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All organizations, no matter the industry, must have a succession plan in place to ensure a smooth transition takes place from one CEO to another to avoid potential problems related to operational effectiveness. In the case of Nature Conservancy, it must first be stated that the rather abrupt resignation of Mr. McCormick is both highly unusual and incredibly inconvenient for the company. The article CEO Succession Plan (2012) explains that while a CEO has every right to resign given a variety of potential reasons (health concerns, family, etc.) they still need to take into consideration the fact that as the head of the company their departure would cause a considerable level of operational decline given that they are responsible for “steering the company” so to speak in the right direction. The article also points to examples such as Microsoft’s Bill Gates, GE’s Jeffrey Immelt and Berkshire Hathaway’s Warren Buffet who indicated their desire to distance themselves from their respective company’s main operations and instead trained successors and delegated sufficient responsibility to them before implementing a succession plan that would culminate in their resignation.
Putting a Succession Plan in Place
The following are the steps that agencies should implement to have a succession plan in place:
- Discuss with the CEO any plans of him retiring in the future. In essence, this is an important aspect of the succession procedure since it enables the HR department to know of a specific time by which a successor needs to be trained or brought in to succeed the CEO.
- Early Role Delegation – This involves the CEO in delegating tasks to potential successors early on to determine who would be a proper fit for the role of CEO in the company. This ensures that should help the CEO leave or resign due to an assortment of potential reasons. There would at least be a minimum level of operational disruption since there would be other people within the company who would already know what to do.
- Successor Planning – This involves the HR department and CEO discussing who would be his ideal successor based on performance evaluation and the CEO’s recommendation.
When it comes to any period of transition, it is necessary for the new CEO to “learn the ropes” so to speak from the old one. It is based on this that the former president should be called upon as a paid advisor to help Nature Conservancy through its period of transition. An advisory role in this regard can involve a variety of different factors such as helping the HR department select a proper successor, guiding and advising the interim president during the transitory period as well as guiding the new CEO in their role within the agency until such a point that they will be able to take over without the need for guidance. The importance of advisory roles should not be underestimated given the potential for a new CEO to “wade in unfamiliar waters,” so to speak, resulting in the potential for problems in his/her view regarding what must be done to improve operational effectiveness within an organization. Freeman (2004) explains that the former CEO of a company knows it better and, as such, is essential in training the new CEO in the various nuances and particulars of the company’s operations. Without an advisory process in place, it is more likely that the new CEO would make a mistake than it is for them to continue the previous operational standards of the former CEO.
The Role of HR
Based on the study What’s In Your CEO Succession Plan (2011), which delved into HR responsibilities and CEO resignations, it was noted that a company’s human resources department is directly responsible for the development of a proper succession plan early on in a CEO’s tenure at the company. This can involve placing potential candidates in jobs of significant influence as well as planning with the CEO who might be suitable to succeed him in the future once he/she retires. Implementing such a strategy is important, as evidenced by the case of Steve Jobs at Apple, whose waning health due to cancer prompted the necessity of a successor. It is based on this that HR departments need to implement both a long term and a short a term succession plan to prevent any issues that may impact the company’s overall operations. While a long term succession plan involves potential grooming candidates as a successor, a short term succession plan involves placing interim presidents or councils as the head of a company until a suitable successor can be found. Freeman (2004) explains that this is a necessary step in the transitory process since it is necessary to help ease the company into the methods and vision that the new CEO would have.
Overall, if the directions that have been outlined in this paper are followed, it can be expected that a proper period of transition can be implemented in the case of Nature Conservancy, resulting in an effective succession.
CEO Succession Plan. (2012). Board & Administrator: For Administrators Only, 28(12), 6.
Freeman, K. W. (2004). The CEO’s Real Legacy. Harvard Business Review, 82(11), 51-58.
What’s In Your CEO Succession Plan?. (2011). NACD Directorship, 37(4), 14.