After the hire
After a CEO is hired, it is important to effectively manage the internal and external candidates who didn’t get the job. The board’s decision should be thoughtfully discussed with external candidates because it is both the right thing to do and because the external candidates might be future partners or customers. The board and new CEO should also discuss the best way to embrace and engage the unsuccessful internal candidates, who will likely be integral to the success of the company and the new CEO.
In fact, internal candidates should be handled carefully throughout the process. We often see them neglected and kept out of the communication loop. If they are not selected, the chair of the committee must be the one who communicates with them first. The leadership advisory firm can coach the chair on these conversations and help manage the potential flight risk of those executives.
Onboarding the new CEO
Many succession committees think their job is done when the new CEO signs a contract. In best-practice companies, however, we are now seeing first-year transition plans for the new CEO where a 360-degree assessment is conducted at month six and at month twelve, with an update to the board and feedback to the CEO. This can act as an insurance policy for the board, surfacing issues with the CEO early and enabling the board to manage the risks and to prevent them from becoming real problems with only one solution.
In summary, turning traditional succession planning–with names in boxes–to one that is actually operational–meaning that it produces viable candidates that can be selected to lead the company–is a much more difficult ask of succession and selection committees. Practice and experience combined with strong leadership are required to steward the process to a strong outcome for all stakeholders. The process is fraught with risks. But when it is handled by an experienced committee chair, and committee members receive the support of a modern leadership advisory firm (in the same manner that committees are supported by compensation, risk, and audit firms), organizations can create a competitive leadership advantage.
Stephen A. Miles is a vice chairman of Heidrick & Struggles where he runs Leadership Advisory Services within the Leadership Consulting Practice. Jeffrey S. Sanders is the managing partner of the North American CEO practice for Heidrick & Struggles.