CEO succession is one of most organization’s top priority. In my opinion, the board including the incumbent CEO doesn’t have to be very hands-on in its succession roadmap implementation to make it work. HR, or at least a senior project team, should be in-charge in developing a structured process allowing CEOs and its board to participate and get involved while they focus on equally important agenda—managing the business.

This article certainly presents a well reasoned argument for the need to establish CEO and executive management succession planning as a legitimate undertaking of the board. But it may be worthwhile exploring some of the other considerations regarding succession planning that the article did not discuss. For example, it would be interesting to know how many organisations with an established and agreed succession plan ran into problems and how many organisations without an established succession plan didn’t experience any problems.

Another issue that comes to mind is the way organisational successes are often attributed to the efforts of an individual rather than understanding how other people or circumstances may have contributed. In other words, prior successes attributed to an individual may not be a guide to future success in a different environment under different circumstances. This is important, not just in external hires but particularly in external hires, because often the decision to appoint a CEO can result in a substantial inflow of other executives or consultants who have a stronger affiliation to the new CEO than existing executives. In an Australian context this was certainly observed in the appointment of Rob Joss at Westpac in the early 90s and more recently at Telstra with Sol Trujillo as well as numerous, less notable examples.

The question then becomes: how can those determining the succession plan guard against basing their decision on the attributed successes of an individual? In other words, how can they ensure that they understand what part was actually played by the individual as opposed to others? This then goes to the heart of the issue around CEO succession. How much can one individual do? For example, although a CEO arguably has the most power in an organisation, the reality is that he or she is also the most dependent person in the organisation.

This is important because the appointment of an executive to a position of authority does not make that person a leader. Often someone may be appointed because they are seen as a good manager. But while it may be possible to rely on positional authority for purposes of compliance, being a leader means having leadership bestowed not from those above but from those below. Unfortunately, too much leadership research has focused on the attributes of the individual rather than seeing leadership as a relationship. So the question is, how can those determining the succession plan determine whether an appointed individual will be a good leader for the organisation? Unfortunately, from my experience, blind reliance on so-called scientific tools may give some people some comfort because they have a process to follow, but in large measure they are largely useless for the purpose at hand.

While it is a great idea to consider candidate competencies aligned with the corporate strategy—inorganic growth requiring entrepreneural/M&A skills or organic growth requiring deeper domain or operational experience—it’s not very clear how this will be effective in such a dynamic operating environment we are faced with today! By the time succession plans come closer to execution, the priorities for the business might change dramatically making the candidate sub-optimal for the emerging situation. So, may be it is a good idea for boards to focus on investing into making organizations responsive and innovative that are capable of producing internal leadership talent or embracing new CEO talent as imperative; rather than worrying about a CEO succession process that might not carry much relevance at the real point of inflection.

In my opinion, the incumbent CEO should be completely removed from the succession planning process. Some may argue that a consultative approach with the current CEO should be used and there might be some merit to that argument. However, there is a distinct possibility that a consultative decision on the successor will be influenced. Taking an independent decision will minimise the possibility of the successor being a ‘mini me” and increase the objectivity of the process.

Additionally, if a transformational initiative is required to improve/turnaround the business, a two-step search process should be employed. In the first instance, external candidates should get priority consideration. The natural attrition that occurs as a result of the external search process should be seen as a healthy sign for the company of the herd/cliques beginning to exit. As a second step, equal priority should be given to both external and the remaining internal candidates. This will increase the possibility that the remaining strong internal candidates are not already “tainted” by the system and culture and are in for the long haul.

I disagree with the comment that planning immediately for the next successor is a dangerous strategy. First, if it is the stated policy of an organization to manage its succession policy this way then there is no undermining message to be received. The decision to prepare for the next change is simply a matter of course. Second, CEO longevity is not guaranteed. Being prepared for an unexpected departure is simple common sense. We back up our hard drives and our files regularly and assign backups for job responsibilities not because we do not trust our hardware, our software or our staff but because accidents happen, people get sick and power surges are beyond our control. Surely it is better to be prepared than caught off guard.

Another area of concern in leadership succession is the matter of organizational culture. As businesses become less traditional in structure, environment, and personality, companies like Google and Apple must also consider how well a new CEO fits into the unique culture that is an integral part of both their public image and their financial success. In organizations such as these it is even more important for the current CEO to be involved in the selection and mentoring of future leaders in order to ensure that the values that drive the organization are effectively passed along.

