Succession of the CEO
CEO Succession is a new process to me. The transition of the CEO is intense for any business. Having a succession plan leads to a smooth transition for the company and in turn leads to more confidence of employees, investors and business partners. In many cases the CEO vacancy is planned, but unfortunately, some vacancies are not planned. In some cases the board must step in to replace a CEO. This can be met with resistance or a founder CEO might realize it is best and have control of finding a replacement.
A few key components of a successful succession plan are that it should be written and reviewed. The plan should be implemented appropriately one year before the CEO is replaced. The board would implement this after a through review of qualified candidates. Once the final candidate is chosen they will be instrumental in the transition. The new CEO will start by learning the company, They will meet the stockholders and build relationships before the outgoing CEO leaves.
The board is usually the one that is responsible for overseeing the CEO succession. The costs of not getting it right will affect the company for years to come. While not an easy transition, it is important to address the situation and have plans for a smooth transition. The life of the company might depend on it.
The founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton, N.J: Princeton University Press.