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1、CEO Succession Planning,Key Design Considerations and Best Practices,December 23, 2003,DRAFT,1,Contents,Introduction and Background Key Design Considerations Best Practices Reward Strategies Next Steps Appendices Appendix A Key Leadership Factors Appendix B Elements of a Succession Plan Policy,2,Int
2、roduction and Background,This report provides an overview of best practices in both succession planning and reward strategies While the information provided in this report can be applied across industries and companies of various sizes, it does take into consideration that the current CEO is also th
3、e single controlling shareholder Please note: Both design considerations and best practices will need to be aligned with prevailing practices in the Russian Federation The balance of this report includes: Key Design Considerations Summary of best practices in succession planning Highlight of typical
4、 total compensation strategies,3,Key Design Considerations,The development of a customized CEO/Majority Shareholder succession plan need to address the following key design considerations As the single controlling shareholder/manager, how is succession planning currently defined in terms of: Retirem
5、ent: What will the CEOs role be after retirement? How about the role of potential heirs? Death and Disability: How will the inheritance be handled (trust arrangements vs. family members/others) Current composition of the Board of Directors - how will the composition change upon retirement CEO/Founde
6、r, other Directors (Insiders/Inheritors vs. Outsiders/Investors) Current capital/equity ownership structure Has the CEO/Founder/Majority Shareholder set up a viable equity structure to ensure a smooth transition What type of compensatory vehicles make sense? Size of company (i.e., sales, number of e
7、mployees), type of industry, local, national, international, etc. What type of management team, if any, is in place? Successors already in line/CEO designate (i.e., inheritors) Translate succession planning guidelines and reward strategies to “local market practices” in the Russian Federation,4,Best
8、 Practices,Every company goes about recruiting its CEO and other members of its top management team in its own way, but the companies that do best are able to: Create a winning value proposition Make managing executive talent a top priority Find the best sources for the talent they need Assure the q
9、uality of the initial work experience for recruited executives Especially in companies where the current CEO is the Founder and/or majority shareholder, CEO searches are often doomed before they begin for one simple reason they start with people rather than with the requirements for the job CEOs may
10、 have a candidate in mind to succeed them They may have invested years grooming the person through job rotations, coaching and exposure to the Board Board members too, tend to fix on a handful of people, typically people theyve known for years inside the organization Succession is an opportunity to
11、reassess the companys overall position and future direction The Board should take a broad and forward-looking view of the business landscape and the companys emerging needs,5,Best Practices,Selecting the “Right“ CEO Matching the CEO to the corporate strategy is the very foundation of succession plan
12、ning. The CEO, as well as the talent pool of potential replacements, must be a solid match with the companys current and future business challenges Articulate the organizations strategic imperatives Based on a strategic assessment of a company, a Board should ask itself several key questions. What m
13、ust this company do well to succeed now and in the future? What are the dynamics of the industry? How is the competitive environment affecting the company? In other words, what are the companys overall critical imperatives for success? Determine the success factors for the CEO The Board must ask its
14、elf what the next person in the CEO seat must do extremely well to achieve the companys strategic imperatives What this step comes down to is this: the Board should define the job and its success factors,6,Best Practices,Articulate the behavioral requirements of the new leader Its clear that the cha
15、llenges facing the company will have important implications for shaping the leadership requirements at the top The key question about a CEO candidate, then, is not how well this person did somewhere else, but whether this person will be able to succeed in this new job in this new environment The Boa
16、rd should ask itself, what kind of person would fit the needs of the company What values are important? Does the candidate fit the existing culture-or is a shake-up essential? Assessing CEO Candidates To determine the right match it is important to recognize that top executives/CEOs value different
17、things The table on page 11 provide a summary overview of of different CEO profiles and corresponding value propositions,7,Best Practices,Corporate challenges and objectives must be considered as well: How a company ranks in its competitive situation Where it is in its development as a company What is its strategic intent and its performance,
