If the board acts expeditiously, its choice is likely to reflect the traumatic and hurried atmosphere in which the decision was made. Delaying the decision, however, breeds disruptive rumor and uncertainty that can affect stock value or bottom-line performance.

When they need to replace their CEO, directors can react confidently, in an appropriate and timely fashion, only when they are armed with current, objective data regarding the available candidates. Companies need a process to provide information that is intelligently gathered, well organized, and readily accessible. Otherwise, their boards will face the unwelcome task of making important decisions about people they barely know whose influence may be felt for years to come.

In the end, having a long-term succession process in place allows an organization to deliberate from a position of strength. A company can anticipate leadership transitions by supporting an ongoing system to maintain a wide variety of useful, objective information about potential candidates.

Once high-potentials are identified, individualized developmental plans can be created to provide the appropriate management and leadership experience necessary to keep the talent pool supplied with prospective leaders who can be tapped to fill the CEO position.

Building the Road to Readiness
Effective succession planning is based upon solid, fact-based decision making. So, what are the barriers that prevent boards from having a fully developed plan in place?

Meaningful work in this area requires
time and energy. Since board members are typically active people whose time is precious, relinquishing this responsibility to the current CEO or to an outside recruiting firm may seem the expedient choice.

Also, when inundated by more immediate issues, boards customarily relegate succession to the bottom of the agenda. One study reports that directors spend less time preparing potential CEO successors than on any other activity.