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Management article
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Reference no. 8851
Published by: Harvard Business Publishing
Published in: "Harvard Business Review - OnPoint", 2005

Abstract

This is an enhanced edition of HBR article R0502C, originally published in February 2005. HBR OnPoint articles include the full-text HBR article plus a summary of key ideas and company examples to help you quickly absorb and apply the concepts. Many companies have no meaningful CEO (chief executive officer) succession plans, and few of the ones that do are happy with them. The problems extend to every aspect of CEO succession: internal development programs, board supervision, and outside recruitment. While many organizations do a decent job of nurturing middle managers, few have set up the comprehensive programs needed to find the half-dozen true CEO candidates out of the thousands of leaders in their midst. Even more damaging is the failure of boards to devote enough attention to succession. Search committee members often have no experience hiring CEOs; lacking guidance, they supply either the narrowest or the most general of requirements and then fail to vet either the candidates or the recruiters. The result is that too often new CEOs are plucked from the well-worn Rolodexes of a remarkably small number of recruiters. These candidates may be strong in charisma but may lack critical skills or otherwise be a bad fit with the company. The resulting high turnover is particularly damaging, since outside CEOs often bring in their own teams, can cause the company to lose focus, and are especially costly to be rid of. Drawing on over 35 years of experience with CEO succession, the author explains how companies can create a deep pool of internal candidates, how boards can consistently align strategy and leadership development, and how directors can get their money''s worth from recruiters. Choosing a CEO should be not one decision but an amalgam of thousands of decisions made by many people every day over years.

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Abstract

This is an enhanced edition of HBR article R0502C, originally published in February 2005. HBR OnPoint articles include the full-text HBR article plus a summary of key ideas and company examples to help you quickly absorb and apply the concepts. Many companies have no meaningful CEO (chief executive officer) succession plans, and few of the ones that do are happy with them. The problems extend to every aspect of CEO succession: internal development programs, board supervision, and outside recruitment. While many organizations do a decent job of nurturing middle managers, few have set up the comprehensive programs needed to find the half-dozen true CEO candidates out of the thousands of leaders in their midst. Even more damaging is the failure of boards to devote enough attention to succession. Search committee members often have no experience hiring CEOs; lacking guidance, they supply either the narrowest or the most general of requirements and then fail to vet either the candidates or the recruiters. The result is that too often new CEOs are plucked from the well-worn Rolodexes of a remarkably small number of recruiters. These candidates may be strong in charisma but may lack critical skills or otherwise be a bad fit with the company. The resulting high turnover is particularly damaging, since outside CEOs often bring in their own teams, can cause the company to lose focus, and are especially costly to be rid of. Drawing on over 35 years of experience with CEO succession, the author explains how companies can create a deep pool of internal candidates, how boards can consistently align strategy and leadership development, and how directors can get their money''s worth from recruiters. Choosing a CEO should be not one decision but an amalgam of thousands of decisions made by many people every day over years.

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