After thorough assessment, viable internal candidates should be identified according to those competencies and should be provided detailed development plans. Additionally, interaction between those internal candidates and the board should increase, providing the board first-hand visibility and experience. Benchmarking internal candidates against the market is critical and may result in recruiting externally to strengthen the bench. If this information is consistently reviewed, the board is able to act quickly and confidently in the event of an unanticipated transition.
Several people, and groups of people, play critical roles in the CEO succession process. The Nominating/Governance Committee is responsible for managing the overall process. With a planned succession, the board and CEO share responsibility until one year from the anticipated transition, at which point the board assumes sole responsibility. At the appropriate times, the HR, Legal and Communications departments play key roles in candidate assessment and development, regulatory filings and announcements, respectively.
The bottom line is, transitioning from one CEO to the next is a complex matter, particularly when a board is faced with unpredictable circumstances such as McDonald’s. An ongoing process, starting immediately after a new CEO is appointed and reviewed every six months, will benefit an organization immensely. Effective succession planning is no longer expected, it is required.
As recent history proves, boards will be held publicly accountable for succession success or failure. The board’s ability to calmly and quickly appoint the right successor will propel the company forward with confidence.