It’s hard to imagine anything more stressful for executives at a company than having to deal with a chief executive officer leaving. It’s a time of great uncertainty confusion for even the best companies. This is especially true if the CEO in question was the original CEO, the founder of the company. Who could possibly replace them?
We will take a look at some of the options available in these situations.
1. Internal Succession
If you follow business news, then you’ll probably know that most companies hire within the company to find the new CEO. Some of you may even have questioned the opening paragraph of this article: what do you mean, who could possibly replace them?
To many people, the answer seems obvious: the chief operating officer is the one who must replace the CEO. But this betrays a slight misunderstanding about what a COO is. The COO is not the sidekick of the CEO who will naturally succeed them when they leave. They are generally the second-in-command, but they’re not always just doing a lesser version of what the CEO does. In fact, what a COO does can vary wildly from company to company. They’re comparable to a U.S. vice president. They complement the CEO, but they’re not necessarily the right successor. They may make a solid interim president if emergency strikes, though.
So it’s important not to assume that the second-in-command in your business is right for the job. Indeed, if the COO ascends to CEO, then you’ll need someone to replace the COO – which is nearly as much of a headache! The COO is, of course, more likely to have the relevant experience. So all of this being said, they are possibly the best bet within your company.
2. Hiring Outside the Company
Many might balk at the thought of bringing in an outsider to take over the reins, but it’s actually more common than you might think. Research has suggested that outsider CEOs usually do just as well as CEOs who came up through the ranks internally. In fact, there may even be some benefits for going with an executive search.
An outsider CEO is more likely to make major changes to a company. If they see any problems with other senior management members, they’re more likely to replace them with new executives. You’re probably right in thinking that this is down to a lack of sentimentality that an insider may have. This may seem like a cold advantage, but it’s an advantage none the less.
3. Preparing Correctly
There is a culture that is cultivated within your company that an outsider CEO may not get. But people often forget that an internal successor may have just as hard a time fitting into the new position. This is because transitional planning is often not as thorough as it should have been. It’s important that this transition is as smooth as possible.
The executives need to work with the CEO before they leave to establish a strong succession plan. These discussions may often be avoided because, let’s face it, they’re not pleasant discussions to have! But what would have been even better is if the succession plan was in place before the CEO even decided to leave. You should either be developing strong internal candidates or you should be developing a perfect CEO profile from day one.