Faced with a CEO succession, many corporate directors hope an internal change agent will emerge as a viable candidate for the role. What specifically are boards looking for in these internal candidates? Our experience with CEO succession over the last several years tells us that four priorities increasingly rise to the top:
The ability to develop strategy and oversee strategy execution at scale. It is one thing to create and execute a strategy for a business line or a business unit, but another altogether to do so for an entire enterprise. Boards want CEOs who can unite a company behind a strategy and then bring it to life in the market.
The ability to make difficult decisions. Decisions to act — or not act — have serious consequences, and boards want CEOs who can thoughtfully but efficiently make decisions, especially difficult ones, like selling business units, laying off employees and other hard but necessary acts.
Evidence of followership. It is becoming increasingly rare for workers to follow someone just because of their title or role. Today’s leaders need to be able to create followers through their personality, behavior and actions. Failure to do so will increase employee turnover to dangerous levels.
The ability to attract, select and develop top talent. Separate from developing followers, leaders must also have the ability to put the right people in the right job at the right time. Choosing senior leaders is harder than it seems. There is a critical need to balance skills and personalities in a way that makes a strong, cohesive team.
Data shows that approximately eight out of 10 CEOs come from within, but the high failure rate of executives in the corner office tells us that many internal candidates who look good on paper ultimately lack the skills and expertise necessary to thrive as a CEO.
I had the pleasure of assisting Justus O’Brien and Dean Stamoulis with this article, which was published by Directors & Boards.