I recently met with a corporate executive who was leaving after a short tenure. A badly bungled CEO succession planning process prompted his departure. He was well-qualified and well-liked. In fact, this would have been his dream job. But the process was so clumsy, the communication wires were so crossed, and expectations were so conflicted that a different opportunity suddenly looked much better. Worse, he was the second leader from that corporation to leave. Both shared nearly identical stories. Both left within months of each other.

For those two leaders, this was (hopefully) a once-in-a-lifetime disappointment. Unfortunately, it’s a common experience. Here are two facts:

• Only 35% of companies have formally prepared for succession planning.¹
• 60% of all executive successions will fail within the first eighteen months.²

Succession Planning is About Much More Than Choosing a New Leader

I’m often asked, “How do we begin preparing for CEO succession planning?” Most people expect succession planning to involve identifying a new leader and facilitating a handoff primarily—but these are only two parts of the process. Effective successions start much earlier and end later.

Where to Start

There are two possible starting points. Either is fine as long as both are accomplished. For most organizations, I recommend starting with building an Emergency Executive Succession Plan. There are three reasons why I recommend this:

1. An Emergency Executive Succession Plan is always helpful even when your current executive plans to stay with you for the next ten years. Unfortunately, life isn’t that predictable.
2. The questions you need to answer to develop an Emergency Executive Succession Plan are educational. It helps boards or whichever leaders are planning begin to recognize that not all emergency successions are the same and that each needs slightly different preparation.
3. Answering the questions for the Emergency Executive Succession Plan prepares you well for other succession planning.

I mentioned two starting points. The second possible starting point is strategic planning conducted by the board (or leadership group). The purpose of this includes:

1. It pushes the board or leadership team to take charge and set direction. Organizations that struggle during succession planning often leave too much control to the CEO.
2. It creates a shared vision of the future so the organization can keep moving forward even if the senior leader leaves unexpectedly.
3. Succession planning decisions should be based on the company’s goals. Without a clear vision, choosing the right leader or measuring their success is hard.

Start with either the Emergency Executive Succession Plan or with Strategic Planning. As soon as you’ve completed one, pivot and complete the other. Between the two, you’ll have gone a long way toward establishing your future as you envision it.

Succession Planning Works Best After Completing Both Plans

In most cases, it only makes sense to build a formal CEO succession planning process when that executive is within 3-5 years of their likely departure. The primary exception to this might be in a family-owned business where a family member may be groomed for leadership for many years before assuming the role.

Attempting to plan succession further out than that becomes an academic exercise. While it might have some value, it’s not very practical. However, if you are within the 3-5 year window and your leader can see their departure on the horizon, follow these steps:

1. Appoint a Responsible Succession Committee: Form a small, well-defined search committee (3-6 members) to lead the process. The outgoing leader may provide input but should not be part of the decision-making process. Establish the committee’s authority, whether they make the final decision or submit recommendations.
2. Support the Outgoing Leader: Ensure the outgoing leader is prepared with both a personal vision and financial security. Many leaders unintentionally hinder their own exit, so having a clear post-exit plan is crucial.
3. Clarify Vision and Values: Define the organization’s vision and values before selecting a successor. This ensures alignment between the new leader and the future direction of the company.
4. Plan for Future Structure: Anticipate future leadership needs and organizational structure based on the defined vision. Identify necessary roles and resources for the organization to succeed. This helps provide a clear picture of the job you are hiring for.
5. Stabilize the Organization: Address potential conflicts, formalize roles, and complete key projects to maintain stability during the transition.
6. Select or Groom a Successor: Clearly define the criteria for internal and external candidates and the process for selecting them. Have a backup plan if the initial selection doesn’t work out.
7. Onboard and Transition: Develop a clear onboarding plan, including coaching and mentoring, to help the successor integrate smoothly and succeed in the new role.

Finally: Strategic Staffing – Building the Leadership Pipeline

Successions impact entire teams and spark movement. Anticipate this. Some positions will naturally open up, especially if the CEO succession planning involves a promotion from within. Adjustments on the leadership team are likely as the new leader and existing team assess how well they fit with the new arrangement. Individuals close to retirement may decide to leave, and leadership changes often prompt others to pursue personal changes.

While you may not be able to predict exactly how things will unfold, you can anticipate that change will occur. Don’t wait until you need new leaders to start building them. Building a strong leadership pipeline ensures that you’re prepared for these changes. Developing a pool of skilled leaders within your organization can significantly ease transitions, maintaining stability and continuity even when key figures move on.

If you’d like help with this, you can download my free Strategic Staffing Guide, which offers insights into preparing your leadership bench and ensuring you have the right people ready to step into leadership roles when needed.

Conclusion

Effective CEO succession planning is about much more than just identifying a new leader. It starts much earlier and ends much later. By planning for emergencies, aligning succession efforts with the company’s vision, and proactively developing leadership talent, you can create a smoother transition process. If you do the necessary work, the chances are high that you will have a successful succession experience.

What step do you need to take next?

Take good care,
Christian

^1 https://www.td.org/insights/succession-planning-is-your-organization-prepared

^2 https://hbr.org/2018/07/3-transitions-even-the-best-leaders-struggle-with