Question: How can the board help CEO develop new leadership talent as a process?

I am associated with an investment firm with interests in several high-technology businesses where we often take board positions.

Over last several years we have tried many different ways to influence our CEOs to identify and develop leadership talent past founding teams/ early employees, but somehow it never figures as a priority till it is too late (i.e. we have a major crisis with a key departure.)

My question: Apart from building comprehensive "risk heat maps" or other such dashboards... what can we do to enable our CEOs to build a solid process for ensuring leadership continuity?

9 Expert Insights

I think that the first thing to do is to have a conversation with the CEO, help him/her understand why there is a need for developing the leadership talent. Last but not least this should become a requirement that is part of the CEO performance assessment. The board has the right to request this, but in order to make it happen all board members have to be in agreement. If the rest of the board does not feel this is important it will be impossible to make it happen.

I have worked in at the cross-space of innovation & cognition for a number of years, and I have developed a process that engenders this type of leadership continuity as a byproduct. I was concerned about the same issue in a number of companies that I have worked with - basically asking 'how can the top talent being groomed for the corner office develop, early on, the skills required of a successful CEO?'

The model I developed is called 'cognitive coaching' - it's aim is to introduce, on a cyclic (bi-weekly or monthly) basis, that top group, at an individual level, to event simulations that train two specific competencies: highly diversified information sourcing and problem definitions and demonstrated capacity for anti-fragile modeling of solutions.

I am going to respectfully disagree with my colleagues.  I view this as two separate issues, (1) board responsibilities and (2) resistance to change.

As a board, you have five main responsibilities: (1) setting the strategic direction and approving the strategic plan, (2) approving the budget, (3) setting policies, (4) holding leadership accountable for results, and (5) ensuring the long-time viability of the company.  That is where leadership succession comes into play.  

Leaderships succession from the board perspective is usually about the CEO and C-level positions, but if the CEO isn't looking at the necessary leadership succession process and identifying / training people to move up, s/he isn't doing their job.  That is where #4, holding leadership accountable for results, comes into play.

It is in the best interest of the organization to do this as you well know.

I suspect that the reason why this isn't happening is because there is some underlying resistance to change.   Leadership succession planning is one of the keys to building a successful organization, and if your CEO is resisting that, you may not have the right person there for the long haul.  

Yes, you can put programs in place, hold them accountable, etc., but unless they buy into the #1 rule in a new job, i.e., train your replacement, you face an uphill battle.  

One of the top responsibilities (and privileges!) of a leader is developing the next generation of leaders. As the leader of the organization, the CEO should already know this. But if that's not enough, the WSIC (Why Should I Care?) and WIFM (What's In it For Me?) for the CEO is that he or she will not be able to achieve their vision, execute their strategy, and produce results all by him or her self -- so they need the people under them to "step up to leadership."

And they will only be capable of doing so if the organization puts processes and programs in place to DEVELOP people into the leaders they can (and must!) be for the organization to survive and to thrive.

The problem is that CEOs -- just because they are in a position of leadership -- often (usually) don't know the first thing about leadership DEVELOPMENT. Being a leader, and developing others into leaders, are two completely separate knowledge- and skill-sets.

The ability to create a culture of leadership development, and to put into place a process by which managers are systematically developed into leaders, is a specialized area. (Not to drop in a "plug" necessarily, but that's why leadership consultants and executive coaches like myself even exist; we specialize SOLELY for the purpose of helping companies do this.)

There is a saying that "Managers are trained; Leaders are developed." So to create a team of highly effective "Managers/Leaders," the CEO needs to put in place a system in which key people are both trained and developed.

And it is the Board's responsibility, and in everybody's best interest, to ensure that this takes place.

The two most common reasons that this DOESN'T take place are: time and money. Yes, everyone is busy. And, yes, resources are limited. But the ROI of leadership development, though difficult to quantify, is often the key differentiator between the organizations that succeed, and the ones that don't...and will give you an incalculable competitive advantage.

“To be called a leader all one needs is followers, little more than sheep. To be a great leader, one needs to be worthy of being followed.  Leadership  is not a job description, it’s Being in action.  Great leaders are known for their ability to develop self-leadership in others, not for directing traffic and putting out fires.  It is a ‘given’ that all human beings are unique. It takes a great leader to recognize the essence of that divine diversity and then take time to develop that magnificent potential into its fullest capacity.”
This is from a book I'm working on called Quintessential Leadership.

