There are three key elements in this phase:
Assist the board in the selection of the successor.
The board is ultimately responsible for selecting the next CEO, and it is one of their most important responsibilities. However, for planned successions, the incumbent CEO can help frame the process, partnering with the board, serving as a catalyst for action when needed and providing input. The CEO typically has considerable influence when the focus is on internal candidates, but less of a voice when the likely source is external, although there are exceptions. Supporting the selection process without attempting to dictate the results is the CEO’s role at this point. The CEO also generally has the greatest insight into the individual sensitivities of the internal candidates and how best to communicate with them in order to maximize retention.
Supporting the succession with a full orientation to the organization, board and all stakeholders.
Once the selection has been made, there are important aspects to consider. First is the timing regarding the hand-off of responsibilities. Staged transitions, such as creating a time-limited COO role, can signal an upcoming transition and allow the organization and the external world time to adjust, as well as allow the successor to learn parts of the organization that may be less familiar to him or her. However, business requirements, personal situations and the dynamics between the incumbent and the successor should also factor into the decision. At least three months of overlap between the two executives allows some time for the incumbent to provide insights into the senior team, the organization, competitors and the industry. Second, it is important to generate a robust and compelling communication plan that encompasses internal stakeholders as well as a proactive outreach to key external constituents such as customers, suppliers, investors, analysts and the media.
Working with the board on whether and how the departing CEO will be involved with the organization in the future.
The views are mixed regarding whether or not the incumbent CEO should remain involved with the organization in a time-limited role as board chair or another role, or to make a clean break. This decision should be based on what the organization and the new CEO need to be successful, and what the outgoing CEO is willing or able to do. When the organization must make a radical shift in strategy, the presence of the prior CEO can impede the new leader’s ability to dismantle what was previously built. The dynamics between the two individuals will also impact the decision, as well as how well-defined the proposed roles and responsibilities are.