Succession Planning and Corporate Culture

Effective succession planning ensures continuity of leadership, promotes talent cultivation and reduces uncertainty for investors. 09 September 2020 Succession Planning and Corporate Culture

Sophie Jones pens an article for the Board Agenda on why succession planning should be part of a company’s corporate culture. Not many board decisions will be more critical than deciding who (and when) to appoint as a new lead executive—whether CEO, executive chair or combined chair and CEO. The new lead executive will be expected to shape the strategic course of the business as well as influence the corporate culture for years to come.

Sophie highlights that based on SquareWell’s latest study — CEO Dismissals and Appointments at the World’s Largest Companies — which tracked lead executive changes at close to 500 companies listed on the major European, UK, and US indices showed that 73 companies (16%) had appointed a new lead executive during that period, with the highest level of turnover among S&P 100 companies.

Most boards now have a plan ready for sudden or unexpected succession, and more and more companies announce well ahead when a CEO will end its mandate. However, when a succession appears unplanned, investors are frequently left in the dark regarding the motivations of the change as well as the process followed by the board. While only 7% of lead executive departures were officially communicated by companies as “dismissals”, whether due to strategic disagreement, a scandal or poor performance, SquareWell believes the real number might be closer to 30% when looking at the events leading up to the lead executive’s departure.

The full article can be accessed here.


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