Succession Planning for the CEO: Why It Should Start from Day One

Protecting leadership continuity by identifying and preparing executives so business critical positions aren’t left vacant is vital. So, when should a newly appointed CEO start working on their succession plan? The moment they’re appointed, writes Joana Proença de Carvalho, Senior Partner at Signium Portugal.

The key to effective C-Suite succession planning, including that of the CEO, should begin well before a company thinks it needs to; bringing the most promising candidates – both internal and external – close to the Board for assessment and to prepare them to assume their place.

The adage among HR leaders has long been “succession planning should start the moment a new CEO is appointed”, but it took a pandemic to reveal the real lack of control we have over our lives and our companies.

With greater global uncertainty now ‘business-as-usual’, there’s never been a more important time for leadership to be prepared for any eventuality. Decisions often must be taken the minute leaders have limited information in front of them, and be prepared to create scenarios that guarantee business continuity, mitigating the consequences change may bring. Planning succession, properly and as an ongoing process, is one of the ways to ensure business continuity.

As an Executive Search and Advisory firm, strategic planning underpins everything we do at Signium. More now than ever, companies need to attract, inspire, develop, and engage talent. None of this can be achieved overnight, so it’s never too early to start.

What is different for Leaders now?

A key challenge leader’s now face is making the right decisions at speed when factoring in multiple risks that can jeopardise the effectiveness of their teams, and organisation at large.

Risk assessment and management is top of mind for every CEO, as is business disruption, continuity, and corporate resilience. This requires having the right people in the right place, engaged with the organisation and motivated to ensure results are delivered or even exceeded.

The closeness of leaders in general – and CEOs in particular – to their teams is crucial. Taking the time to listen carefully, not just about what their teams are doing, but how they do it and how they feel about it, is critical. While the demands are many, the CEO must focus on what is important, which is substantially different from what is urgent. And it is all about people.

Over and above the skills already mentioned, today’s C-Suite and their successors must act according to bullet-proof principles, purpose and values set. Whilst both have always been important in leadership, I cannot remember a time when we have seen so many leaders leave top positions for ethical reasons, and not for poor performance.

This adds another dimension to the framework businesses must set up for the effective development of current and future leaders.

An in-house appointment or a new broom?

One of the many vital questions CEOs, Boards and Shareholders must determine is whether to prime an executive from within the company succession pipeline, or to find an outsider.

The answer depends on the company’s context, its size, time-frame and strategy. In general – obviously with exceptions – insiders bring continuity and stability if they don’t significantly change their company’s performance or structure. However, the recruitment of an outside candidate to the C-Suite may be suitable in situations requiring transformational change – a turnaround, scaling internationally, or a cultural shift.

I believe every company should first spot internal talent and create succession plans based on its current pipeline, but I also see tremendous value in external searches for fresh approaches and benchmarking.

Why is IQ & EQ more important today?

Signium’s signature is “Intelligence and Intuition”. It is how we run our business and what we look for when assessing candidates. A good balance between IQ and EQ is essential to ensure that individuals can adapt quickly, to navigate turbulent waters and to shape the future of the organisation, while developing and engaging people.

The candidate profiles we design for C-Suite mandates have a strong focus on culture, values and what used to be called soft skills, but are now power skills. They include appropriate and effective communication, emotional awareness, flexibility, adaptability and the capacity for teamwork and engagement.

These, combined with their relevant track record, are most likely to produce a leader who best serves the organisation, and all its stakeholders. Add to this, the support of the Board as mentors, and new CEO’s results are likely to be fruitful for years to come.