Leadership Change: Here's How to Make It as Painless as Possible
The best succession plans are the result of a dual effort. The board of directors and the current CEO should team up to lay out a succession plan, Tandon says. That means thinking through what is needed in a successor.
The succession plan should have clear objectives and goals — long- and short-term — and include a detailed job description. It should lay out the steps for transition when there is a change at the top, and the plan should include what the organization needs and expects three to five years down the road in addition to immediate concerns. It should also lay out potential internal candidates or the qualities internal candidates should possess to be considered as future leaders.
The plan should be so airtight that the organization can run efficiently no matter the state of the C-suite.
“A very important quality, and what I try to do, is to make sure the organization runs smoothly if the CEO wasn’t there,” says Lucy Morillo, president and CEO of the Miami Children’s Health Foundation. “… Some organizations fall apart when leaders leave. Good organizations run by true leadership are set up to run without the leader.”
It’s the job of the board to perform the search for the ideal candidate. Many times, that person is in the organization already.
“Insiders with the right capabilities have historically been more successful than bringing in an outsider as a new leader,” Tandon says.
“Studies have shown that compared to internal candidates, outsider CEOs have more than double the turnover rate, the turnover of other senior management increases dramatically and the organization is less likely to perform successfully relative to its peers,” Nardizzi adds.
There are several reasons this is true. For starters, outside candidates lack familiarity with the organization and the culture, which can cause problems. That results in a steeper learning curve to understand the organization’s strategy, programs and operations. Couple that with the time it takes to build relationships with board members and key staff, and outside candidates are more than a step behind.