Board Succession Planning: Demystifying the Process, Debunking the Myths
If you’re short on time, this is for you:
- Make Board Succession Planning an intentional exercise and don’t let this can get kicked down the road.
- Catalog, with the help of an objective advisor, what you have, what you need, who’s available to do the lifting, and how all of that maps to your future needs.
- Bring your goals and intentions together in one place: A Position Spec that everyone on your team can embrace.
- Don’t wait for a board vacancy to network. Meet people when you don’t “need” them.
- Cultivate several strong prospects at a time. Regularly review your short list and revise if circumstances change. Stay in touch, stay open and control your board evolution destiny.
Board Succession Planning deserves your attention
Succession planning of any type is a vexing topic. The very idea of new people in the room, which will surely alter the dynamics in some way, goes against our natural instinct to avoid disruption. That is ironic since disruption is often associated with value creation in the business environment. Nonetheless, most people have an aversion to the unknown, especially when it involves resolving competing opinions about board size, what expertise is needed most, the timing of a change, and related topics. This can lead to the proverbial can getting kicked down the road, exacerbating risk by not addressing the need. Far better to be proactive and accept Board Succession Planning as a regular governance best practice. Yes, it may require pushing past a little discomfort, and will definitely demand objectivity, scenario analysis and forward thinking. It’s hard work but always worth it.
Planned board succession is a chance to connect the organization’s vision, goals, and strategy with the composition of the board, while also preparing for future committee rotations and leadership.
Board Succession Planning, sometimes referred to as refreshment, is most commonly driven by anticipated departure(s) of current directors. Change provides an opportunity to consider anew the organization’s needs not only at that moment in time but also looking forward with a 5+-year time horizon. Planned board succession is a chance to connect the organization’s vision, goals, and strategy with the composition of the board, while also preparing for future committee rotations and leadership. This supercharges the ability for a board to help a company pursue its greatest opportunities and mitigate its greatest threats.
Why do Board Succession Planning now?
Board Succession Planning enables you to drive change, instead of change driving you.
In this dynamic world, the only thing constant is change itself. (Nerd alert: Astonishingly, this philosophy is attributed to Heraclitus in 500 BCE yet couldn’t be more applicable in modern times.)
Conceptually, we all understand that companies are continuously evolving. If they’re not, they’re unlikely to go the distance. From Boardspan’s vantage point, that begs the question: How do boards evolve with the companies they govern? The answer is anything but simple. Savvy board members work hard to identify the changes that will have a meaningful impact, whether positive or negative, versus those ideas-du-jour that just create noise.
To be fair, when hot topics flash in and out of the boardroom, some amount of skepticism is healthy. Nonetheless, keeping a keen eye on seemingly small issues that can sneak up and cause problems is the remit of board members, and it is often part art and part science. After all, the very nature of board work is to be aware of the many moving parts. When change comes about, whether through evolution or revolution, the board cannot fall behind.
Our advice: Be intentional. Evolution happens whether you’re ready for it or not.
Most organizations are expected to keep a competitive pace–or better yet, set it–so, what does that mean for the board? Where and when do boards need to adapt and shift to best serve the evolving organization? Our advice: Be intentional. Evolution happens whether you’re ready for it or not. Define change–don’t let change define you. This is the essence of why board succession planning is important.
Intentional board succession planning is a building block for strategic boards. It keeps the board’s focus on the goals and long-term vision of the company and carves out time for deeper thinking about board composition and refreshment. Further, it abets alignment, a core characteristic of highly effective boards. A thoughtful board succession planning process helps boards focus on the future and build overall alignment on strategic direction. From a practical standpoint, it makes board transitions smoother and minimizes the risk of vacancies.
The difference between Board Search and Board Succession Planning: Timing
While Board Succession Planning and Board Search overlap in many respects, it’s important to know how the two processes are different. The most important distinction is timing. Succession planning is about looking out into the future, typically at least two quarters and as much as a few years. It encourages–and even requires–a long-term view and embedded strategic planning for how the board should consider its evolution. The benefits of planning ahead are many-fold and include:
- Embracing the rigor and creating the space to think through the board’s evolving needs
- Creating candidate lists to compare ideas and allow boards to cultivate prospective members at a gentle pace, exploring the cultural fit
- Being far along in candidate development, so boards are poised if an unexpected vacancy arises
- Giving your organization the flexibility to be adaptive as needs change; Position Specs can change over time, and that’s perfectly fine.
- Planning when, who, and how you will add someone to your board
If filling a near-term board opening, many of these planning techniques apply to a more conventional search process. Forethought and careful consideration will never let you down.
