Proactive CEO Succession Planning
CEO succession planning, which is the practice of identifying, assessing, and selecting talent to succeed incumbents in critical roles, should be an ongoing top priority for Boards of Directors, CEOs, and CHROs. At Lotis Blue, our executive succession planning team knows that “planning” goes far beyond maintaining a slate of candidates. Our clients recognize that proactively navigating the inherently emotional and political aspects of succession requires careful management of both the mechanics and dynamics of the process, supported by objective, science-backed tools. When done right, CEO and senior executive succession planning ensures an organization maintains a deep bench of talent in its most critical roles, enhancing resilience against the inevitable challenges of leadership transitions.
Perspectives on Getting Succession Planning Right
Succession planning is a strategic business process aimed at building resilience and managing risk—it is not simply replacement planning. Effective governance is essential, particularly for executive-level roles, where the stakes are high and require both objective assessment and stakeholder management. Just as business strategies evolve to remain competitive and respond to external pressures, succession planning must adapt to secure future success.
As a socio-political process, succession planning benefits from executive talent reviews that drive development goals and readiness for future roles – though these reviews are rarely executed effectively. Because ‘leadership’ is a complex and difficult-to-measure quality, assessing leaders through multiple lenses provides a more complete view of their fit and future potential.
Linking succession planning with leadership development is essential to realizing the full value of the process. Additionally, incorporating external assessments can help counteract biases that often influence decision-making, ensuring a more balanced and effective succession planning approach.
The success rate of executive hiring hovers around 50% and can cost a company more than $1.5M per leadership role if done poorly, and 25x more if the focus is CEO succession.
Identifying Leadership Talent
A pivotal component of CEO succession planning is the careful identification and development of internal leadership talent. This strategic endeavor necessitates a thorough evaluation of the organization’s talent pool to identify individuals who not only exhibit leadership potential but also align with the company’s values and strategic direction.
This cultivation process is active and continuous, requiring ongoing commitment to identify succession risks and address them through targeted leadership development strategies. Executive succession planning should be considered an ongoing business process – closely linked to both strategic objectives and leadership development – rather than a static plan that is retrieved when key talent departs. At Lotis Blue, our executive succession planning team collaborates with clients to move beyond programmatic, calendar-driven approaches, which can drain resources and yield limited returns. By blending concepts from behavioral science and design thinking with proven methods, Lotis Blue creates a cohesive and integrated approach to succession planning that evolves with business needs and demands of key talent segments.
Insights
Our Guiding Framework for Leadership Continuity in Health Care
CEO succession planning is only one aspect of the broader executive talent management strategy. Our team frequently provides consulting in the complex world of health care, where executive succession comes with unique challenges and opportunities.
Our experience in health care highlights several key design principles in effective succession planning:
Support the core mission of the health system to deliver high-quality, reliable, and world-class patient care by identifying and developing top-tier talent effectively.
Establish a common understanding among senior leaders of the characteristics that define exceptional performance and future leadership potential.
Ensure critical roles have the depth and breadth of ready organizational leaders to lead the health system now and in the future.
Enable current leaders to gain deeper insight into leadership potential, the depth of the talent pool, and potential risks to mitigate.
Think two to three moves ahead, moving beyond simple incumbent replacement to plan for long-term leadership needs.
Use scientifically validated tools and methods to objectively and reliably assess competencies and indicators of potential.
Support the growth of current and future leaders using a 70/20/10 model, which includes challenge/stretch assignments (70%), development relationships like mentoring and coaching (20%), and formal training/coursework (10%).
Drive the succession planning process through executive leadership with HR support to ensure consistency, clear criteria, and equity in decision-making.
Design a process that is intuitive and easy to execute while maintaining a rigorous methodology.
Make Bold Moves
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