Director Advisory
CEO Succession
Data, Not Assumptions, Should Be Paramount When Selecting a New CEO By Jane Edison Stevenson and Dave Heine Rule number one: Never assume anything. That’s a bit of advice boards might take to heart when planning for their next CEO. For example, nowhere on the list of best practices for CEO succession planning have we seen the following: make sure to ask top talent whether they want to be CEO. Their answers may surprise you. If you think that sounds too obvious, consider this: as part of Korn Ferry’s proprietary CEO Readiness Assessment, the firm queried 79 external and internal CEO candidates between 2010 and 2014 on whether they wanted to become CEO. Nearly a third didn’t. In our experience, everyone wants the CEO title, but not everyone wants the job. The real problem is that candidates can be swept up in the belief of others that they are the best choice and feel pressured to pursue a job that doesn’t really interest them, resulting in less-than-effective CEOs. Moreover, boards’ opportunities to see CEO candidates are often limited to wellrehearsed presentations or dinners, and they are liable to make broad assumptions about how candidates will perform as CEO based on these infrequent interactions. Fortunately, the increased sophistication and reliability of assessment science have made possible a far more robust succession planning process that enables decision makers to fill in the gaps with data, structure, and process to substitute for assumptions and extrapolations made in a vacuum. The result is a multifaceted picture of succession candidates that allows directors to assess their capabilities against the strategic business priorities that will
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define success in the role. When we evaluate succession candidates, we assess them on four dimensions of leadership. The first two are competencies and experiences, which represent what an individual does. The others, which represent who an individual is, include hard-wired dispositions and cultural fit, and motivations and interests.
In our experience, everyone wants the CEO title, but not everyone wants the job. The formula goes far beyond traits that are more readily apparent to an analysis of a range of innate inclinations and aptitudes, skills and behaviors, drivers and interests, and experiences that are strongly associated with effective CEO performance. Be sure to consider: ■■ Does a candidate have the confidence and stamina required to be the lone decision maker, or is he or she more collegial in style with a need to please and come to consensus? If the latter is true, he or she may find the role difficult and ultimately be unsuccessful in the transition to CEO. ■■ Is a candidate energized by a group or by soul-searching when engaging in final deliberations about key issues? ■■ How easily does he or she carry the weight of tough decisions? All of these criteria and many more are relevant to choosing the right successor,
and there is now a great deal of predictive data that compares individual profiles with actual successful CEO performance. Once a successor is identified, it is important not to make assumptions about his or her ability to immediately assume the role. Regardless of how qualified the individual is, there is always a steep learning curve, particularly with insiders who have never before served as CEO. Boards that want to ensure a quick and successful transition will identify a holistic, individually tailored program that targets areas relevant to CEO performance. Identifying areas that require strengthening and providing the support needed for further development have been shown to dramatically increase the odds of success. Given how fundamental CEO succession planning is to the success and well-being of every organization and to the governance responsibilities of the board, nothing should be left to chance. Even those assumptions that seem the safest and most logical have the potential to derail the process if steps are skipped; critical questions go unasked; or the crucial skills, experience, and personality traits—which research validates are most closely tied to success as a CEO—are not rigorously evaluated. Jane Edison Stevenson is global leader for CEO Succession and vice chair, Board & CEO Services, and Dave Heine is exec utive vice pres ident, Board and C-Suite Practice, at Korn Ferry.