The question of who will helm the ship after the departure of the CEO is critical for a business’s longevity. To maintain organizational resilience, a robust CEO succession plan must be in place to ensure the organization’s continuity of service, stability, and adaptability. Despite its obvious significance to the business’s continued success, the CEO succession process is often approached with apprehension due to a lack of a solid plan.
Amanda Webster, Chief Operating Officer of Fund&Grow, has seen what happens behind the scenes and knows well how successful succession occurs. “The process needs to be specific to the business, and each approach tailored to that business’ needs and goals,” she says.
Here, we delve into some of the often complex intricacies of CEO succession planning and discover why it is so critical for cultivating continuity and resilience within the organization.
Behind the scenes of succession planning
When the time comes for a new CEO to take the reigns, a strategic succession planning process needs to be in place. That plan first involves the company’s Board of Directors to define the future of the new CEO’s role within the company.
Key steps in this process involve identifying individuals with high potential within the organization and outside of it, assessing them against predetermined criteria, and developing a talent pipeline that can lead to long-term company success. “Finding the right CEO can be quite the process,” Webster explains.
Indeed, the process of defining the role, searching for candidates, assessing those candidates, and getting the board’s approval on chosen candidates can be lengthy. However, conducting an in-depth search is worthwhile if it finds the right person for the job.
The Disney case study
One CEO search is playing out in public, giving people an inside look on the long road to replacing a leader. In late 2022, the Disney Company replaced its divisive CEO Bob Chapek with former CEO Bob Iger, following disappointing earnings reports and post-pandemic box office issues, but Iger made it known from the get-go that this replacement was temporary and gave Disney two years to find his replacement.
“It’s not uncommon for the process of finding a successor to take a significant amount of time,” says Webster. “It can take four to six months just to search for, select, and hire the successor. You must also factor in at least 90 to 120 days for onboarding.”
For a company as large and multifaceted as Disney, the process is even more complex. They do not want a repeat of the situation they found themselves in with Chapek, and many agree that Disney is in need of some big changes.
While Disney has considered promoting from the inside with well-known execs like Josh D’Amaro, experts have also opined that real change can not come from the inside. “Disney is going to be looking for someone who can continue Iger’s work in streamlining the company, cutting costs, and focus on making their streaming platform profitable,” says Webster.
The next Disney CEO must have a deep understanding of digital media, a forward-thinking vision for entertainment, and, of course, leadership experience. They also need to align with Disney’s culture and values, display strategic thinking abilities, and embrace innovation.
What to look for in a CEO’s successor
For a successful successor, companies typically seek someone who has a holistic understanding of the business, can influence decisions, and can act as a trusted advisor.
While there is no universal checklist for a CEO, the search usually begins with a simple outline of the primary duties and expectations of the role. The selection process then becomes more meticulous, focusing on assessing the candidate’s ability to fulfill more specific responsibilities unique to the organization. A blend of strong leadership qualities, industry experience, and strategic vision are typically top considerations for CEO successors.
Often, companies choose to hire internally because it is cost-effective, maintains continuity, and fosters loyalty among employees. “However, external hiring has its benefits as well, as it can bring in a fresh perspective and diversity,” says Webster. “It is a constant balance between preserving internal knowledge and seeking external innovation.”
Becoming a company’s new CEO
While many companies promote from within, this does not mean that applying for a CEO position is a waste of time. “Despite the possibility of an outgoing CEO having a successor in mind, boards can make unexpected choices,” Webster notes.
If one aims to land a position as CEO — either from inside their current company or externally — it’s crucial to demonstrate strategic thinking, decisive action, and effective communication. It is equally important to showcase genuine engagement with the company’s vision and ask questions that reflect deep thought. Above all, authenticity is paramount. The Board of Directors will want reassurance that the new CEO can carry on the company’s legacy.
The wise and thoughtful selection of a CEO successor is a strategic imperative that can shape an organization’s future. The process involves careful consideration of several factors, from leadership qualities to industry expertise.
Effective succession planning is about not only finding a carbon copy of the current CEO but also finding that one person with the right blend of skills, vision, and values. Sometimes, they may be a diamond in the rough, and having a solid plan to seek out and assess the right fit is crucial.
By embracing the principles of thoughtful consideration and long-term planning, companies can find a new CEO who can weather any storms that may come their way and lead the organization to a bright future.
