In 2023, leadership successions will be at the top of many board’s agendas…public companies, private equity controlled, and, yes, increasingly in family enterprises…a continuation of the 2022 high turnout of CEOs and executives. Boards are asking, “Should we bring back a former leader, promote from within, and/or look outside to compare candidates?” Most recently, Disney’s board brought back Bob Igor to replace his hand-picked successor… the same with Howard Schultz at Starbucks. Several boards, we hear, are considering similar succession “boomerangs.” Others, believing that to minimize the risk of “leadership unknowns”, have chosen to trust their existing evaluation succession process and consider only those currently in that process. Increasingly though, the majority are comparing and considering internal options and external candidates, a highly sensitive and confidential process, one that increasingly we are managing for our clients… a much smarter and robust approach.
What We Know: Three Selection Considerations
In a recent survey, nearly 70% of CEO candidates believed they weren’t prepared fully for the rigors of the role…especially as the expectations of leadership are evolving. That is also true for many key leadership appointments. In our work, we have identified three important leadership considerations that will help boards and CEOs grasp the asymmetrical aspects of succession, evaluate candidates and make the best choices, reducing the risk of less optimal executive selections. Obviously, in this brief riff, consider these points as basic guidelines.
Seek Candidates Who Demonstrate:
Strategic Mindsets: Leaders that empower teams to develop stretch and scalable strategies… with a balance & discipline to oversee execution…adjusting willingly to meet new or unforeseen challenges and to take advantage as opportunities arise. Evaluative and Rigorous Thinking… A track record of knowing when to act and when not… especially when the path forward isn’t clear. Demonstrates a commitment to a holistic strategic alignment and an appreciation/implications of alternatives…Knows the array of choices and the impact of each… Ability to communicate what’s important and what isn’t, at all levels. Track Records That Recognize the Importance of an Inclusive Decision Culture… And, the Acquisition and Positioning of Talent. Minimize “beloved” as criteria in making executive appointments, especially when evaluating internal candidates. “Beloved” leaders oftentimes develop followership and teams that value established and unchallenged responsibilities over the benefits of exploring/examining alternatives and instituting changes in roles and responsibilities that yield improved performance. The success of a decision-oriented inclusive culture depends upon attracting and retaining the most talented executives placed in the right roles… where as a team, the sum adds up to more than its parts.
The Bottom Line
*Key Leadership Positions Are Contextual. As such, not every executive that appears to have the requisite experience may be the best qualified to lead/address certain company challenges, potential upside and especially during times of economic instability, even if well-known and respected within a company. *Positioning” Talent is a Leadership Art and a Science. Times and conditions evolve and the requirements moving the goalposts of determining and defining success change, evaluating leadership capabilities should be a dynamic and continuing process. Looking at past performance or experience is no longer the principal bellwether determent of leadership success…nor, should it be. *Commit and Invest in a Deep and Continuing Dive. Leadership selection failures are costly, disruptive and expensive to repair. Given the current state of change, ongoing transformations and the number of leaders that fall short of the marks, having expertise without the necessary breadth of leadership perspective is not enough… and likely will result in high risk and a day of reckoning, perhaps, soon. Make inclusive non-ego-driven leadership an action-oriented but flexible top priority, aligning talent to your priorities to achieve performance benchmarks. Every leader and teams have aspirations. Aspirations become achievable if you are committed to, and possess, truly qualified talent that is geared, incented and placed in the best positions to win. Simply, don’t sell short your leadership expectations by talent compromises. Ask the tough and insightful questions about the contributions & outcomes required to drive enterprise value from each key role. If changes must be made, move quickly. Just being “comfortable,” without context and defining outcomes/successes, is a limiting option. Boards recognize, given their increasingly complex governance duties, that they must appoint leaders…CEOs and executives… that are driven by times and conditions…far outweighing “general comfort” and just the time and grade of prior experiences.
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