CEO vacancies can be planned or unplanned. CEO’s don’t just leave your organization when they get to retirement age. In fact, there are many reasons that a CEO may leave before they are expected to. That’s why it is incredibly important to be doing succession planning now! The key to doing CEO succession planning is following eight easy steps that I have laid out for you. Keep reading or watch the video above to learn those eight steps!
Step 1: Assess Your Organization
Take a look at your organization’s vision, mission and strategic goals for the next three to five years. It is important to understand where your organization wants to be in the future, so you know what experiences and capabilities you will need in a perfect future CEO to be able to achieve those goals. It is important for your current CEO and the board to assess your organization together.
Step 2: Identify Important CEO Competencies
Now that you have assessed your organization, take a look at what competencies the CEO will need. You can develop a list of critical competencies (things that a future CEO absolutely needs) and some desired competencies (traits that would be nice, but aren’t absolutely necessary). Common competencies for the CEO role may include things like:
- Strategic Thinking
- Decision Making
- Relationship and Communication Skills
Step 3: Identify Potential Successors
There are likely people within your organization who could be the CEO in the future, or maybe have expressed their desire to become a CEO. It is important to select a few of those individuals and include them as potential successors. You should keep them informed that they have been selected as a potential successor for the CEO role in the future, but make no guarantees!
Step 4: Rate Those Potential Successors
Remember the competencies you identified in step two? Now it is time to take a look at your potential successors and grade them based on each of the competencies that you want in a new CEO. This will allow you to see where those people have gaps, and what they can improve on.
Step 5: Create a Development Plan
A development plan is a critical way for potential successors to improve and grow into the competencies that you desire in a new CEO. So now that you know where each person’s gaps are, create a detailed plan of things that they could do to work on those gaps. An example of a gap may be a person who always needs to get all of the facts together before they make a decision. This may be a gap because many times CEO’s may have to make quick decisions. So, an aspect of this person’s development plan may be to work on making quicker decisions that are appropriate to the situation.
Step 6: Develop an Emergency CEO Succession Plan
Many people think that an emergency succession plan and the planned succession plan are supposed to be separate. However, they actually should be combined when doing CEO succession planning. It is so important to have an emergency succession plan. This is because you need to determine who your emergency successors would be if the CEO suddenly leaves the organization. Consider if you want the same potential successors from your planned succession plan to also be the emergency successors or if you have other people who would be willing to fill in as interim CEO.
Step 7: Report your Plan to the Board Annually
Make sure to keep your board updated on any changes that may have been made to your CEO succession plan. For example, have your emergency successors changed, or how are the potential successors doing in terms of their development plans? It is important to keep the board involved in your CEO succession plan.
Step 8: Review and Edit Your Plan Annually
Things are constantly changing at every organization which is why it is important to review your plan at least on an annual basis. Things to consider when revising your plan each year are things like: Has anyone left the organization that was a potential successor? Should any changes be made to your potential successors development plans?
Having a CEO succession plan is incredibly important to your organization’s success, and it doesn’t have to be hard! If you follow the eight steps laid out above, you will have a comprehensive CEO succession plan for your organization. It really doesn’t matter if you have a CEO who is retiring soon, a new CEO to your organization, or even a young CEO — start doing your CEO succession planning now to ensure success!
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