4 strategies to fix your ineffective CEO succession planning

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Any HR professional would likely agree: Finding and retaining top talent is both their chief focus and greatest frustration. When that talent sits in the C-suite, the implications of rising to that challenge are all the more significant.

And it’s a task HR leaders are increasingly facing. According to recent research from Gartner, more than one-quarter of C-suite leaders plan to leave their posts within a year—and more than half in two years. Executives are increasingly being asked to do more in their roles, driving up burnout, particularly amid ongoing demand for transformation.

Executive searches are costly, lengthy and disruptive—highlighting the value of strategic executive succession planning, says Ani Huang, president and CEO of the Center On Executive Compensation, a division of the HR Policy Association.

HRPA and the Center for Executive Succession recently released a report highlighting the pain points of CEO succession planning and offering guidance for boards of directors and HR leaders. While the research focuses on CEO appointments, many of the recommendations are applicable to the entire C-suite succession planning process, Huang notes.

What sets the CEO search apart, she says—and drives up the need for strong leadership and collaboration from the CHRO—is the role of the board.

“The CEO will be heavily engaged in hiring their own people,” she says. “Not that the board isn’t interested in the next CFO, but CEO succession is a unique role for the board—and one that the CEO shouldn’t be in charge of.”

What is the CHRO’s role in CEO succession planning?

Any C-suite vacancy is a challenge for HR, but undoubtedly the CEO spot is the most impactful role in an organization—making it a top priority for executive succession planning.

The research found that board directors surveyed point to CHROs’ potential to evaluate CEO candidates objectively and to shape the hiring process. At organizations whose boards report solid succession planning, CHRO engagement in the process is higher than at those without strong strategies.

Ani Huang, Center On Executive Compensation
Ani Huang, Center On Executive Compensation

“In the more successful boards, CHROs are more engaged,” Huang says. “In fact, directors identified CHROs as more critical to certain parts of the process than outgoing CEOs—including owning the process itself.”

Such an approach, she says, should involve the intentional reframing of CEO succession planning as a forward-thinking leadership strategy—rather than an exit plan for the CEO.

“CHROs have to normalize the process,” she says.

When a CEO hesitates

Doing so can help curtail one of the most significant challenges in CEO succession planning: hesitation to plan from the person in the top job.

Among the 10 challenges listed in the report that can derail planning for the next CEO—including reactive succession or pre-ordained successors—having a CEO who avoids talking about what comes next is both the most common and “trickiest” obstacle facing boards and CHROs, says Huang.

Of the boards that prioritize succession planning, 70% report CEO engagement, compared to just 28% at organizations that don’t emphasize succession planning.

When CEOs are hesitant to prepare, Huang says, it can stall succession—leading to frustration and disengagement with internal candidates, as well as derailed attempts to develop bench strength.

CHROs are critical to “diffuse the tension” when a CEO is resistant to the conversation, reframing succession planning as an “act of leadership,” researchers wrote, and working to make the CEO feel “secure, supported and in control of the process.”

4 strategies to get ahead on CEO succession planning

Emotionally charged conversations are just a piece of the puzzle for HR leaders, according to the HRPA and Center for Executive Succession Planning report. They also face pressure to deliver on a timeline and have to wade through power dynamics—all while having to prove their own capabilities as they navigate between executives and the board.

In this environment, researchers recommend four ways CHROs can design and own an effective CEO succession planning process:

1. Lead with the business case.

Often, CEO succession becomes an issue only as a matter of compliance—or when a departure is immediately on the horizon, Huang notes. Yet, CHROs should be framing efforts to identify the next leader as an ongoing matter of business strategy.

“It’s about what’s going to future-proof the organization,” she says. “The long-term value and sustainability of the company is inherent not just in who you pick, but the process itself.”

To that end, HR can work to integrate succession planning into board and performance reviews and development opportunities. Creating definitive processes allows HR to create a level playing field, focusing on the long-term business interests of the company—reducing the risk of a CEO attempting to pre-ordain a candidate.

Framing CEO succession planning as a means toward “long-term value creation,” Huang says, “enables CHROs to say, ‘OK, here’s the exact process we’re using for everyone else—and it applies to the CEO, too.’ ”

2. Start early.

Consistently, succession planning starts much later than it should, Huang says.

She estimates boards and CHROs often don’t start strategizing until 12 to 18 months before an expected transition. In the report, board directors acknowledged how critical early planning can be: The majority said the process to pick the next CEO should get underway the very day after that leader’s tenure begins.

An effective way to get started early, Huang notes, is by planning backwards—focusing on future needs first. This involves making succession planning a “living board process,” including readiness metrics and regular updates from the CHRO to the board. Candidate timelines and tailored development programs focused on the future needs of the business are essential, according to the report.

3. Leverage objective insights.

Data will be a crucial tool to help HR create a more solid succession planning process, Huang says. CEO profiles, industry benchmarks, talent trends, candidate assessments—all need to be at the forefront of the strategy.

In particular, CHROs can be critical in providing the board insight into internal talent data. Some organizations are looking to external, third-party assessments to provide the most objective analysis of candidate readiness, she notes.

See also: How data and strong HR values can help leaders buckle up for what’s ahead

4. Build credibility.

No matter how forward-thinking or formulaic CHROs are in approaching CEO succession planning, without the trust of the board and C-suite, they’ll find little traction.

“All of the behaviors that the board directors reported as necessary from the CHRO to help with the succession process, we see from those they trusted,” Huang says. “Trust is a prerequisite; if they didn’t have it, it’s the opposite: Some of these same strategies could backfire.”

For example, without pre-existing relationships with these decision-makers, a CHRO’s recommendations may come off as pushing an agenda.

Demonstrating sound judgment and the ability to use discretion can build that credibility, as can a visible understanding of the business, its needs and its future direction.

“When a CHRO is trusted by the board, the CEO and the executive team, they can help lead a disciplined, future-focused process that ensures alignment, minimizes disruption and builds confidence in the incoming leader,” researchers wrote.

Jen Colletta
Jen Colletta
Jen Colletta is managing editor at HR Executive. She earned bachelor's and master's degrees in writing from La Salle University in Philadelphia and spent 10 years as a newspaper reporter and editor before joining HR Executive. She can be reached at [email protected].

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