In the recent Atlanta Journal Constitution article from December 2011, “Don’t Get Burned Passing the Torch,” founding partner of the Koblentz Group, Joel M. Koblentz was quoted extensively on the importance of succession planning as “the” seminal responsibility of corporate boards.
These days, boards of directors at most large companies consider succession planning one of their key tasks, said Joel M. Koblentz, senior partner at the Koblentz Group. Often, boards now formally monitor CEO’s efforts to develop their potential replacements, as well as candidates for other members of the senior executive team, said Koblentz, whose Atlanta firm advises companies on succession issues and helps them recruit executives and board directors.
“It’s only in the last few years that boards have taken it seriously,” he said. But now, in the wake of numerous financial scandals and corporate missteps over the past decade, company directors are “much more cautious” about vetting a CEO’s hand-picked heir-apparent, he said. They’re also insisting on a wider choice of candidates.
“Because it’s a lengthy process, they’re starting earlier,” said Koblentz. “The best companies are doing it continuously.”
He said it usually takes at least two years to set up a viable succession plan because it takes that long for the current CEO and board of directors to pick candidates, become familiar with their strengths and weaknesses, and rotate them through jobs to broaden their experience.
Smaller companies are at a disadvantage, he added, because often their bench isn’t deep enough to allow such juggling of jobs to groom candidates.
“There are many emerging and midcap companies who struggle with this because the costs are so expensive,” said Koblentz. “But many are concluding that it’s more expensive not to do it.”
Sometimes, however, even the largest companies appear to stumble, either because they didn’t have a good replacement waiting, the board didn’t challenge the CEO’s hand-picked successor, or board members and other players become involved in internal power struggles.
“The process fails when the CEO designates the crown prince and the board just says, ‘OK,’ “ he said.
Even so, there is an advantage to appoint executives who are in the company today.
Koblentz commented that insiders naturally have an advantage over outside hires. “They know the business. They know the culture. They know how the trains run.”
Joel is a good friend and his sage advise is something that a;ll HR executives should listen to and read his blog on www.koblenzgroup.com
