Claudius A. Hildebrand

Kate Hurley

Giovanna Galli

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <h5>The Situation</h5>
  <p>During times of volatility and unpredictability, boards often don’t know how to plan for succession. Many therefore opt to play it safe. But that can actually be risky—and counterproductive.</p>
  <h5>The Problem</h5>
  <p>By playing it safe, many boards make three mistakes: avoiding decisions (and missing opportunities), keeping outgoing CEOs around (undermining new leadership), and overvaluing experience (hiring leaders fixated on the past).</p>
  <h5>The Solution</h5>
  <p>The CEO-selection process represents a chance to gain a strategic edge. But that’s only possible if boards balance risk and reward, prioritize CEO development, and tailor their selection criteria to the specific needs of the moment.</p>
 </div>
</article-ideainbrief><p class="mag-icon-boards-w30">When COVID-19 first hit, many boards assumed they could delay CEO transitions until the storm passed. But five years later it’s clear there is no “other side” of the storm. In this unpredictable environment, where traditional forecasting models falter, it can be difficult for boards to know how to plan for succession—and many, in fact, are getting it wrong. That’s the conclusion we came to after our team at Spencer Stuart studied CEO transitions across companies in major U.S. and European stock indexes.</p>

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<p>In an increasingly unpredictable world, boards often struggle to plan CEO successions. Many don&#8217;t want to change captains midstorm, and many play it &#8220;safe&#8221; by hiring the most experienced candidate they can&#8212;and keeping their outgoing CEO around in other capacities. But those approaches can be risky and counterproductive, say three consultants whose team at Spencer Stuart has extensively studied CEO transitions across major U.S. and European stock indexes.</p>
<p>What matters most in CEOs today is not the depth but the range of their experience, particularly with organizational change, failure, and recovery. If boards hire someone unfamiliar with those challenges, they expose companies to three risk factors that can erode their competitiveness: rigid playbooks, cultural calcification, and shorter tenures. In this article, the authors explain why those factors are so problematic and describe how organizations today can transform the moment of CEO selection into a moment of strategic advantage by balancing risk and reward, practicing &#8220;always on&#8221; succession planning, and revising their selection criteria.</p>

Choose the Right CEO for Volatile Times

In an increasingly unpredictable world, boards often struggle to plan CEO successions. Many don’t want to change captains midstorm, and many play it “safe” by hiring the most experienced candidate they can—and keeping their outgoing CEO around in other capacities. But those approaches can be risky and counterproductive, say three consultants whose team at Spencer Stuart has extensively studied CEO transitions across major U.S. and European stock indexes. What matters most in CEOs today is not the depth but the range of their experience, particularly with organizational change, failure, and recovery. If boards hire someone unfamiliar with those challenges, they expose companies to three risk factors that can erode their competitiveness: rigid playbooks, cultural calcification, and shorter tenures. In this article, the authors explain why those factors are so problematic and describe how organizations today can transform the moment of CEO selection into a moment of strategic advantage by balancing risk and reward, practicing “always on” succession planning, and revising their selection criteria.

Choose the Right CEO for Volatile Times

Summary.

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