Often it is a difficult discussion to instigate. If the board does, they might worry that the current chief executive will take it as a sign they are looking for them to move on, or that they are not happy with performance. If the chief executive starts the conversation, it may be seen by the board as a sign they are looking to leave. However, open, transparent and timely discussions about succession planning will leave the organisation much better prepared to manage the transition in a positive way when it does take place. Building trust is key.
Clarity of roles and accountability
A good first step is to form a board committee that is responsible for succession planning, or make sure that this task is included in the responsibilities of an existing one, such as the Nominations Committee. Another important step, which includes a much wider range of organisational stakeholders and activities, is to have a proactive, intentional and inclusive approach to developing diverse talent at all levels, but particularly in the leadership team. This means that if there is a sudden departure, the organisation has the readymade internal talent to ensure continuity whilst an interim or new permanent chief executive is appointed.
Agree on key requirements
When the need arises to recruit a new chief executive, it is critical to consider what essential skills, credentials, knowledge and values are required to meet the objectives of your organisation before discussing ‘who’. The assessment of these attributes is best rooted in the organisation’s strategic objectives, operational challenges and potential opportunities. The Board needs to own this discussion, and ideally be aligned on what is agreed. If working with a recruitment specialist, they can support and facilitate this, and will be able to contribute valuable insights to ensure the role and compensation is appropriately positioned to the requirement and market. An example of this is a client Prospectus recently worked with, where there were strongly differing views within the Board about the experience required for the chief executive position. The Chair put together a team that was representative of all these views to lead the recruitment process and, together, we were able to identify some core credentials everybody agreed with, and include other requirements as desirable qualities. We were then able to present a diverse group of candidates following our search, and the new chief executive was appointed with unanimous agreement following a robust assessment and selection process.
There are different ways to recruit; some organisations prefer to work with a specialist search consultant, others like to handle the recruitment themselves. Often this depends on the time and resources available. Regardless, there are a few things to consider and get right. First, ensure that the role is properly defined and has a strong narrative associated with the appointment. Consider how you can open up the opportunity to enable those from under-represented groups to apply, ensuring that diversity and inclusion is integral to the recruitment process – don’t be afraid to be intentional about this. Then, consider how potential candidates will be alerted to the opportunity, whether through open advertising or a headhunt or both, and finally how they will be assessed and selected fairly.
A fair and inclusive process
Selecting and assessing the chief executive is critical. The consequences of an unsuccessful hire can be expensive and have a negative long-term impact on your organisation. Ensuring that the process is inclusive and reduces bias is also a key factor, from something basic like having a diverse selection team, through to more complex issues, such as fully understanding how different experiences and backgrounds might be transferable to the role.
Those that are responsible for making the hiring decision must have meaningful information about, and interaction with, the candidates. They should consider whether additional tools such as personality/leadership profiles and in-tray exercises are required to form a full understanding of their leadership skills, experience, values and potential. We usually recommend that there is broader engagement from key stakeholders (for example, from service users and staff) to ensure there is a 360 view of the candidates. It is also important to consider the candidate’s own experience of the selection process and to configure it in a way that provides them with valuable information and insight about the opportunity and organisation, whilst giving useful feedback throughout.
The handover
Once the appointment has been made, the transition period should begin as soon as possible – this is a critically important part of the succession process. As far as possible, utilise the knowledge and experience of the outgoing chief executive through a structured handover, and ensure they are treated well as they exit the organisation. The incoming person should spend time with the board, the senior leadership team and other key stakeholders as they familiarise themselves with the organisation. As they settle into the role, it is commonly known that the first 100 days are particularly important, but our experience, and this study by McKinsey, shows that it can take more than a year for them to be fully integrated. The Board, and in particular the Chair, should stay close and be supportive of them. It will help to have clear alignment on objectives and expected achievements during this time.
Every leadership transition is unique, and a new chief executive will invariably mean changes, with some of these expected and some not so much. Like many other key strategic decisions, making it a success will require trust and a strong partnership between the board, chief executive and wider team.
