Perhaps it is a sign of the times (i.e. world recession) but CEO succession planning is the latest business area that companies are seriously considering. The concept essentially is: how should a company handle (or better, manage) the transition process of the outgoing CEO in relation to the incoming CEO?
The outlook for 2009 is gloomy with international unemployment, according to the International Labour Organisation, set to hit the alarming 50 million mark, and this is not just restricted to the financial services sector but the world economy in general (Malta being no exception). CEOs are (obviously) not immune to such downsizing exercises and it therefore pays for your company to have a CEO succession plan in place.
This is being suggested because the position of the CEO is crucial to the continued success of any organisation, and the insight and wisdom of the outgoing CEO is somehow not lost on his or her departure but actually captured for the "general good" of the organisation. A comparable example might be the trading-in of your old laptop with a newer and better one without the transferring of all your documents, e-mails and programs. The value of the new laptop is only realised if all your years' of accumulated information and material are transferred in whole to the new laptop.
What can't be avoided, though, is if and when the new CEO thinks he knows best and fails to solicit or rejects the words of wisdom of his predecessor. Sure, any advice given by the old to the new will be sprinkled with a dose of bias, but any high-potential new CEO can discern the "ego" from the "facts".
The chairman and/or the board of directors who presumably are overseeing the succession process should therefore be aware of the wealth of information, insight and advice (what one might call "intellectual capital") which the outgoing CEO holds. This "intellectual capital" should be extrapolated in a structured fashion for the benefit of the company and its continued success.
The sort of information I am alluding to includes, for instance, the various expectations of high-ranking employees and what representations have already been made to them; short-term opportunities that are ripe for harvesting; the strength of internal allies and external partners; and the wisdom that comes from experience well reflected on, etc. As Victor E. Millar, a well-respected and retired management consultant, said: "The former CEO can tell you which are the load-bearing walls" and as any architect can attest, if you try to build a new floor on an existing structure without knowing the "load bearing walls" you could bring the whole building down.
So what would such a CEO succession plan look like? The starting point obviously is to persuade both CEOs to get together in focused and engaged discussion. But the crux has to be the drawing up of an agenda so as to help structure such discussion(s). There is little benefit to be gained from a series of informal chats between the two CEOs; the organisation actually needs to structure the agenda of planned discussion and know what information (intellectual capital) it needs to extrapolate.
The areas that might need to be covered (and this list is by no means exhaustive) are the following:
Right-Here-Right-Now Issues: What requires the new CEO's immediate attention? What's the financial health of the organisation? What unresolved (internal and external) problems have a shelf-life of more than one year?
Works-in-Progress: What is the most vital, and why? What can be paused? What are the cost benefits of each?
Leadership Issues: What leadership style is needed, given the organisational culture and current strategy? Who, if any, was expecting to be (internally) appointed CEO and why wasn't he/she? What is the current stake-holder management plan?
CEO Wisdom: What problems did the outgoing CEO encounter when he first moved in, and how did he handle such problems? What are the major challenges the organisation is facing within the context of the industry it competes in?
Governance: What are the dynamics among the board members? What are the pros and cons of how meetings are conducted? Who are the major investors, allies and partners, and what are their concerns? What checks and balances are in place?
In conclusion, anyone seriously thinking of proactively planning for a CEO transition process should consider giving the process itself the force of law, for example, inserting a clause in the incumbent CEO's contract of engagement that he/she will remain available for consultation for some period of time, because everyone knows that with a successful transfer of CEO-level knowledge, the company's continued success under the stewardship of the new CEO stands a better chance of success. So plan for it especially in these uncertain times!
• Mr Fenech is a partner consultant of Fenci Consulting.
The outlook for 2009 is gloomy with international unemployment, according to the International Labour Organisation, set to hit the alarming 50 million mark, and this is not just restricted to the financial services sector but the world economy in general (Malta being no exception). CEOs are (obviously) not immune to such downsizing exercises and it therefore pays for your company to have a CEO succession plan in place.
This is being suggested because the position of the CEO is crucial to the continued success of any organisation, and the insight and wisdom of the outgoing CEO is somehow not lost on his or her departure but actually captured for the "general good" of the organisation. A comparable example might be the trading-in of your old laptop with a newer and better one without the transferring of all your documents, e-mails and programs. The value of the new laptop is only realised if all your years' of accumulated information and material are transferred in whole to the new laptop.
What can't be avoided, though, is if and when the new CEO thinks he knows best and fails to solicit or rejects the words of wisdom of his predecessor. Sure, any advice given by the old to the new will be sprinkled with a dose of bias, but any high-potential new CEO can discern the "ego" from the "facts".
The chairman and/or the board of directors who presumably are overseeing the succession process should therefore be aware of the wealth of information, insight and advice (what one might call "intellectual capital") which the outgoing CEO holds. This "intellectual capital" should be extrapolated in a structured fashion for the benefit of the company and its continued success.
The sort of information I am alluding to includes, for instance, the various expectations of high-ranking employees and what representations have already been made to them; short-term opportunities that are ripe for harvesting; the strength of internal allies and external partners; and the wisdom that comes from experience well reflected on, etc. As Victor E. Millar, a well-respected and retired management consultant, said: "The former CEO can tell you which are the load-bearing walls" and as any architect can attest, if you try to build a new floor on an existing structure without knowing the "load bearing walls" you could bring the whole building down.
So what would such a CEO succession plan look like? The starting point obviously is to persuade both CEOs to get together in focused and engaged discussion. But the crux has to be the drawing up of an agenda so as to help structure such discussion(s). There is little benefit to be gained from a series of informal chats between the two CEOs; the organisation actually needs to structure the agenda of planned discussion and know what information (intellectual capital) it needs to extrapolate.
The areas that might need to be covered (and this list is by no means exhaustive) are the following:
Right-Here-Right-Now Issues: What requires the new CEO's immediate attention? What's the financial health of the organisation? What unresolved (internal and external) problems have a shelf-life of more than one year?
Works-in-Progress: What is the most vital, and why? What can be paused? What are the cost benefits of each?
Leadership Issues: What leadership style is needed, given the organisational culture and current strategy? Who, if any, was expecting to be (internally) appointed CEO and why wasn't he/she? What is the current stake-holder management plan?
CEO Wisdom: What problems did the outgoing CEO encounter when he first moved in, and how did he handle such problems? What are the major challenges the organisation is facing within the context of the industry it competes in?
Governance: What are the dynamics among the board members? What are the pros and cons of how meetings are conducted? Who are the major investors, allies and partners, and what are their concerns? What checks and balances are in place?
In conclusion, anyone seriously thinking of proactively planning for a CEO transition process should consider giving the process itself the force of law, for example, inserting a clause in the incumbent CEO's contract of engagement that he/she will remain available for consultation for some period of time, because everyone knows that with a successful transfer of CEO-level knowledge, the company's continued success under the stewardship of the new CEO stands a better chance of success. So plan for it especially in these uncertain times!
• Mr Fenech is a partner consultant of Fenci Consulting.