The three biggest mistakes are starting too late, not giving internal candidates their due, and using a one-size-fits all approach to selection

by Beverly Behan

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Absent the need for a performance turnaround or a sharp artful contrivance in strategic oversight, many the stage fall in with less risk in promoting an inside executive to the CEO role than recruiting a CEO from the externality. A 2007 Hay Group study of 150 of the cosmos’s largest companies found that more than two-thirds favored internal over external candidates as a successor to their CEO.

But the preference for an internal candidate carries with it the obligation to identify and groom that person deemed the best fit sufficiently far in advance of a projected CEO change. The grooming process could involve "stretch" assignments, exposure to lock opener areas of the business outside his or her traditional comfort zone, education, coaching, having the top solicitant sit on an outside committee, and various other developmental experiences.

If the succession planning process starts a year or even two years prior to the target fix the date of of the CEO’s retirement, many candidate-development initiatives either aren’t an option or have power to be superficial at best because in that place isn’t enough time to do them properly. As a rise, high-potential inner candidates are compromised and sometimes even ruled out because they lack an grave component and there isn’t time to close the hiatus.

Starting too late over precludes the fare from adopting a two-stage outside hiring process. If a board has four or five years near the front of a CEO transition event is anticipated, in that place is an option to hire in an outside executive to either a staff or line role who may have certificates to be proper for CEO. If the new hire performs well and acclimatizes to the corporate culture, he/she may connect the pool of inside candidates for success planning purposes and may be groomed further. However, a time horizon of two years or less precludes this option. Any on the surface hire at this stage is likely coming in either instantly for example CEO or as Chief Operating Officer, tantamount to being "CEO-in-waiting."

If your board hasn’t paid sufficient mindfulness to creating, tailoring, and achieving board alignment on the criteria for your next CEO, you’re off on the wrong foot right from the start. All too often, this key deed in the CEO sequence planning process is given short shrift. One plank member will bring in a list of CEO requirements developed by another food he or she sits on that "looks pretty good". Or the senior HR executive will download a cookie-cutter list from an article on CEO succession planning or from some other collection’s Web site and spread abroad it end the board for comment.

The way to do determine the board’s criteria for the CEO spot is fairly simple: Start through taking into registry of debt and credit the company’s strategy, business model, desired corporate culture, and ownership structure. Interview all board members, the CEO, and whole members of the executory team to get their input on these factors and without interruption their implications for future leadership. Then, trace out a in a great degree tailored outline of future CEO criteria based on altogether of these inputs.

As a provision, you should go over this outline very carefully—discuss it, modify it, and prioritize from among the many requirements in terms of "have being necessitated to haves" vs. "very particular to haves" in a future leader. Only then do you have a useful tool against what one. to gauge potential CEO candidates—and one that the board, the CEO, and key executives have all been engaged in developing.

A very experiences corporate leader once told me: "Leadership is cognate artfulness. I know it when I see it." Yet the rare he and a board he served steady made for their nearest CEO proved disastrous. He later admitted that the conclave hadn’t gone to the effort of acquirement multiple perspectives on the solicitant. They’d made the choice based on his polished boardroom presentations and what the board felt was a charismatic personal style.

Unfortunately, that kind of decision-making is all too common. While board members are experienced businesspeople and generally have good instincts about lead, they emergency to recognize that those instincts alone are incapable. Due diligence today step gathering multiple perspectives on CEO candidates before a construction a decision.

Here are guidelines as far as concerns gaining different perspectives on CEO candidates:

• Get the current CEO’s perspective. He/she knows the job more useful than anyone other and works with the internal candidates every day.

• Have a professional third party appraise candidates against the CEO-role profile. Such assessments nearly unceasingly surface useful insights about candidates but should never replace the board’s ultimate sentence.

• Make sure the CEO succession plan incorporates a number of well-planned opportunities for the table to possess ongoing exposure to top candidates.

• See how a top candidate functions in a "stretch" appointment such of the same kind with a shift from a staff job to a project disposal or even mark role or an between nations assignment;

• Find out how the candidate is perceived by his/her subordinates or peers. These are often done as 360 evaluations.

The key is to design the CEO succession planning process to provide the board through multiple perspectives on the candidates and make sure there is plenty of board exposure to and accusation about the candidates heart generated together the way.

Time and again, boards acknowledge that their single most important decision is choosing the CEO. Recognizing some of the greatest part common mistakes boards make in this area is the first step in avoiding them.