According to the research, 40 percent of companies do not have a defined Succession Plan.Succession and Good Governance: Keys to successfully implementing Succession Plans that support the sustainability and competitiveness of our companies Written by Antonio Núñez, Senior Partner at Parangon Partners, and Luis Huete, professor at IESE Business School.
The study, based on a survey of more than 3,320 CEOs, managers and executives of companies in the country, shed light on the lack of preparation for business succession in Spain. The study highlights that Four in ten companies have not defined a plan to ensure a smooth transition and successful in senior management.
Likewise report It highlights the lack of due diligence in 48% of companies. Plan. Antonio Nuñez explains: “Almost half of companies that create an Action Plan do not plan to review it periodically, which can leave them in a vulnerable position in the event of unexpected changes.”
Finally, the Study reveals that over the past decade: More than 50 percent of companies have changed their CEO in the last three years. This underscores the need to adequately prepare for succession in key management positions.
Professor Luis Huete comments: “Succession processes for key people in companies must be defined and clear, taking into account contingency, immediate and intermediate successors. When choosing leaders it is important to take into account both performance and cultural fit. When you need a long-term vision and team-building skills “You can have a leadership position by being results-oriented.”
The study also highlights that CEO succession may have different objectives and that strategic renewal is one of the most important as the new CEO is expected to bring new perspectives and approaches to respond to ever-changing challenges and opportunities.
Keys to successfully handling a good backup plan
- Detailed transition planning: Define the duration and scope of the transition, identify key milestones, and determine how responsibilities and knowledge will be transferred.
- Focus on company needs: The Board should clearly understand what the company needs before discussing candidates and focus on “what” is needed rather than “who” will fill the position.
- Determination of requirements and competencies: Define the requirements and competencies required for the CEO position and other key positions.
- Other Key Positions in the Succession Plan: An effective succession plan should address not only CEO succession but also other critical positions in the organization, including general managers, division or business unit leaders, regional managers, and critical specialty positions.
- Unexpected Situations During the Inheritance Process: The takeover process may face internal resistance from employees or management team members due to loyalty to the outgoing CEO or uncertainty about new leadership.
- Succession Plan Review Frequency: It is recommended that the Succession Plan be reviewed at least once a year or whenever significant changes occur in the organization. According to the survey, 48% do not plan to investigate.
- Responsibility for leading the Succession Plan: This task falls to the Board of Directors, specifically the Nomination and Compensation Committee, succession committee, or a committee specializing in leadership and talent.
- Importance of Internal Candidates: Research has shown that promoting internal candidates can have a less negative impact on a company’s performance and stock price than hiring external candidates. This highlights the importance of developing individualized development plans for internal candidates.