Managing Leadership Succession

Studies and experts concur: Promoting CEOs from within is better for an organization's long-term performance than hiring from outside. To do it properly requires a collaborative effort between top leadership, senior-level HR executives and the board of directors. And don't look for ready now. Look for capacity for growth. By Kristen B. Frasch There's mounting evidence that promoting CEOs from within an organization makes better business sense than acquiring one from the outside, especially in today's haphazard -- some might say, traumatized -- economy. The latest testament to this theory is a just-released study by Chicago-based A.T. Kearney and Indiana University's Kelley School of Business in Indianapolis that followed 36 companies -- all of which exclusively promoted CEOs from within their own ranks. The results showed these companies outperformed others on return on assets, equity and investment, revenue and earnings growth, earnings-per-share growth and stock-price appreciation. The study, Homegrown CEO: One Key to Superior Long-Term Financial Performance is Leadership Succession , underscores the way boards of directors often fail when it comes to CEO succession planning, says Paul A. Laudicina, chairman and managing partner of A.T. Kearney, a global consulting firm specializing in CEO-agenda issues. Rather than focus on leadership development and creating a qualified stable of internal CEO candidates, Laudicina says, boards too often end up going outside the organization to fill the top spot. Unfortunately, their stakeholders, more often than not, pay a big price for that star search. Outsiders, he says, experience a significantly higher failure rate and shorter tenure than insiders. Recruiting at the top is often far more risky, costly and disruptive than seeding succession from within -- a point worth noting in today's risk-averse economy. The 36 companies identified in the study represent

25 different industries and include Abbott Laboratories, Best Buy, Caterpillar, Colgate-Palmolive, DuPont, Exxon, FedEx, Honda, Johnson Controls, McDonald's, Microsoft, Nike and United Technologies, among others. Results of the research show that responsibility for managing leadership succession is among the most important duties of a board of directors, says Fred G. Steingraber, chairman emeritus of A.T. Kearney and leader of the study. This responsibility cannot be left to the CEO, the chief human resource officer or to chance, where -- all too often -- it currently seems to reside, he says. Boards need to develop relationships with CEOs that enable them to monitor, advise and, when necessary, adjust the process to ensure that a talented executive is ready to step in, whether in an emergency or over a three- to five-year transition. But don't count HR out in this equation, says Stephen A. Miles, vice-chairman of Chicago-based Heidrick Struggles, a leadership-development consultancy. HR, he says, has a huge role in encouraging and sometimes forcing this closer tie between the CEO and the board. It's all part of what he champions as the new model for picking the next CEO [from within]: progression planning. Heads of HR, Miles says, are the meat in the sandwich of progressive succession, which he describes as a collaborative approach in which CEOs and HR leaders, or heads of talent management, work together to create an environment in which viable candidates are being grown and board members are being regularly exposed to them. That exposure -- which can take place in off-site meetings or in-house seminars -- ensures the potential leaders are considered viable by the directors, not just by the few top leaders who've hand-picked them. We stress 'progression' instead of 'succession,' he says, because succession is always [done with] a backward-looking lens. And the term 'succession' lends itself to 'looking for the next anointed one.' Like Miles, Mark Nadler, a Chicago-based partner at Oliver Wyman Delta, a management-consulting firm specializing in organizational and leadership effectiveness, takes issue with the [report's] suggestion that, as a general rule, boards, rather than CEOs, should 'manage' the succession process. Most of the directors he's hearing from are looking for a collaborative process managed by the CEO with appropriate oversight by the board, Nadler says. More and more, he says, companies are recognizing that CEO succession is really about leadership transition, sure you have a pool of viable candidates ... executing the transition minimize the loss of key talent, assembling a team of key players who will complement the new CEO's strengths and weaknesses, and having people in place to fill the vacancies resulting from promotions at the top. That means executive talent development becomes a critical process, and the CHRO is the lynchpin in that process, he says. Though boards shouldn't manage succession, he adds, they should still be deeply involved should be sure management has a good executive-development process. Boards also should become familiar with the candidates so when the time comes, directors can make informed, intelligent and independent selection decisions. But it's the job of the CEO and top management -- and the CHRO, in particular -- to actually manage the process. In his work with employers, Miles says, he helps CEOs and HR devise ways to incorporate board members into the culture. Most organizations, including many large companies, still suffer from a serious disconnect between the CEO and his or her head of HR, and the board, he says, because the CEO and CHRO are developing candidates who are not viable -- not in the least -- in the board's eyes. Indeed, Improving Succession Plans: Harnessing the Power of Learning and Development , a 2010 research study by the Institute for Corporate Productivity and the American Society for Training Development, found the most-often-cited barrier to succession-planning success was a lack of sufficiently robust development plans (including learning and training programs) for candidates. Well-managed and supervised development programs and stretch assignments are key, says Miles. CHROs must ensure there is in-house, collaborative progression planning -- a method, he adds, that is much less risky than going outside and is, therefore, far more imperative in today's economy than the old-school approach. The current system of compliance-based CEO succession, in which the recommended steps are carried out and paperwork is generated and signed off on to comply with a companies' own rules of governance and guidelines established by the U.S, Securities and Exchange Commission creates a very false sense of security, he says. [Those companies] are still using 'ready-now' terminology, which is a myth, Miles says. No incoming CEO is going to be as good as, or better than, the CEO who is leaving. They need to look for capacity, capacity for growth. 管理新知 您可能感兴趣的文章 HR如何提高招聘效率？

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