Human Resources Issues for Senior Management
Issue link: https://digital.hrreporter.com/i/343811
18 Executive Series Digest hrreporter.com BOARD OF DIRECTORS pick up their game — and where you may be able to help them." at single decision is one of the most important things a board is tasked with, ac- cording to David O'Brien, former president and CEO of Toronto Hydro and current board member of OMERS, based in Toronto. " at (new CEO) will be the outward face of the board, that's the individual that will be most recognized out in the market- place… but, equally important — and peo- ple forget this o en — is it's also the person that is inwardly facing." OMERS just went through a CEO tran- sition that took two years to put into place. ey eased the new CEO into the role over a period of months, said O'Brien — rst, by attending meetings alongside the current CEO and, eventually, by standing in for him. "So when we made the announcement, there was not a pushback in the market- place," said O'Brien. "Everyone should have a succession plan for the CEO. Don't wait for the CEO to get hit by a bus. e worst thing you can do is to have no leadership in an organization." One pitfall in the succession planning process is when the current CEO is reluctant to leave and becomes less than co-operative, said Beattie. Another is when the process is based on a rewards system instead of merit. " e role of CEO succession, far too many times, is a reward system for a job well done, as opposed to a rigorous, disciplined process of saying, 'What do we need going forward?'" he said. O en, companies hand over the CEO position as a reward for doing a good job instead of really critically looking at wheth- er that person has what it takes for the role, he said. To help avoid that pitfall, HR should identify and consider external candidates as well as internal ones, said Blair. "It's your job not only to create internal succession but to know who the best people are in the marketplace and to be identifying those people — and, where you can, forging relationships with them… so that when the day comes that the board makes the deci- sion, they at least have options." Boar ds more active in CEO succession planning By Karen Gorsline (Strategic Capability) T he panel on maximizing boardroom e ectiveness focused on three areas: presentations and pre-reading; the relation- ship between the CHRO and relevant board committees; and CEO succession planning. While the rst two provided help- ful reminders and useful insights, the discussion on CEO succession planning provided the most food for thought. Boards have become much more active in CEO succession plan- ning as it has a signi cant impact on an organization's future. e CEO is both the outward and inward face of an organization. e days when a CEO picked board members who would rubber stamp the executive's direction and decisions have been chased away by events highlighting the board's accountability to shareholders. Boards now more fully recognize they put the executive in place and are directly responsible for appropriate oversight and gover- nance of her actions. Boards see an opportunity to improve their governance by having an emergency, long-term succession plan for that most senior executive. ere are a number of things boards are doing on this front: • Engaging the current CEO in CEO succession planning — this cre- ates an understanding there will be a time to step down when oth- ers are ready to move forward, and also establishes opportunities for the current CEO to look forward to new challenges. • Looking at potential successors from within as well as outside the organization. • Constraining the existing CEO from using succession as a form of reward system. • Staying more involved in coaching and developing the board-CEO relationship over the initial few years. • Identifying future competencies needed by the CEO. • Dealing with issues around the participation of former CEOs and founders in board activity. Are these things enough? No. Most e orts are focused on im- provements in the current context and do not incorporate enough thinking in terms of the future shape of the organization. Organiza- tions need to be asking forward-looking questions such as: Is the organization considering all of the relevant business futures as part of talent development and succession planning? Many years ago, Shell started actively mapping out multiple scenarios, including extreme or radical situations where the business model would need to be drastically altered, impacting the required capabilities of the executive and workforce. IBM, well-known for talent development and internal succession, actually faced the need to bring in external leadership as it moved from a hardware manufacturing, sales and service organization to a consulting and service provider model. Organizations must con- sider: What shi in business can be anticipated? Can internal tal- ent prepare to take on new ways of conducting business, and could awareness of the potential change be used to contribute to higher executive engagement and broader capabilities? Is up the only way? For many years, organizations have been en- couraging career thinking that lateral moves are excellent opportuni- ties to learn and provide new experiences to promote retention and engagement. However, once an executive indicates a desire to be a