CEO Succession –why is the plan always absent

All chief executive officers will eventually leave. But why do boards fail to adequately plan for the CEO succession? We have seen it in

All chief executive officers will eventually leave. But why do boards fail to adequately plan for the CEO succession? We have seen it in politics, the skill of planning for the successor seems to be the last item on the to-do-list of most board agendas, which they keep moving to the next meeting. The result is trial and error when the need for a new CEO arises.

As part of business continuity and disaster recovery, we usually conduct business impact analysis (BIA) on the institution’s mission-critical capabilities that support key processes. One of such capabilities is people – staff skills, experiences, and roles. Here we map the key business processes – defined as processes that are mission-critical where failure or absence for a very short time would cause huge losses to the business in terms of lost productivity of potential legal costs due to failure to fulfil key service level agreements. Any person running a mission-critical process is defined as a key man.

The chief executive officer, by the nature of their roles and the key stakeholders they keep tabs on, always rank among the top mission-critical employees – folks whose work makes the business thrive.

Handson insight

The practical approach to business continuity plans I have found easy is to start by defining the institution’s key customers and stakeholders and understanding how value is created and delivered to them. Then examining the processes that deliver the value. And thereafter, identifying the capabilities that support each process involved in the value creation and delivery. The process criticality, as already explained, is assessed by looking at the loss to the business if the process went offline. Any process that would lead to high losses in the shortest time possible of going offline, is the riskiest and therefore critical.

One such process is identified and ranked, then a strategy to keep it running and prevent any possible disruption can be agreed upon.

When it comes to people, the best risk management strategy is succession planning. For every identified key role, the company must have a strategy for succession, where there is a provision for a junior staff who can ably fit into the shoes in case need arose.

However, over my over 10 years in supporting the organization’s undertaking business continuity planning, only 10% of the organizations have a clear CEO succession plan, yet this role is identified as most critical. Why are CEO’s reluctant to have a successor developed internally?  Why is the CEO succession plan usually absent? To make matters worse, even those organizations with a plan, usually look outside for a CEO when the incumbent moves.

In these turbulent times, companies must rethink their sustainability and growth strategies. Is it necessary to plan for CEO succession? What is the best way to do so? What are the qualities of a great CEO?

The challenge I have noticed when a new person joins at the CEO level, they usually bring along many new people in top roles. The practice usually creates a problem with new staff vs old staff. This could affect strategy execution. Seemingly easy decisions take longer to conclude and the long -term growth the business may suffer.

What are your experiences with CEO succession? Please share your experiences.

Copyright Mustapha B Mugisa, 2020. All rights reserved.

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