Free Essay Example: Succession Planning for a CEO

According to Larcker and Tayan (2016), succession planning refers to the systematic process of ensuring leadership continuity within a company by recruiting or encouraging individual employee growth and development. In particular, it is an approach that recognizes that some jobs, such as a CEO's position, are the lifeblood of the entity and too critical to be left vacant or filled by any but the best-qualified persons. When effectively done, succession planning is crucial to mission success and develops an effective process for recognizing, developing, and retaining top leadership talent (Larcker & Tayan, 2016). The Board of any company must consider various factors that are found in successful succession planning initiatives. These aspects include that the senior leaders are personally engaged and they hold themselves accountable for growing leaders, succession is linked to strategic planning and investment in future, workforce data and analysis inform the process, and leadership competencies are identified and utilized for selection and development.

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How should Lone Star go about finding a successor to Ritter? Should Bowers be recruited to be the next CEO? If so, why? If not, why?

Therefore, the Board in Lone Star should begin by conducting a thorough job analysis for the position of the CEO to enable them to understand the core roles, responsibilities and duties that they need the future CEO to perform. Also, the job analysis will help them identify the crucial knowledge, skills, abilities, and other characteristics that the individual must have to perform successfully in the position (Larcker & Tayan, 2016). After the job analysis, the Board should then conduct an in-depth analysis of Lone Star's current management to identify individuals whose qualifications and leadership competencies appear to match the requirements of the CEO position. Workforce data analysis or a skills inventory can be a good source of such information. Similarly, previous performance review would also avail valuable information for determining qualified candidates. Engaging Ritter in the process by considering his choice of Bowers as a potential candidate for the position is viable, but the Board should not give Ritter the authority to name his successor as his personal favorite may not be qualified given the kind of candidate the Board is looking for to fill the CEO's position.

How should other internal candidates be identified and recruited? Detail specific recruiting sources to be targeted, along with the qualifications required for the position.

When filling a CEO position, senior management can recruit a successor either externally or internally. Their main role is to find a person who fits the organizational culture and help develop his or her skills to lead the company (Larcker & Tayan, 2016). Identifying talent within the organization first would be the best option and if none of the current employees fits the position, then the management can recruit externally. As noted form Lone Star, Bowers may be a qualified candidate according to Ritter's recommendations. However, there may be other employees within the organization who may be more qualified for the position than Bowers. It is essential to note that, the CEO is responsible for leading the development and execution of the entity's long-term strategy with a view to growing shareholder value, which is a crucial determinant of corporate performance (LeCounte, Prieto, & Phipps, 2017). Therefore, the Board must conduct a thorough workforce analysis to ensure it identifies and recruits the most qualified individual for the job.

Does Lone Star need a succession plan for the CEO position? If so, how would you advise the board in setting up such a plan? Create an outline of what the succession plan would look like.

The primary goal for any management of a company braced with the responsibility of filling the position of a CEO is to identify the most talented individual with the required qualities. However, this process can be tedious and challenging, which calls for the development a succession plan to guide the management. The plan facilitates a careful selection of the potential candidates and the provision of training and development that ensures the chosen candidate has the skills, knowledge, and abilities to tackle the company's future challenges ((LeCounte, Prieto, & Phipps, 2017). Therefore, Lone Star Bank needs a succession plan. Moreover, the CEO's position plays a significant role to the long-term success of the bank and given that many organizations are experiencing major challenges in finding qualified replacements for outgoing CEOs, the bank must develop a well-thought-out succession plan with the help of the Human Resource Department. I would advise the Board to adopt the succession plan best practices as shown below.

Succession Plan Outline

Step 1: Assessment of the Key Position

This step involves:

Identifying the position that needs the succession plan

Establishing the required skills, education, experiences, and behavioral competencies needed to qualify for the position

Developing the desired leadership competencies for the position

Step 2: Identification of Key Talent

This stage involves:

Identifying talent with critical competencies from multiple levels

Measuring the competency and skill levels of the current workforce, using assessment instruments

The talent is identified by management's assessment of performance and potential for advancement through tools such as performance evaluations, 3600 feedback evaluations, and personality assessments.

Step 3: Assessment of Key Talent by

Assessing the identified talent for the potential to identify who is ready for the promotional opportunity

Sharing the analysis with employees to establish steps to increase their readiness for future positions

Step 4: Development of Succession Strategies

This stage involves:

Identifying recruitment strategies such as recruitment and relocation bonuses and any special programs

Identifying retention strategies such as retention bonuses and quality of work life programs

Identifying development or learning strategies

Step 5: Implementation of Succession Strategies

This step involves:

Implementing the succession strategies

Determining and applying measures of success

Linking the succession planning to HR processes such as performance management, compensation, and workforce planning

Step 6: Monitoring and Evaluation

This step ensures that:

The succession plan still align with the company's strategic goals and vision

It involves:

Reporting and tracking to evaluate progress

Listening to leader feedback on the success of internal talent and internal hires

Analyzing satisfaction surveys from shareholders

References

Larcker, D. F., & Tayan, B. (2016). CEO succession planning. The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Members, 141.

LeCounte, J. F., Prieto, L. C., & Phipps, S. T. (2017). CEO Succession Planning and Organizational Performance: A Human Capital Theory Approach. Journal of Leadership, Accountability and Ethics, 14(1), 46.