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The surprise departure

The surprise departure

Paul White’s resignation as CEO of Orient-Express Hotels came as a surprise to everyone. No one really knows if the OEH board was surprised, but the standard PR statement that he was leaving “to pursue other interests” doesn’t give much insight. 

How should boards react to the sudden departure of a senior executive? In Ram Charan’s book on board governance, “Owning Up,” he encourages boards to ask the question, “Are we prepared to name our next CEO?” If the answer is no, they have a lot of work to do.

Succession is one of the most important responsibilities of a board. Boards should have a clear process and strategy for dealing with the planned or sudden departure of the CEO. I would recommend the following steps for anyone dealing with succession:

  • The first step is to start early. Always have a plan in place, and make it a standing agenda item at every board meeting.
  • Don’t let the present/outgoing CEO determine the successor. This is a board decision. 
  • Get to know all the high potentials inside the company and invite them to board meetings as appropriate.
  • Identify high potentials outside the company. Use search firms and advisors where appropriate.
  • Be prepared for “worst-case scenarios.”
  • Treat the process as a priority. Start with the company strategy, culture and a formal needs analysis.
  • Narrow the field to five to seven candidates that you can truly vet and spend time getting to know. Assessment, behavioral interviewing and reference checking are still the best way to conduct due diligence on candidates.
  • For most CEO searches, I recommend the candidates spend some time in the field and draft a strategic white paper on how he or she will lead the company. This will give the board insight into the individual’s communication skills, strategic thinking, market analysis, people skills and passion for the job and the company’s future.
Surprises are great for birthday parties and anniversaries, but not for succession planning.
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