Assuming that the board has agreed to the long term and short term business plan, it will be possible to not only identify the competencies needed by the current CEO incumbent but also the future competencies that he will need if he is able to meet the plans requirements. In companies that I have worked in, this key task is included in the bonus scheme targets. Incumbents need to identify possible succession candidates and assess whether or not they can be developed and how this will be achieved within a 5-year timetable to be ready to take over. By making this a bonus element with a 10% of bonus target for convincing the board it is being achieved and a minus 20% of any bonus earned through other tasks, everyone (management, shareholders, and the board) know that this is a serious attempt to safeguard both the organisation’s future and a motivating factor for current executives.

While planning next CEO, another issue (if not a challenge) to be most likely addressed is how to assuage the hurt of other eligible internal aspirants or how to simultaneously fill the vacuum if they decide to opt out of the corporation.

Not many companies do this. It is a question of who bells the cat. The HR leader expects the board to take the initiative. In the succession planning discussions the team does bring this up as a sensitive issue. And in case a situation arises for replacement without lead time, there is this sense of urgency created and the one of the internal guys resort to arm twisting and get away with becoming the CEO.

The process described by the authors is based entirely on competency—on the ability of the new CEO to do the job. This is the basic approach that’s used by every search firm selling their services to the Board. This approach has been around for many decades. The problem is, this approach doesn’t work—64% of CEO’s selected under this kind of competency-based approach fail to reach their 4th anniversary and a full 40% are retired or fired in the first 18 months.

To their credit, virtually every professional search firm can find and present a slate of candidates, each of whom who is capable of doing the job. The reason the turnover rate of CEOs is so high, however, is not because their skills, talents, experience, and knowledge doesn’t adequately match the needs of the company. It’s because their character—specifically their values, beliefs and business philosphies—don’t fit with the cultures of the organization through which they must bring about needed changes. Until boards adopt a succession planning best practice that incorporates the empirical measurement of organizational culture and the degree of fit between the candidates’ character and that cultural reality, they will continue to make the costly mistakes that come from the use of an exclusively competency-based approach as advocated in this article.

The mantra, “If you can’t measure it, you can’t manage it” that underscores Six Sigma and lean processes is just as applicable to “culture” as it is to “quality.” Culture (and character) must be measured, and fact-based data about the heretofore “soft stuff” of culture must be interjected into the heart of the CEO selection process for it to work. Competency alone is not enough be cause it’s not what leaders do that causes them to fail so much as it’s the way they do what they do. Metaphorically speaking: once the shape of the hole is understood, only then can the right peg be selected to fit it. Selecting “pegs” on the basis of their strength is only part of the solution. They must be selected for their strength (competency) and their shape (the fit between their character and the culture of the organization.)

I think this article does a good job of addressing two critical issues; the first is the whole idea of succession planning for “mission critical” roles and the second it begins to allude to is the process of executive selection itself. The current failure rate for “new” CEOs in their first two years in the role is well over 30%. As the author adroitly pointed out, a big part of this is because we don’t have a good process. In many cases the “successor” is a “mini-me” or duplicate and rarely do organizations engage in a robust process of really examining the totality of the skills and attributes of candidates to fill these critical roles. The interesting thing is most executives fail for non “technical” or expertise reasons, but rather for lack of good fit. While I agree with several of the others that an objective assessment of each candidate is mandatory, I would submit that developing a comprehensive profile “pre-candidate” is a better process than allowing the candidate pool to dictate the process. I think this allows us to really examine the critical skills and attributes without being influenced by the “halo” effect. This process should be followed not only for the CEO, but for all “mission critical” roles. In my experience, wrong process = wrong results.

Boards are not likely to take this on readily, regardless of the risks entailed by failing to plan for executive succession. However, if a board determines that succession planning is of importance, better to make it a critical performance responsibility of the CEO and have that responsibility shared among all senior leadership of the organization. Calling it “talent” or “leadership development,” and making it as much a part of executive performance assessment as any other criterion is more likely to advance succession planning than the good intentions but reluctant attention of a board.

Succession planning enables companies to speak to the varying levels of leadership, and what is expected at each one, creating clear expectations for employees looking to progress with the company. If succession planning is practiced at all levels of an organization, it has a better chance of producing strong, consistent leaders that will continue to promote internal growth and opportunity, creating a streamlined pool of talent that is able to meet the needs of the business with minimal learning curve, and minimizes the need to seek (and pay for) external talent. That is good for both your business, and your people.

