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Managing Succession

By | 21/02/2022 in Blog posts
Managing succession

The Queen has done seventy years at the top and is on her fourteenth ‘chief executive’! She is seemingly as sharp and wise as ever and continues to fulfil her unique role without fault. She views it as a vocation and a lifetime commitment and has never hinted at the possibility of stepping aside. At the risk of being accused of treason, one can argue however that this approach has made the future more challenging for the institution itself and her appointed successor.  The succession to a monarchy is of course a special situation and without any comparator in the commercial world, but it shows that in any context managing succession has its challenges and failing to do so has consequences.

It is unsurprising therefore that the issue of the chairman’s succession often arises as an item on the agenda of a board review. It tends to be an issue of which everyone is conscious but is reluctant to pursue. The reasons are obvious. For a chairman it signals the end of an era and, in the case of a senior chair, retirement. Some welcome this but many are more hesitant. For his co-directors it is therefore a sensitive subject to raise and pursue.

The fact that there is guidance in place and a committee whose job it is to oversee the process does not seem to alter the reticence. There are ample excuses for prevarication. The Code itself allows for a chair’s period of office to be extended beyond nine years for a limited period ‘to facilitate effective succession planning and the development of a diverse board, particularly in those cases where the chair was an existing non-executive director on appointment’.

There also always seems time for it ‘to be sorted’ so it tends to be a subject which is difficult to address and more easily avoided when the incumbent still has a year or more to go. The well-ordered succession programme needs be planned well in advance. Ordering the succession to synchronise appropriately with the change of the senior independent director and/or of the chief executive might need planning some years in advance and each of those appointees also have their own sensitivities. Also, advance discussions about the retirement of a chair can ‘leak’ notwithstanding the best intentions and can be disruptive.

The Nomination Committee has the front-line responsibility for managing succession. But itself is chaired and populated with the very people concerned and, while the person whose succession is in question should absent themselves, who steps out of the room first? Perhaps as an agenda item it should be a fixture in the calendar of every Nomco. Perhaps making another the chair of the Nomco rather than the Chair of the Board. Perhaps there should be a greater influence exerted by the Chief People Officer.

Now, I accept there is a danger in over dramatising the sensitivity element and boards and nomination committees do eventually address the challenge. The reality is, however, that managing succession remains a challenging process, and it often takes the intervention of an independent third party with whom directors feel able to share their concerns for it to be raised and advanced. 

Death is never an easy subject to talk about and our dear Queen must surely be aware of and involved with the detailed planning which goes with managing her succession, but with as with everything else she seems to take it all in her stride.  In the meantime, let’s celebrate and salute her seventy glorious years on the throne.

James Bagge is the executive chairman and co-founder of Bvalco, a board evaluation consultancy focused on helping boards become fit for the future

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