Inside the Boardroom
Board members weigh in on succession planning.
While the CEOs focus on identifying their next waves of leaders, their boards of directors are also taking much more active roles in the succession planning process. Recent situations, such as the lack of a successor at a high-profile company like The Walt Disney Co., have upped board members’ awareness about succession issues and their importance to a company’s future.
“Directors are increasingly not looking for the CEO to come and say, ‘Here is the succession plan,’” says Ric Marshall, co-founder of The Corporate Library, a Portland, Ore.-based independent research firm that focuses on corporate governance. “They are looking to work with the CEO to put that together.”
That’s the case at Gables Residential, where the board is most concerned with the CEO position and his four direct reports. “Some years ago, we spent very little time on this at the board level,” says Chris Wheeler, CEO of the Boca Raton, Fla.-based REIT. “[Today] the board is much more up-to-speed and involved with succession planning in the company. We sit down at every board meeting and talk about succession planning for some period of time.”
For leaders who may be reluctant with this level of board involvement, remember that succession planning is an ongoing way for a CEO to communicate with the board about the qualities he or she sees in his top people, adds Marshall. “The best CEOs have no problem submitting their work and their choices for senior managers to the board and openly discussing what they have done,” he says. “It’s almost the ultimate test of a genuinely great chief executive officer, that they are perfectly comfortable talking [with the board] about what decisions they make.”
Typically, board members become most concerned about succession planning should a top executive leave the company without warning, says Dee Soder, founder and managing partner of New York-based CEO Perspective Group, an assessment and advisory firm for executives and boards. Today’s volatile business climate—especially on Wall Street—has only heightened boards’ traditional concerns. “Things change fast,” Soder says. “You can’t keep up with the scandals, mergers, and other changes. The boards want to feel comfortable there’s a plan in place.”