This article makes excellent points, and who would argue with the need to understand both immediate and longer term strategic challenges in selecting a CEO. However, the horribly high failure rates assoicated with this process will only improve when boards focus more intensively on the three C’s (character, competence and competencies). The problem is we often get the order/priority wrong. As Hollenbach argues, getting the “who a person is” right is uniquely important at this level. The technology to make better-informed decisions is well established, and using a well-designed process integrating multiple assessors and multiple tools greatly increases the odds of success.

This article points to the challenges and pitfalls facing public companies who defer/neglect succession planning. Needless to say, the importance of succession planning in family owned or small businesses is equally challenging and all too often neglected. Failing to face this emotionally charged issue in small companies often has devastating consequences. Coaching small business owners through this process is much needed given the number of jobs created by this sector in our economy.

A major problem in deciding the successors of an organisation is not within the systems but it lies in the roots of the thoughts of people who perceive young talent to be a threat to their honour. I’ve seen many board members who hold back real talent at the expense of the society and the organisation just to be on the hot seat for a more longer time. This has to change by accepting that knowledge nourishes by sharing and rusts when hid and kept secret to increase personal importance.

I did not find there to be much new in this article that would be helpful for any company to be better at succession planning that has not already been written. I do suggest a word of caution with specific regard to the recommendation that the time to begin CEO succession planning is the day the new CEO starts the job. I would counter argue that such an initiaitve that begins relatively soon after the new CEO comes on board could send a message of lack of confidence, or that the board has not fully embraced the new CEO and therefore potentially create negative impact on shareholder value. Every action of the board and executive management has a place and time. The decision of initial priorities of the board and CEO to right the company need not be distracted by this issue early on in the new administration.

Often the succession process is not considered because there is an assumption that talent is abundant—the right person will be there when we need them. Research By Jac Fitz-Enz demonstrated the financial impact of succession planning on revenue per FTE. What he found was that those organizations who have fully prepared a successor(s) for 90% of their executive level roles enjoy a 5 fold increase in revenue per FTE compared with those who have identified successors for 60% or less.

I am also curious that the writer talks only of identifying an individual candidate. More common practice would be to identify multiple candidates for each role and develop succession pools. This allows more people into the process, creates a level of competition which supports development without limiting options too early.

An additional area is not mentioned and is invaluable is the use of proper assessment tools. The succession conversations should be informed by appropriate experts who can give a robust, scientific appraisal of each individuals proven capabilities and potential to grow. Often where succession fails is where past performance is the sole factor used to predict future performance. What makes succession so tricky and therefore worthy of investment is that you are making judgements on potential, not just realised capability.

This article makes some refreshingly obvious points in the core text. It also opens up some more unusual avenues to explore if you read between the lines. Should CEOs be appraised on their ability to develop people? On their ability to develop multiple successors? Is this a corporate competency in your organization? Given the risks of copying others’ processes or practices without fully understanding them, how useful is benchmarking outside talent and how should it be done? Does your HR line (and your top management) have good enough networks to do their own benchmarks, or do you have hire headhunters to do it for you? What about diverse candidates? And do you know what you are looking for? What are the key developmental experiences that grow successful executives in your organization? Are they necessarily the same as what other organizations require?

I agree with the view that succession planning should be built into the overall organisation recruitment and selection strategy. Succession planning can be seen or used as a motivating factor for staff with aspirations, and the neccessary skills to progress in their organisation. Last minute consideration often means some people with great potential are overlooked. These are people who then leave the organisation. This can only be described as a waste of talent.

The authors do a nice job of laying out the criteria for developing a CEO succession process (though I’d be curious to see how many firms with the same person in the CEO and Board Chair positions would satisfy these criteria—it seems pretty challenging to do both jobs exceptionally well given their different demands). In my view though, this article hits on a larger question facing most firms today: how do we get the board fully up to speed on the strategy while not asking them to micromanage the firm? There is ample evidence that most (not all) outside board members have only a superficial understanding of what the strategy is, and why it constitutes a “good” strategy. Though this seems to be changing, it is changing much too slowly. The board knows the strategy when each member can clearly articulate (1) their firm’s targeted arenas, (2) what differentiates the firm in those arenas, (3) the pace and staging of strategic changes, (4) how organic, acquisitive, and partner-based vehicles fuel that staging and pacing, and (5) how those pieces have a positive economic logic and maximize enterprise value. This type of understanding is essential in the regular evaluation of a CEO and the processes put in place to manage unexpected and planned successions.