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Why Succession is a Continuity Issue

Why is CEO continuity so difficult? According to Challenger, Gray’s league table of CEO departures of the past 12 months …

Why is CEO continuity so difficult? According to Challenger, Gray’s league table of CEO departures of the past 12 months the recession has not been kind to CEOs, even though the pace has slowed down since last year. In addition to performance pressure, most leaders must confront impatient investors and boards that are less reluctant to pull the trigger. In this issue we feature a roundtable discussion of what’s wrong with succession management today, coupled with results of a survey CE conducted in partnership with organizational consultants RHR International.

There are many things that happen when succession doesn’t go well. Loss of top talent is chief among them, but almost as important is the loss of momentum, a fact revealed in the survey results Interestingly, 42 percent of the 255 top executives and board members rated themselves as effective in getting succession continuity right, yet almost half (48 percent) admitted they hadn’t seen a copy of the succession plan within the past 12 months.

In our roundtable discussion, CEOs admitted that succession has all too often been viewed as a discrete event unto itself instead of as a continuity issue affecting all parts of the company. In today’s unrelenting environment, where there is less room for error than in previous times, both boards and management must connect succession to strategy. Another improvement would include a focus on “what” instead of jumping immediately to “who?” In both our survey and roundtable, CEOs are coming to realize that the roles and skills needed for the next leader are often different from what allowed the previous leader to be successful.

If there is one thing companies need to do well in any succession process it is to link succession with a clear communications plan that reaches everyone inside and outside the company. As our cover story with this year’s CEO of the Year, Jim Skinner of McDonald’s, underscores, when a company is faced with having three CEOs in a fourmonth period (in this case due to severe illness), the potential for uncertainty and discontinuity can be enormous. In this respect McDonald’s is the poster child for having a well-defined succession plan in place. Skinner and his team were able to carry through with a “plan to win” and they did.

About J.P. Donlon

J.P. Donlon
J.P. Donlon is Editor Emeritus of Chief Executive magazine.