How to Think About CEO Succession Planning

By Bob Weissman
Former Chairman & CEO of Dun & Bradstreet

The overriding mandate for every Board of Directors is simply this:  Act so as to ensure the continuing success of the institution.  And, as we consider the components of a Board’s responsibility for achieving this end, the job of building a robust management succession process is perhaps the most important.

In a well-managed company there will be many competent executives who ought to be in the pool of potential successors to the CEO.

But we also know that we live in an

uncertain world, and that the critical mix of leadership competencies cannot be guaranteed ahead of time.  The right mix of skill for an incoming CEO will vary over time within a company as its weaknesses, risks and opportunities evolve.

The list of potentially critical competencies is long, and includes:

            Nose for revenue

            Affinity for customer contact

            Cost management skill

            Strategic thinking

            Global experience

            Charisma

            Risk management skill

            Operational management competency

            Connection to critical outside audiences

            Connection to investment community

            Specialized industry knowledge

While we might want a candidate to have all of the above in his or her ‘skill kit’, we know that in the real world there are damn few renaissance men and women and that therefore compromises must inevitably be made.  This means that in the real world there is no ‘Mr./Ms. Right’.  Given that fact, our job as directors should be:

1.     Agree on the appropriate list of critical skills which might be applicable for    the company at this time and for the next several years.

2.     Discuss those criteria so as to understand them and how they should be measured in the absolute sense.  This means creating an externally focused standard – i.e. “A good golfer is someone who shoots 72.” rather than “Bill is the right person because he shoots 103 and his competitor for the job shoots 125.”

3.     Develop access to a broad skill pool, both within and outside the Company.

4.     Within the internal management pool, work diligently to develop and enhance the skill sets of potential candidates.

Our ultimate goal as Directors should be to create choices so that we can have the luxury of identifying the right person with the right set of skills at the right time.

What do you think? I’m open to ideas. Or if you want to write me about a specific topic, let me know.