What I want to say is that my colleagues before me (some) have put their finger on the issue.  Yes you can hold the leader accountable for this process, yes you can put a process in place, however, it is the CEO who could benefit from the development of their own leadership qualities and skills. Clearly there's a gap, a piece missing in this CEO's leadership fulfillment and without someone to help them close the gap and be able to help them integrate the nuances of the being/doing shift then what will most likely happen will be that the CEO will do a behaviorial change for a short time then rubber band back to the former self.

And key to the whole engagement is not only the CEO's willingness to change but the desire on their part to change...rarely is anyone dragged kicking and screaming to success.

One thing I have always found interesting  is the basis that many organizations ... and in your case, a board ... uses in hiring its c-level leaders.  By backgrounds or experience in the industry or that company, they are often qualified.  However a critically important aspect of the responsibilities is ability as a leader and too often that is given 'back-burner' attention.  And, the effectiveness of the person's leadership skills is going to impact the success of the company.  Your summary question is "How can the board help CEO develop new leadership talent as a process?" and my straight forward suggestion is three fold.

1.  Ascertain that the board identifies and is in agreement on the leadership responsibilities of the CEO in place or to be hired

2. If you are promoting from within the organization, provide the CEO with input on the leadership skills you have observed in terms of strengths and weaknesses.  This might even be the result of a 360 style analysis.

3. Hire an executive coach to work with the CEO to develop and/or strengthen needed skills.  

The number one problem I witness is that to many C-level executives are left to their own best judgement of what defines effective leadership and the result is a roller coaster ride from one person to another.  I am confident that providing your CEO with an appropriate coach will accomplish what you seek to achieve ... of course providing that the CEO is on board with the need to embrace the process.

As an advocate of using the Malcolm Baldrige Criteria for Performance Excellence, I'm acutely aware of the importance of effective leadership development and succession planning. The recently retired director of the Baldrige Performance Excellence Program, Harry Hertz, just posted the following blog regarding the Baldrige Fellows Program, which recently visited a recipient of the National Quality Award. It seemed particularly to address your concern; and indeed, a focus on the Criteria can transform an organization:

... share with you a simple, powerful, message Pattie Skriba, Good Samaritan Hospital's VP for Learning and Organizational Effectiveness, shared — their six key steps to organizational transformation (as they refer to it going from good to great):

1. Establish an inspiring vision.
2. Enroll leaders in the vision and create ownership.
3. Create alignment and transparency to support the vision.
4. Deploy evidence-based practices.
5. Establish a systematic leadership process.
6. Build loyal relationships with stakeholders.

I was struck by two things as I looked at the list. First: how logical this list is in concept and yet how hard it is to put into practice. Second: the  overlap with Baldrige core values and concepts: visionary leadership, customer-driven excellence, valuing workforce members and partners, focus on the future, management by fact, and systems perspective. While the “Baldrige six” don’t have a one-for-one match with the “Good Sam six,” in aggregate they sure do form a twelve-pack of powerful messages to any senior leadership team looking at organizational transformation.

Here’s my list of six things to do with this blog if you want to get better faster:

1. Share it with your senior leadership team.
2. Challenge them to act on it.
3. Determine how you will measure progress.
4. Deploy, align, and show commitment.
5. Communicate, communicate, communicate.
6. Don’t give up!

Your organization will be better for accepting your suggestion. Thanks and let me know how it goes.

If the individual is not doing this, then he or she, not to put too fine a point on it, is probably not the right person to benefit from your investment.  Why not make it a rule before you invest that there should be a clear succession plan in place?

Depending on the size of the company, the Board should be demanding this anyway.

In my experience, the Board is the boss and the CEO is the subordinate.

I would ask questions about succession that can only be answered if the CEO has some simple form of a succession planning process in place. If the CEO decides not to comply with a Board request, the Board can decide to replace the CEO. Ensuring the continuity of the business is a Board responsibility to the owners of the business. It shouldn’t be optional.

Succession planning does not need to be an expensive process. You do not need to hire high priced consultants like me. It just requires clear questions and focus.