key: cord-0048414-y1bvl56s authors: Santora, Joseph C. title: COVID‐19: An Urgent Imperative for CEO Succession Planning date: 2020-07-13 journal: nan DOI: 10.1002/bl.30164 sha: 99a6e13eb12cf2da182eb299b724360a3c3c8a37 doc_id: 48414 cord_uid: y1bvl56s Dr. Joseph C. Santora is the founder of TST, Inc., a management consulting company, editor of the International Leadership Journal (internationalleadershipjournal.com), and an executive educator. In this article, he discusses the impact of COVID‐19 on CEO succession and urges boards of directors to create and implement a CEO succession plan with the assistance of their companies' chief human resource officers (CHROs). A recent Financial Times article profiled CEOs from 10 major companies who shared their views on meeting challenges during periods of ambiguity (Redcliffe-Johnson, Neville, & Moules, 2020) . The absence of the alarming impact of COVID-19 in their narratives is compelling. COVID-19 is an equal-opportunity, nondiscriminating killer. It knows no boundaries, ages, genders, races, creeds, or religions. To date, more than 5 million people worldwide have contracted the COVID-19 virus, with more than 325,000 fatalities. Sadly, these numbers continue to increase daily. Many CEOs do not plan for succession. Indeed, they often share the false belief that they are immortal; but, like the rest of us, they will die. CEOs Jean Philippe Ruggieri (Nexity Group), Mike Dean (Mahdlo), and Don Welge (Gilster-Mary-Lee) have all died from COVID-19-related complications. Without an emergency CEO succession plan, these CEOs could have seriously jeopardized the sustainability of their companies. Today, many CEOs and their boards simply give "lip service" to CEO succession. Larcker and Miles (2010) found that more than 50% of companies in their survey were unable to "immediately name a successor." They also found that these companies were unprepared for a CEO succession process. In 2016, Hooijberg and Lane identified three reasons boards do not plan for CEO succession: a mismatch between prospective CEOs and the company strategy, CEO insecurities, and a failure to identify mid-level managers for executive development training. Indeed, CEO succession has raised such major management concerns that Favaro, Karlsson, and Neilson (2015) , writing in strategy + business, have called it a $112 billion problem. The CHRO must play a prominent role in CEO succession planning at the board of directors and C-suite levels. The role of the CHRO in the succession planning process is to serve as the liaison to the board secretary, the board chair, and the vice chair. Time should be reserved at every board meeting to: (1) review and update the organization's CEO emergency succession plan, (2) present all executive-level human resource changes that could have an impact on the company's emergency CEO succession plan, (2) schedule quarterly workshop scenario exercises to test organizational preparedness for CEO succession in an emergency situation, and (3) review and update necessary decision-making duties and responsibilities CEO successors need to lead organizations effectively in an adverse organizational climate. CEO successors must be ready, willing, and able to assume the CEO position. Without a doubt, COVID-19 has tested the limits and mettle of CEOs and their boards to develop innovative CEO emergency succession plans. Should a catastrophic event occur, one approach might be to follow the US presidential line of succession model: the vice president succeeds the president, the speaker of the house succeeds the vice president, followed by the president pro-tempore (highest-ranking senator), and then the presidential cabinet beginning with the secretary of state, the secretary of the treasury, the secretary of defense, the attorney general, and down the line according to the order of the creation (see [US] Presidential Succession Act of 1947). Inside successors should possess an intimate organizational knowledge to ensure a seamless transition during a major crisis, as the current pandemic has proven to be-certainly in less complex and nonemergency times, an outside successor may add greater depth and value to an organization for various reasons. Alternatively, boards of directors and their leaders may seek to adopt a variation on the Boston Consulting Group's leapfrog succession model: "Corporate boards of directors are increasingly reaching down below the second layer of management to name new chief executive officers. By accelerating the promotion of these executives, boards hope that the new CEOs' ability to understand and act upon signals on today's unpredictable environment will more than offset their relative inexperience" (Torres, Hansell, Foster, & Baron, 2014, p. 1) . Moreover, the CEO leadership characteristics that boards of directors have traditionally sought and valued may no longer be totally relevant for current and postpandemic CEOs and may require other leadership characteristics; as such, emergency CEO succession plans must be assessed accordingly (see Cheng, Groysberg, & Healy, 2020; Ciampa, 2020) . COVID-19 and other world health, political, and economic upheavals (e.g., the Global Recession of 2008) exist in a volatile, uncertain, complex, and ambiguous world. COVID-19 has forever transformed the workplace in many ways. It has established a new normal. It has forced boards of directors and their leaders across industries and sectors to take decisive action and make CEO succession a major corporate governance issue to ensure that their companies can function effectively and efficiently in both ordinary and unstable times. For sure, COVID-19 has forced us to review the CEO governance succession planning process. Your CEO succession plan can't wait Should a crisis change your CEO succession plan? Harvard Business Review (includes a 3-minute, 31-second video entitled "CEO Succession: Why It Pays to Have a Plan 2010 CEO succession planning survey Presidential Succession Act of 1947 Leapfrog succession: A new trend in appointing CEOs? Retrieved from https:// image-src.bcg.com/Images/Leapfrog_Suc B oard Leadership's mission is "to discover, explain and discuss innovative approaches to board governance with the goal of helping organizations achieve effective, meaningful and successful leadership to fulfill their missions."Board Leadership aims to fulfill this mission by engaging its readers in a lively and illuminating inquiry into how board governance can be made more effective. This inquiry is based on three key assumptions:• Boards exist to lead organizations, not merely monitor them. • Effective board governance is not about either systems, structures, processes, theories, practices, culture, or behaviors-it is about all of them. • Significant improvements are likely to come only through challenging the status quo and trying out new ideas in theory and in practice. 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The course provides 200 hours of study and a broad introduction to businesses and how they are governed, maintained, and financially managed, as well as the laws to which they need to adhere. The knowledge and skills attendees learn in this course will prepare them for more advanced certification programs offered by the Institute.For more information, visit https:// bit.ly/3i4cVy1. September Governance Institute Leadership Conference -Virtual According to organizers, the Governance Institute Leadership Conference offers current information, interactive sessions, expert speakers, and the opportunity to meet others with a similar commitment to improving governance and achieving optimal board performance. Topics of interest vary from year to year. This year, it will focus on the COVID-19 pandemic, which organizers say has completely changed-and will have a lasting impact on-the financial and strategic landscape for hospitals and health systems.For more information, visit https:// bit.ly/2Vk8O7x. (continued from page 1) (continued on page 7)