Eight Myths About CEO Succession
Myth 1: Companies Always Know Who the Next CEO Will Be
Reality: Two of five don’t have a viable internal candidate to immediately fill the shoes of a CEO if he or she were to leave tomorrow.
Myth 2: Succession Is all About Risk Management
Reality: While leaving the position open can bring on risk, the long-term goal here is about building shareholder value (i.e., “success planning” as opposed to risk avoidance).
Myth 3: Boards Know How to Spot a Strong CEO
Reality: Actually, board members place too much weigh on expenses and revenues, stock price and other fiscals, and too little on customer service, innovation, talent development, employee engagement and additional success drivers.
Myth 4: It Should be Obvious as to Who the New CEO Will Be
Reality: This is true but only if you pursue it the wrong way, such as thinking in terms of available people first instead of strategy. Determine the ultimate objectives, then find the best match.
Myth 5: Boards Prefer Internal Candidates
Reality: Often, they don’t get enough exposure to internal candidates and express initial hesitation that they’re “untested,” regardless of whether they eventually promote these candidates.
Myth 6: CEOs Hired From the Outside Usually Deliver
Reality: They get weaker financial results, leave sooner and are more expensive to bring onboard.
Myth 7: There Is a Best Model for Succession
Reality: One size doesn’t fit all, and business moves too swiftly for any one model to remain static. Boards must constantly re-assess what’s needed from tomorrow’s top leader.
Myth 8: Boards Seek Diversity in a CEO
Reality: The numbers don’t lie: Less than 5% of Fortune 500 companies have women CEOs. Just 14 (less than 3%) are African-American or Latino.