While most Nominating & Governance Committees oversee both Board Succession Planning and Management Succession Planning, the exercises should be seen as distinct processes serving entirely different purposes. An intentional approach to each, given interwoven timing considerations, is important. Beyond that, the characteristics of these two types of succession planning vary considerably. For example, CEO Succession Planning factors in both unplanned and planned leadership changes. Typically, an unexpected departure is more of a concern with management than with the board because there’s almost always someone to help cover the board responsibilities. Yes, a suddenly empty chair can create more work for others, but the work of the board carries on while you’re filling that seat. Plus, board members rarely leave without providing ample notice since terms of service are well known and that forces (or should force) conversation around renewing service commitments.
Brass tacks: The work of Board Succession Planning
A board succession plan should be developed around shared vision, board goals, alignment of priorities, agreed-upon responsibilities, and other considerations. Objectivity, open communications, and transparency are key ingredients in the process. An effective Board Succession Planning process should be measured, comprehensive, and proactive.
Don’t be daunted by the Rubik’s cube aspect of board building. With the right tools, current information, and a coordinated effort, you’ll have the best sense of direction possible.
The market knowledge and rigor that an external advisor provides keeps the process disciplined and work progressing so that boards stay on task to achieve the optimal outcome. A knowledgeable advisor will ensure that you:
1. Organize the information that characterizes your board
To kick off Board Succession Planning, it’s critical to know a few things:
- The skills/knowledge/expertise currently available and needed in the future
- Committee roles and responsibilities: Qualifications, willingness, time demands
- Board leadership: Chair and/or LID, Committee Chairs
- Service length: Years served and outlook for continuance
- Capacity and commitment: How much time is required & available from individuals
- Diversity in all respects: Gender, ethnicity, age, informed perspective
While this may seem like a lot of information, each piece plays an important role. And when boards overlay the pieces onto each other, true insights emerge. Don’t be daunted by the Rubik’s cube aspect of board building. With the right tools, current information, and a coordinated effort, you’ll have the best sense of direction possible.
2. Identify gaps, overlay findings, and connect the dots
Much like a kaleidoscope, strategic planning works best when you shed light on the multiple moving pieces, bring in fresh perspectives, and allow a little reflection. In other words, go beyond the singular dimension approach that doesn’t paint the full picture of the board’s or the organization’s needs. By looking at the intersection of goals, priorities, and changes in the business environment, a fuller picture emerges.
This approach needn’t delay your succession planning strategy. Working with an advisor who provides the objectivity and rigor you need can be invaluable and expedient. It’s worth spending some time here to help avoid the pitfalls of jumping to conclusions too quickly.
3. Create a succinct Position Spec
Don’t skip this important step. A well-articulated Spec serves multiple purposes:
- It confirms that the board’s leadership and those responsible for the search are fully aligned
- It informs candidates about the priorities for the search (most candidates are pretty good about self-selecting in or out)
- It gives others interviewing candidates, whether earlier or later in the process, an explicit understanding of the drivers of the search. Thus, getting early internal buy-in for the Position Spec contributes to a smooth process.
The Position Spec guides the relationships you cultivate
With a Position Spec developed, your advisor should be able to identify candidates and start to screen them against your “true north” goals for the process. Your advisor and the Nom & Gov Committee should assess candidates for the critical competencies, availability, interest, and, most importantly, cultural fit, which can happen at a pace you set. From here, a short list is created as well as a cultivation plan including timing, frequency, and team.
By always having a few potential candidates in consideration, a regular contact schedule and a well-organized documented process, you will never feel the pressure of a rushed board search again.
We recommend cultivating two to four prospective candidates at any given time. If one removes themselves from consideration (for example, their capacity changes or they become involved with a competitor), then your advisor should replace them with an equally compelling candidate. By always having a few potential candidates in consideration, a regular contact schedule and a well-organized documented process, you will never feel the pressure of a rushed board search again. How’s that for incentive?
Where to from here?
Back to good old Heraclitus, change is constant, thus, all boards should be in constant succession planning mode. If you’re not in planning mode already, there is no time like the present to get a process in motion.
Having a continuous process, however, doesn’t mean that you’re always interviewing, vetting, and talking about candidates at a board or committee meeting. That is entirely avoidable when you have a short list of people on your radar screen in various phases of cultivation and an open mind to be opportunistic about adding new names to your list. Succession planning is a flywheel and getting that wheel spinning makes it easier to keep up momentum.
Who is on your board is foundational to the board’s success. It makes sense to put thought and intention behind who you want to sit at the table. Not only does a well-articulated succession plan accomplish this, but it also takes much of the work and stress out of finding and onboarding new directors when the time comes. Once you take the first steps in Board Succession Planning, you’ve taken control of your board’s destiny and charting a path to success.
(Photo by Imagesrouges on iStock)