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Excerpt from “Inside CEO Succession: The Essential Guide to Leadership Transition”
Copyright © 2012 by Thomas J. Saporito and Paul C. Winum
An emergency succession plan ensures the continuous coverage of executive duties and safeguards the interests of the company’s stakeholders, reputation, and value-creating activities. An emergency succession plan also provides guidelines to the board for temporarily appointing an interim CEO. Yet 40 percent of the directors we surveyed claim that they are not prepared for an emergency succession in the event of a sudden, unexpected, or unplanned departure of their company’s top leader.
An absence of leadership is a very dangerous and risky way to manage a business. It’s an embarrassing indication of poor board governance, but moreover, it has an immediately detrimental effect on the company’s market position and share value. Boards never know when they may have to implement an emergency CEO succession due to an unexpected leadership void. For this reason, boards should always be thinking about and planning for succession. When a company is blindsided by the sudden departure (or loss in tragic circumstances) of its CEO, boards must react immediately, though calmly and decisively. They must assure the public, customers, and employees that new leadership will soon be in place, either permanently or on an interim basis.
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