Planning for a CEO succession requires HR leaders to tackle a sensitive and potentially thorny subject with their chief executives. In light of this, HR needs to tread carefully and be aware of the undercurrents of such conversations.
Steve Jobs' recent resignation as CEO of Apple made national news last month, although his three medical leaves signaled that this day might come. With his announcement, Jobs also recommended "that we execute our succession plan and name Tim Cook as CEO of Apple."
As HRE Editor David Shadovitz observed, "Shareholders and others certainly have good reason to worry when someone as important to a company as Steve Jobs falls ill. But as yesterday's news demonstrated (and made undeniably clear), Apple's board, despite criticism to the contrary, was more than ready for that day. Wall Street seems to agree, with Apple's stock ending the day better than the major indexes."
The corporate world is full of stories of well-executed succession plans -- consider GE's transition from CEO Jack Welch to Jeff Immelt, or McDonald's Corp., which had to replace its CEO two times in two years because of untimely deaths. McDonald's was able to name a CEO each time from within its ranks because the CEOs and board had plans in place for what to do if the unthinkable happened.
But there are just as many examples of less-successful CEO successions, where CEOs and boards seem unprepared or surprised.
Consider Hewlett-Packard, where the board needed to conduct searches and bring in someone from the outside when CEOs Carly Fiorina and Mark Hurd were each asked to leave. A company as large as HP didn't have anyone inside ready to become the CEO.
Since no one lives forever, and life has a way of throwing surprises at us all, why aren't more organizations better prepared? Is it because HR isn't doing its job? What should HR executives be doing to ensure leadership succession at the top?
It's not a matter of tools or forms.
There are lots of succession-planning consultants, software and tools available to help with the process. Most seasoned HR professionals have worked with an assortment of planning tools -- whether it's a color-coded ("green means they're ready, red means they'll never be ready") tool or a system that uses brief descriptions to detail an employee's readiness for the next step.
Filling out the forms isn't a problem. It's the conversations that go along with the forms that may be difficult.
HR executives often need to be skilled psychotherapists when broaching the subject of succession with a CEO. Unfortunately, some HR professionals fail to recognize this.
Talking about succession planning is a very different conversation for the CEO than it is for the HR executive. While HR views the conversation as being about the future talent needs of the organization, the CEO views the conversation as having repercussions on his or her personal and corporate goals and aspirations.
HR executives need to realize this and be sensitive not only to what they're being told by the CEO, but to what isn't being said by the CEO.
The CEO probably won't tell you that he or she doesn't want to specify a date or trigger for a departure. It may be because the CEO simply doesn't know how long he or she plans on staying.
An ambitious CEO isn't likely to admit to HR that the right offer would prompt a resignation.
Plus, staying or leaving the company isn't totally within the CEO's control if they have a strong and independent board, or if they have different views on what the corporate strategy should be. Just look at Robert Kelly's unplanned departure as CEO of Bank of New York Mellon, reportedly because of his abrasive management style.
CEOs also know that suggesting an end date or trigger event can adversely impact their own effectiveness.
They don't want to be viewed as "lame ducks" or "short timers." They want to be able to make decisions and set strategic direction for as long as they hold the position, and they will avoid anything that might negatively impact their ability to do so.
CEOs also know that a tentative date, once vocalized, can be interpreted as set in concrete.
So how should HR executives approach this precarious conversation? After all, it's a crucial part of the planning process to know how long you have to help get internal candidates ready to be a CEO.
First, be sensitive to the very real discomfort the CEO may have with such a conversation, especially when it's a conversation that includes the board. Building a reputation for keeping the CEO's confidences is critical in this regard.
Second, acknowledge that asking the CEO to provide a timeline or date can be awkward for him or her. Remind the CEO that the exercise is necessary as matter of good corporate governance, that the board will expect it and that it is not binding in any way. Plans often change.
Third, reassure the CEO that having a plan in place will help ensure that everything the CEO has worked to achieve for the organization won't be lost in the future because of poor planning.
And finally, help the CEO see some humor in the process. At the Society for Human Resource Management, I always appreciated the fact that, when we talked about my own CEO succession, we always attributed my unplanned departure to winning the lottery, and not because I got hit by a bus.
Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.