Why CEOs and Succession Plans Fail — and the Unconventional Path to Getting It Right
If you read recent business headlines with any sort of regularity, one trend has become crystal clear — CEOs are leaving at an unprecedented rate. In May 2023, the number of CEO exits hit their highest total (224) since 2002. Departures of those occupying the top executive spot are up nearly 50%, while average CEO tenures are constantly declining.
What do experts believe is behind this recent exodus?
- The job may be too stressful. Mounting — and often conflicting — expectations are causing many to reach a breaking point. Both internal and external stakeholders expect the world from CEOs, even in the face of constant criticism and scrutiny from all sides.
- It has become increasingly difficult to find the exact right fit for the job. Today’s enterprises need someone who can see (and meet the demands of) where the organization is going and possesses the values and leadership skills to get it there.
Since the wrong CEO choice could spell disaster for the company, many boards are simply hiring traditional, time-tested leaders who they know will uphold their values.
The Problem With a Conventionalist Approach
While it may seem like the best idea to keep doing what you’ve always done, this presents two critical problems:
- What most boards are doing simply isn’t working. The evidence of this issue lies in the fact that many CEOs are walking away from their jobs and not looking back. Succession planning becomes quite difficult when you aren’t able to keep anyone in the seat for a significant period of time.
- Taking the traditional route doesn’t always move the company forward. The traditional choice is often the safe choice, and safe leaders may hesitate to implement creative or innovative solutions.
More conventional CEOs may face challenges in responding quickly and appropriately to market disruption and may, in turn, miss out on significant opportunities as a result.
What Can Companies Do to Address the Issue?
The good news is that boards don’t have to completely break with the strategies that have brought them this far in order to ensure a successful succession plan.
What today’s corporations need are CEOs with:
- Massive talent
- Robust skill sets
- Deep alignment with the organization’s values
- A fierce commitment to having the courage to break with tradition when an opportunity is running in a different direction.
While this “best-of-both-worlds” leader sounds like the perfect solution to companies’ succession planning issues, many boards have no idea where to find leaders like this.
Everyone may be on board with the idea, but it means nothing if these types of CEOs are virtually non-existent.
If your company is to have any grasp on long-term leadership and succession planning, it will require a strategic approach. It won’t be easy, but taking the right steps will make it possible.
5 Key Steps to Nailing the Corporate Succession Plan
If finding an unconventional leader is one of your priorities, you should know in advance that it will take deep consideration of outside cultural forces and an honest assessment of your internal team and corporate environment to understand and locate the person you’re looking for.
While no concrete method can guarantee success, these five steps will help you get closer to your goal.
1. Figure Out the Future
Take the time to map out where you believe your organization is going in the future. Consider the business landscape and where you want your company to land within it. Understand the leadership challenges a future CEO will face and what traits they will ultimately need to overcome them.
2. Start With Who You Have
Look into your current leadership stack to see if you have anyone who fits your criteria. What you are looking for is someone who consistently promotes company values yet possesses the tenacity to think creatively and introduce unconventional solutions.
If you already have an innovative leader like that, consider how you might develop them so they are ready to sit at the helm of the organization.
3. Consider Multigenerational Needs
Every generation is unique. From baby boomers to Gen Z (and even Generation Alpha coming up after them), each one has different values and ideas about what corporate leaders should be doing.
Ensure you are looking for a CEO who can engage all generations, finding a way to make each one feel heard and seen while continuing to work in the best interests of the organization.
4. Assess Your Current Team
Identify the current needs and temperament of the executive team you have right now. Consider their capacity, strengths, weaknesses, and commitment to organizational values. How open-minded are they about unconventional approaches?
Having a CEO who can work well with your executive team will be key in their ability to lead effectively.
5. Know What Needs to Change
It is a unique challenge for unconventional leaders to find success in stubborn company cultures. It’s important to continually assess your current organizational culture and identify areas that may need to change to accommodate future goals. Doing so will positively impact a future CEO’s longevity and ability to lead the company.
Finding the Right Leader Is a Long-Term Strategy
CEOs are leaving their positions at unprecedented rates, leaving many companies in a bind when it comes to their succession plans.
While most boards believe going with more traditional leaders is wise governance, it is becoming increasingly clear that this strategy needs an overhaul. Today’s companies need leaders who are committed to organizational values but willing to be flexible and innovative in their approach to growth.
However, finding these types of leaders can pose a significant challenge. Fortunately, there are steps organizations can take to make their search easier. That can involve the following:
- Taking the time to assess their current team, understanding the needs and values of the next generation, and being honest about what needs to change are critical in identifying the right leaders who can handle the pressures of the position while moving the company forward.
- Taking a hard look at the potential leaders who are already available is another savvy move. As you do, consider who might have the capacity to take on the daunting task of leading the company into the future. If no one in your organization comes to mind, consider how you might raise them up.
- Finding the right leader takes a long-term strategy. If you start now, you’ll minimize the chances of making profound mistakes and maximize your opportunities to find the next-level leader you need.
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