Corporate boards need to have a process in place to replace their chief executives so they are not unprepared when their CEOs leave.
That was a conclusion of a Nov. 28 panel on corporate succession co-sponsored by GWSB’s Institute for Corporate Responsibility (ICR) and the Center for Law, Economics, and Finance (C-LEAF) at the GW Law School.
The program was one in ICR’s ongoing series on “Challenges in Corporate Governance.”
The panelists were Anthony M. Santomero, the Citibank chairman; Nels Olson, vice chairman and co-leader of the international board and CEO services practice at Korn/Ferry, the executive recruitment firm; and Julie Howard, CEO and director of Navigant Consulting Inc., a global expert services firm.
The panel explored how corporate boards should carry out one of their most important responsibilities — developing a succession plan for the CEO — both for the long-term and for emergencies. They discussed what factors should be considered, and how the plan should be organized to maximize effectiveness, and the chances of a good outcome.
The departure of a CEO is a critical transition time for a corporation, leaving boards to decide whether they want to continue the course set by the outgoing CEO or take the company in a new direction.
If a board wants to stay the course, it may look within to promote someone who worked closely with the outgoing CEO. If it wants a different approach, it may recruit from the outside.
Regardless of which direction a board takes, it should ensure it has options when the time to replace a CEO comes, said John Forrer, the ICR’s associate director. That means grooming talent from within the company to possibly take over one day, as well as staying on top of developments in its field so it knows what other leaders are doing and/or if they may be in the market to change jobs.
Boards “constantly have to make sure a succession plan is in place,” said Forrer. “The worst thing would be to be surprised.”
For more on the Challenges in Corporate Governance series, go here.
Posted by gwsb on December 18, 2012 | Filed under: GWSB News.