Apr 14, 2007

Succession planning at the top

Businessweek reports in The Accidental CEO (Not Really):
"Fashions are changing in the boardroom: Outsiders are suddenly out. Mackay is among the 85% of CEOs appointed to S&P 500 companies last year who hailed from inside their companies: 61 out of 72 appointments, reports executive search firm Spencer Stuart. This is a sharp increase from prior years. Only 60% of a total 60 CEO appointments were internal in 2005 and 66% of 67 in 2004. White knight saviors with stellar records at other companies, once all the rage among boards that sought to shake up tired management teams, are becoming increasingly passé. 'People have been burned by the glamorous outsider,' says Warren G. Bennis, a professor of business at the University of Southern California."

There is one thing that insiders have at the CEO level that takes an outsider months to learn, and seems so non-glamourous. That's the advantage of knowing how everything works in the organization.

Knowing what kinds of products are made where, knowing what suppliers are facing an issue with, knowing who your biggest retailers are, knowing the culture.

An outsider CEO needs to spend time on learning these, however, a lot of the energy goes in managing external stakeholders like Wall Street and the learning that should be critical to solve the business issues get left behind.

Having a great succession planning process is a great way to build talent in an organization, and needs to be done at every level, not just the CEO level.