Increasingly, the best boards of directors are not looking for outside candidates when it comes to the corner office; they are looking for rigorous succession planning processes to help them develop and assess their internal executive talent to make smart decisions about corporate leadership.
In recent research from the Philadelphia-based Hay Group, board members from more than three-quarters (77 percent) of those "Most Admired" companies said they have a preference for internal candidates, compared to 60 percent for peer-group boards.
In addition to the issue of CEO candidacy, 91 percent of "Most Admired Companies" agreed that, "We have a well-defined plan to cover the emergency loss of the CEO that is discussed at least annually by the board," as opposed to 65 percent of the peer group who said they had such a plan.
"The study illustrates that boards on 'Most Admired Companies' are not only demanding a more significant role in the succession planning process, they are devoting much more time and effort to it than other boards are," says Beverly Behan, managing director of the Board Effectiveness Practice of Hay Group.
Source: HR Executive, June 2, 2007