The Risks Of CEO Succession

by Ernest von Simson for Forbes – CIO Network, February 17th, 2011.

Corporate boards have two indisputable responsibilities: first, ensure transparency in financial reporting, executive compensation, and corporate governance; and second, manage CEO succession, including the duty to fire a failing chief executive, and recruit a successor who can lead the company through a successful transition.

CEO succession has hardly been a straightforward board activity. In too many cases, either the failing CEO remained in place too long or the successor proved incapable over the long term. Admittedly, similar errors are apparent at every level of the organization, but they generally don’t jeopardize the company as a whole.

The always thorny question of timing the retirement of a CEO can get even pricklier when the CEO is also a founder. Too often boards retreat into complacency and dependency after years of strong leadership by the incumbent. Too often the CEO is allowed to choose his own end date – which is invariably postponed when growing turbulence threatens the graying legend’s legacy. (continue reading… )

 

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