There is no period in a company’s history more fraught with anxiety than the months leading up to the naming of a new CEO. Often, the board is eyeing the clock while trying to nudge the CEO into a graceful exit.
Amoco, Anheuser-Busch, Chrysler, Motorola, Wrigley. Great Midwestern companies that failed to adapt to global competition and ended up being acquired. Many others have suffered the same fate or declared bankruptcy, and now the ongoing disruption from globalization and technological change is putting our legacy companies under further pressure.
In contrast to the “merchant princes” who built the great retail businesses of the last century, the next-generation CEO will need to be a more skilled team builder who can create a culture of motivated collaboration.
If a board of directors is well prepared, the selection of a new CEO will be the end product of a comprehensive succession and transition plan. During the transition period, the new CEO is introduced in an orderly way and is allowed to get up to speed on key issues and to forge important relationships before taking charge.
Leadership succession is one of the most critical and daunting tasks a family business can face. Unfortunately, there are few resources that set forth in a concise way established best practices and then provide practical guidance on their implementation.
Everyone agrees that CEO succession planning is critical. Yet many Chairmen are concerned that their own companies are underprepared for a change of CEO – and are exposed to the risk of a damaging leadership vacuum. This is the finding of an Egon Zehnder study in which more than 50 Chairmen and CEOs of major companies headquartered in France, Germany, the UK, and the US were interviewed.
Away from the meta-national decision centers, family businesses in emerging and fringe economies need to continuously adapt their business models to the growing presence of globalization. Sometimes, this can mean they have less time or lack the necessary focus to optimize vital internal processes, such as top-level succession planning.