Six Things I’ve Learned About CEO Succession

It’s a horse race.

More horses are better. More candidates mean you have more choices, more breadth and depth of leadership, more leaders performing at their peak and delivering better business results, and more leaders to take on more business opportunities. But the horse race doesn’t have to be public. It doesn’t have to divide the organization, and it doesn’t have to distract from the business.

It’s not personal.

It’s not about you, the incumbent CEO. It’s about the institution and its future. Throughout the process, in every interaction with the board or any director, in every interaction with an executive or a potential candidate, you have to set your personal feelings and relationships aside. No favorites, no appearance of favorites.

It’s hard to let go.

It would have been easy for me to agree to stay on until I was 65, P&G’s compulsory retirement age for its CEO. I was a known entity with a proven track record—a safe bet for the board. But I was convinced that would be the wrong decision and that it was better to transition sooner rather than later. I felt my successor should ride the economic recovery (however modest it would be) behind an evolutionary strategy and a new leadership team. Our industry was relatively stable. P&G’s business model was still competitive. The company’s results were solid, and as an organization we had the skills and experience required to execute our strategies. If we waited another two or three years, we would risk losing top candidates and effectively pass over an entire generation of strong P&G leaders. My successor, Bob McDonald, was more experienced and far better prepared to be CEO in 2009 than I had been in 2000. Still, it was hard to get my board to let go. But with the help of Jim McNerney, Norm Augustine’s successor as presiding director, we were able to persuade the directors, in a series of individual and group discussions, to embrace a change in leadership and support the new CEO.

The process will never be perfect.

By its very nature it is messy and imprecise. No one anticipated a global financial crisis or the worst global recession since the Great Depression, but we adapted our business strategy and tested the final CEO candidates against more-uncertain and volatile scenarios before making a final decision.

Move over, move out, move on.

The day Bob McDonald took over, he was sitting in the CEO’s office and led the executive team meeting. I had already moved out of that office and to another floor in the building. Before the year was out, when the transition criteria were met, I retired as chairman and moved on… out of Cincinnati…and on to the next chapter in my life.

CEO succession forces the board to up its game.

A more rigorous, inclusive, and ongoing succession process builds the board’s ability to work with the CEO and fosters strong relationships between the board and the management team.

—A.G.L.

The Four Kinds of Leadership Judgment: A Framework for Selecting a CEO

Ultimately, the choice of a CEO is a calculated bet on how good that leader’s judgment will be when it comes to selecting the right people, setting the organization’s direction, and handling the inevitable crises all organizations face.

With Warren Bennis, I have developed a framework that will help in examining a leader’s past judgment calls and predicting future calls. The framework identifies four levels of leadership intelligence: judgment about yourself; judgment about your immediate team; judgment about your organization; and judgment related to stakeholders (decisions that involve your board, suppliers, customers, and community). Good leaders need capabilities at all four levels. The chart to the right presents the core issues—regarding people, strategy, and crises—in each area for which leaders must exercise judgment.

Great leaders are defined as such because a high percentage of their judgment calls are good. The key to such high performance is possessing knowledge that goes beyond a “just the facts” analytical capability. It is possessing deeper knowledge of the four domains.

PERSONAL JUDGMENT

PEOPLE Personal judgments about your ambitions, role, and capabilities

STRATEGY Personal judgments regarding your career and life strategy

CRISIS Personal judgments made during times of crisis and introspection

TEAM JUDGMENT

PEOPLE Judgments about who is on and off your team

STRATEGY Judgments about how your team evolves to meet business demands

CRISIS Judgments about how your team operates and with whom during a crisis

ORGANIZATIONAL JUDGMENT

PEOPLE Judgments about organizational systems for ensuring quality and capability of people in the organization

STRATEGY Judgments about how to engage and align all organizational levels in strategy execution

CRISIS Judgments about how to work with the organization through times of crisis

STAKEHOLDER JUDGMENT

PEOPLE Judgments about which stakeholders are important and how to engage them

STRATEGY Judgments about engaging stakeholders to frame, define, and execute strategy

CRISIS Judgments about dealing with key stakeholders during times of crisis

—N.M.T.

SOURCE JUDGMENT, BY NOEL M. TICHY AND WARREN G. BENNIS (PORTFOLIO, 2007).

Via Scoop.it – Greek HR

Μια μελέτη δείχνει ότι ο ανθρώπινος εγκέφαλος είναι πολύ καλός στο να επεξεργάζεται τα καλά νέα για το μέλλον και να αφήνει τα “κακά” για αργότερα, έχοντας προδιάθεση για αισιοδοξία.
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