Succession Planning (people decisions)

Introduction

Succession planning involves decisions about people.

When CEO of Westfarmers Richard Goyder (2017) stated

 “...The hardest decisions I have had to make at Westfarmers are the people decisions…”

 Richard Goyder as quoted by Patrick Durkin, 2023

One of the biggest challenges facing senior management and board members is making the tough decisions around people, especially

People decisions at senior management level

“…The relationship between the CEO and chair is one of the hardest to manage..”

Pauline Vamos as quoted by Patrick Durkin, 2023

Chairs and boards need to be wary of ‘CEO capture’. This occurs when it is time to move on the CEO but maybe for reasons like friendship, past performance, no obvious successor, etc, the decision is made not to replace him/her by the board, especially the chairman. 

However, as Ken Henry (when chairman of NAB - a large Australian based international bank) describe- the CEO-chairman relationship

“...there will be a time when I have to throw him (CEO) under a bus. He has to trust me that when I am doing that it is in the best interest of the company. Even if he might regard it as being unfair to him personally…”

Ken Henry as quoted by Patrick Durkin, 2023

Boards need to remember that they have a fiduciary duty to all shareholders and stakeholders.

Furthermore, the timing when the new CEO starts and the old one leaves is pivotal:

“...If you dally too long you can ruin the chance of the next person doing well, and you can ruin the reputation of the person who is there now…”
 David Gonski as quoted by Patrick Durkin, 2023