Being skillful at succession.

• Author: Sonnenfeld, Jeffrey A.

Recent CEO successions where there is no immediate successor -- for example, following Joseph Antonini's departure at Kmart -- highlight the poor succession planning that exists all too frequently in the boardrooms of corporate America. However, such situations can be avoided by boards who are prepared to grapple with the succession issue before it reaches crisis proportions, and follow a few simple guidelines. We propose that the five keys for a board for successful succession planning are:

1. Early Preparation.

2. Communication with Your CEO.

3. Knowing Potential Internal Successors.

4. Understanding Your Organization's

   Culture.

5. Knowing Your CEO's Likely Departure

   Style.

1. Early Preparation

   The primary responsibility of the board of directors is to represent the interests of the shareholders through ensuring that the organization has a management team in place that will pursue those interests. As such, succession planning becomes a key function of the board, and one that, unfortunately, all too often is abdicated or deferred until it becomes a crisis. Therefore, the first key to a successful transition is to plan early.

   When the small, independent Anglican church of Emmanuel in the famous village of Wimbledon, England, hires a new incumbent minister, the minister's first duty is to present the church trustees with his letter of resignation, which the trustees keep locked in a small safe until the day they decide to accept it. While this curious governance practice in this small outpost of the Church of England represents the other extreme from that found in corporate America, it indicates the trustees' readiness to address the succession issue and to plan ahead, which provides a lesson for others to learn from, even if the implementation is different.

   Monarchs, as we call them, are those corporate leaders who either die in office or are removed by their boards. They tend to avoid naming a credible successor at any point but will identify obviously flawed candidates roughly six months before their potential exit. By contrast, most smooth CEO successions have identified robust candidates two years in advance.

   Ambassadors are those CEOs who gradually step out of office but remain engaged in quiet ways, often providing wise counsel to proteges during this two- year interim grooming period. Charles Adams, shaper of the modern Raytheon Corp., and Marvin Bower, the founder of McKinsey, have played such a constructive mentoring role in their octogenarian years.

   While the last thing on most CEOs' minds when entering office is the transition out of the office, it should not be the last thing on the minds of the board. One practice that is more common in the corporate world is for the board to have a transition plan in place, either developed with or by the CEO, in case some unforeseen circumstances arise -- the proverbial "hit by a bus" scenario. Reginald Jones at General Electric also went through this scenario with his senior deputies when conducting his own succession planning, posing "what if" scenarios if he and the deputy were killed in a plane crash. While a pessimistic and morbid exercise, the discipline of planning for these contingencies provides the basis for succession planning under more normal circumstances.

2. Communication

   with Your CEO

   Just as conducting an emergency disaster scenario is usually done in conjunction with the CEO, it is important to engage the CEO in long-term succession planning to avoid undermining and isolating the CEO from this important process. However, there are caveats that we will discuss shortly where the CEO may try to undermine potential successors, where the board has to take over total responsibility for the process to ensure a workable transition.

   Generals are those CEOs who prepare a disingenuous departure plan and undermine their own successor to return from retirement to regain lost glory. They will often set up destructive battles between rival corporate warlords to neutralize powerful potential successors. Under normal circumstances, however, the CEO has a far better knowledge of the internal talent in the organization's pipeline and can work with the board to groom potential successors with developmental assignments and increasing...