CEO Succession – What Strategy to Make?

CEO succession planning implies the preparation of capable personnel who are ready to fill the vacant key positions. While this practice is often associated with senior management, it is relevant to the entire organization.

In recent years, it has become increasingly clear that the transfer of power from one leader to another has a huge impact not only on people’s attitudes and business productivity, but also on the company’s stock price. Traditionally, companies have relied on their HR departments to ensure that there are always talented executives who have gone through all the hierarchies and are ready to take the place of their elders. Indeed, many believe that talented people on the bench is an important indicator of the future performance of a corporation. But from a human resources perspective, succession planning has another major challenge. Knowing that they are being prepared for more keeps the brightest managers in the company.

Until recently, most companies, regardless of size, have drawn up succession plans for senior positions, as well as development plans for key personnel, to ensure the “supply” of people ready for high-ranking positions in the future. Typically, these are fast track programs for the so-called “ambitious” – university graduates and other candidates with high potential.

However, it remains unclear to what extent the CEO succession planning concept is suitable for lean corporate structures. In particular, there are doubts about fast track promotion, which relies on identifying high-potential employees.

The problem with traditional succession planning – and acceleration in particular – is that it creates an expectation of promotion even in today’s lean management structures, where there are far fewer corporate ladders. It also ignores non-management positions, such as the role of knowledge workers whose activities can make a vital contribution to the future of the business. The question here is how to keep brilliant researchers or programmers if they have no desire to move up.

As a matter of fact, in this case, traditional fast track promotion and succession planning is likely to be not very effective way to retain talent in the future. More flexible approaches will be required to accommodate employees, their families and the changing professional structure of the organization.

Not everyone wants to be a CEO. The first step should be a clearer understanding of what a successful career means for a particular person.

In recent years, there have also been serious discussions about how best to organize the transfer of power from one CEO to another. This debate, increasingly active, raises a number of painful issues for HR professionals.

In particular, in the United States, the practice of filling high positions with people from outside has become widespread. This conflicts with traditional succession planning. In the future, some well-known companies may have to reconsider their approach to this problem.

Some organizations pride themselves on promoting people from the inside out and have long been preparing them for high-ranking “insider” positions. They believe that the best scenario is a smooth succession, with the management being transferred from one director to the next with little or no disruption to business style.

In addition, it should be noted that different scenarios or stages in the development of a company require different types of continuity. For example, when a company is performing poorly, it can hinder the promotion of talent from the inside.

Some companies prefer a different succession strategy. Rather than scheduling a new CEO ahead of time, they are adopting a Darwinian approach to build strong leadership cadres who will “emerge” a new CEO in suitable times. “The time will come and he will come.” This approach has its advantages, as well.