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A years-long plan. Organizations are increasingly reckoning with CEO succession plans earlier than might be expected. Board members are being asked to weigh in as many as five years before a possible transition, according to the Financial Times. Beginning the search for a new chief executive early enables companies to develop a leadership pipeline rather than hire externally, which can be disruptive and costly. When a leader is chosen, boards should also consider offering incentives to the people who didn’t get the job. [FT]
‘Failed CEO appointments.’ CEO turnover is surging across the world, CNBC reports. From January to March 2024, more than 50 CEOs left their posts, and 68 new CEOs were appointed, according to a leadership advisory business that monitors CEO departures from companies listed in global stock indexes. Of outgoing CEOs in the first quarter of 2024, 15% were executives who were in the role for less than two years. [CNBC]
Liking the likeminded. One of a board’s most important tasks is to secure the successful transition of power from one CEO to the next. To succeed with succession planning, though, boards must recognize and address their tendencies toward similarity bias, McKinsey partner Tim Koller and consultant Derek Schatz explain. This occurs when individuals are inclined to evaluate more favorably or behave in a more positive manner toward people they perceive as sharing their own identities or other characteristics.
More objective process. A good old-fashioned task force, established by the board long before any executive departures are announced or even considered, can help make the succession-planning process less subjective. In this way, companies and boards can ensure that they’re getting or building the leadership talent that they need to keep up with their industry. Learn how a succession-planning committee can help board members pick the best leader for an organization.
—Edited by Belinda Yu, editor, Atlanta
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