Boardroom Insider: “5+ Ways CEO Succession Has Changed”

By Ralph Ward, Publisher/Editor, Boardroom Insider

In mid-2020, corporations worldwide faced massive, scary challenges, but one of the few bright spots was in
retaining top talent. Chief executives hunkered down to do COVID triage, and some even delayed retirement
plans for the duration. But by late 2020, global chief executive turnover was resuming, and the trend has
strongly accelerated in the first half of 2121. This leaves boards taking a fresh (and urgent) look at their CEO
succession plans in light of the world turning upside down for the past 18 months. How has your top
succession planning changed – and what comes next?

▪ Executive search and HR experts have been talking about a “great migration” for months now, with
employees at all levels responding to suddenly rebounding demand switching jobs en masse. But a similar
exodus is underway in your corner suite, and this one will be permanent. “Many of the boomers who were
ready to retire delayed leaving due to COVID,” says Dan Hawkins, CEO at Summit Leadership Partners
talent advisors. Now, the return to near-normal “has accelerated their interest in leaving.” A generation of
CEOs in their 50s and 60s are ready to cash out and move on. This not only makes your current chief exec
more uncertain, but means that near-contemporaries in the pipeline (as well as similar outside talents) are
evaporating from your CEO prospect pool.

▪ This new succession change frangibility, along with the memento mori scare that COVID brought, is
shifting boards toward deeper, but more variable CEO succession plans. What if a top candidate leaves for
another opportunity – are you developing backups? What if tomorrow that backup departs? Is your
emergency CEO succession plan ready should the next COVID variant strike the corner office? What if your
present CEO becomes ill and must take a leave, but intends to come back? Who makes that call? Turmoil
since 2020 has investors and proxy advisors looking more closely at how robust public company succession
plans are. Table-top “what if…” scenario planning needs into your new board succession role.

▪ The past 18 months have made boards worldwide far more serious in how often and how deeply they work
on CEO succession. “Historically, boards looked at CEO plans annually, or maybe semi-annually,” says
Hawkins. “Now, it’s a regular board agenda item.” Boards have also become much more forward looking on
plans – the days of not worrying about CEO succession until the incumbent tells you he’s leaving next year are
long past.

▪ While you and your board were out of the boardroom due to COVID, the world changed in other major
ways. “Obviously, there is a focus on more diverse talent now,” Hawkins observes, and that must have an
impact on your leadership pipeline. One of the most obvious ways to diversify the CEO succession talent
stream is to widen the river. As a new report from Spencer Stuart notes, “use succession planning to grow,
develop and accelerate a more diverse talent pipeline, not just one candidate.” Boards are the ideal monitor to
ask why the top talent lineup remains pale and male, and to push for more inclusion. First, with greater
emphasis on deeper talent development, by working to rotate and season execs in the pipeline on a more
planned basis. Second, by expecting a succession plan that also looks outside the company for rising prospects
who are more diverse, and can be nurtured into leaders.

▪ These new demands of CEO succession, along with boards being scattered for so long, have boosted the
need for outside counsel and support on the process. Hawkins says this includes all elements of CEO
succession – “our exec coaching business has doubled in the past 18 months, with the specific goal of building
internal talent.” Seeking outside help in shaping a next-gen CEO skill profile is also a hot topic.

▪ Other items on CEO succession shopping lists today – Claudia Allen, senior advisor to KPMG’s board
practice, cites: Digital savvy, especially AI potentials; risks and opportunities of ESG; ability to build,
appreciate and communicate cultural issues; strong “soft” skills and empathy.

RALPH WARD’S BOARDROOM INSIDER is published monthly for directors, CEOs, those who work with corporate and nonprofit
boards (corporate secretaries, corporate counsel, support staff, and consultants), and those who are board prospects.
Ralph Ward is author of the books BOARD-SEEKER, BOARDROOM Q&A, THE NEW BOARDROOM LEADERS, SAVING THE
CORPORATE BOARD, IMPROVING THE CORPORATE BOARD and 21st CENTURY CORPORATE BOARD, and a speaker on
corporate board issues.

 

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