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Seven Secrets of Succession Success
Seven Secrets of Succession Success
By Alan J. Kaplan
One of the most important responsibilities of a bank’s board of directors and chief executive officer is succession planning. Public companies in particular, given the greater emphasis on good governance, need to be more attentive and proactive in managing this process than ever before.

Succession planning can be a daunting task. Organizational dynamics and personal bias play key roles in the process. So how can a board and CEO better handle the critical issue of executive succession? By planning for it early, reviewing it often, and following these seven principles:

1. Look to your strategic plan first for guidance:
Ideally, your bank’s strategic goals and objectives are well established and regularly updated, providing a foundation for the kind of new leader best suited to take your organization to the next level. If you lack a true organizational plan, you may be in the unusual situation of having a new CEO develop and drive the bank’s strategy. In this case, it is still crucial for the board to have some advance discussion around the issue of strategic direction (i.e. autonomy, sale or merger), possibly facilitated by an outside expert, before launching into a CEO search.
2. Develop a concrete specification of your ideal CEO profile:
It is important to allow each director to contribute to this effort, and you may want to involve your human resources director at this stage of the process as well. After compiling this “dream criteria” and sharing it with the full board, it is imperative that the group agrees on the top five or 10 criteria, in order of importance (this is where the HR director or an outside consultant may come in handy!). Think about it this way: it is nearly impossible to come to a timely decision on who to hire if everyone has a different view of what the ideal candidate looks like. Build consensus and stick to it.
3. Establish the candidate screening, evaluating, and interviewing process:
Remember that candidate confidentiality is paramount. Develop an agreed-upon method by which candidate credentials will be screened; potential candidates contacted; prospects interviewed and evaluated; how reference evaluations will be conducted; who negotiates an offer on behalf of the bank; and who will be the primary contact/liaison throughout the process. If all this seems overwhelming, an external consultant or high quality executive recruiter may add value to the process.
4. Consider any qualified internal candidates for the position:
This may seem foreign to some who presume that an outsider is the preferred way to go. However, there is mounting evidence that the high profile outside CEO is often less successful than a well-groomed internally developed candidate. (See “The Curse of the Superstar CEO, Harvard Business Review, September, 2002.) Even if you are not convinced that your internal contender is the right solution, the board owes it to the organization and the individuals involved to give serious consideration to qualified insiders.
5. Reacquaint yourself with interviewing techniques:
The actual candidate interview process can be intimidating to some, particularly when meeting a high-powered CEO. Structure the interview process in a way that both maximizes the information gained and entices worthy candidates to remain engaged in the process. This is another area where a good HR director or consultant can be particularly useful. It is also beneficial to develop a candidate evaluation form for completion after each interview. This provides a useful common framework, as well as a basis for later ranking each of the contenders.
6. Focus on cultural fit early in the process:
Identify someone who is both well qualified and who will mesh well with your organization’s culture. Search committees can get starry eyed over a big name or well-credentialed candidate, particularly one with a dynamic personality. Presumably you will not be interviewing candidates for a CEO or COO position that are not technically competent to function at that level. So, what differentiates these candidates is the soft stuff: how they lead, their day-to-day management style, communication skills, personality traits, vision, and the like. These are the factors that make or break an executive’s success in most cases. So don’t ignore the intangibles!
7. Thoroughly reference your finalist(s):
Make sure you have the proper candidate authorizations before proceeding here. Referencing should involve a 360-degree process, including not just peers, superiors and subordinates but also customers, advisors, directors, and even vendors. The more you can learn about how this executive functions, the better able you will be to gauge their fit with the role and your organization. And don’t forget to verify credentials as well. This includes all academic degrees as well as any professional certifications (CPA, CFA), etc. You would be amazed at how much exaggeration exists here!

Dealing with executive succession can be a challenge for even the most seasoned board or CEO. Developing a proactive process and managing it thoughtfully will help you succeed at succession. Start the process of future succession planning NOW, as your new CEO settles in, and you may have an even smoother transition in the future.

Alan J. Kaplan is founder and president of Kaplan & Assoc., an executive search firm based in Wynnewood, Pa. He can be reached at (610) 642-5644 or

Posted on Wednesday, June 30, 2004 (Archive on Tuesday, September 28, 2004)
Posted by kdroney  Contributed by kdroney


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