Succession—it’s not just a great TV show. (And when does the new season start?) As this article in Corporate Board Member contends, selecting the next CEO “is often the single most important decision a board will make, yet between a quarter and a third of companies don’t have a succession plan in place—and even those who do often get it wrong.” Survey data in this post from Russell Reynolds Associates revealed that, even in the face of the pandemic, over 60% of responding directors “stated that their board had not reviewed or updated the succession plan for the CEO and other key executives in light of the health risks posed by the COVID-19 crisis.” Moreover, 70% of the largest companies (annual revenue of $10 billion and over) had not reviewed the CEO succession plan. The post reports that the need to replace a poor CEO selection has been estimated to lead “to a loss of $1.7 billion in shareholder value in addition to a loss of organizational confidence and momentum.” Not a good look. Why does this happen? According to an article from PwC, it’s often because “just having the conversation is difficult.”
Given the pervasiveness of COVID-19, one issue that boards have had to face is what to do if the CEO or other executive critical to business continuity is suddenly taken ill or required to self-isolate because of exposure to the virus. What about succession planning? How should the absence be communicated? A couple of recent pieces from prominent consultants provide some guidance on these issues.
PwC survey of directors showed skepticism on the benefits of shareholder engagement, critical views of some board colleagues and gender splits on board diversity
by Cydney Posner In its annual survey released Tuesday of more than 800 corporate directors, PwC identified ten key findings, including critical views on other board members, split views on board diversity and skeptical views on the benefits of shareholder engagement. Of the directors surveyed, in 2016, 35% thought that at least […]