’s first day,” says Tony Kirschner, partner at executive search firm Leaders International. “They are responsible for refining their executive team and ensuring its sustainability, so they should immediately start looking for indicators of leadership and wider interest in strategic direction amongst their staff.”
For larger companies, choosing a successor is up to the board which should have a subsection known as a nomination committee. “If these committees are managed properly,” explains Mark Andrews, Managing Director of Laing O’Rourke’s Middle East branch, “they should engage the CEO of the business and the HR Director at the very least.”
A board can also help when the CEO is themselves the bottleneck. It is not uncommon for a CEO’s ego to undermine a good succession plan if they believe they are the only person truly able to run the business. This is especially difficult when it comes to family-owned companies or founders. “Founders have an extra level of bias and commitment to their organization, which they can be reluctant to let go of,” says Greg Longster, Mr. Kirschner’s partner at Leaders International.
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