The seven habits of highly effective boards
Selecting the new CEO is one of the Board’s three most crucial tasks, matched only by a decision to merge or sell the company, or the selection of a new Chairman.
Merely announcing who your next CEO will be can move the market value of your company by 5% or more1, and research by Harvard Business School on the value of a great CEO suggest figures of around 15% of your company’s market value2. Furthermore, the share prices of companies with successions that are unplanned typically under-perform their peers by more than 2%3.
Yet this ‘bet the company’ decision is still often tackled too late, with no recourse to a contingency plan, and without the benefit of enough data – as a recent client commented “there as less data in the process than in a footnote of a monthly Board pack”.
To help Boards address this important topic, this article sets out the seven steps required for addressing a specific foreseeable succession need, and concludes with briefer suggestions for longer-range planning.
See full Study, in pdf format.
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