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Jul 24, 2014

Engaging the Board in Succession Planning
 

This is the second post in this two-part series on engaging the board in planning. In the previous post, we discussed how to involve the board in strategic planning, and now we turn our focus on how to engage a board in succession planning.



Many boards approach succession planning by imposing age or term limits on its board or, by default, the decision is made by death or disability of a board member. This probably does not meet the state law duties to act in good faith, in a manner each board member reasonably believes to be in or not opposed to the best interests of the corporation, and with the care that an ordinarily prudent person in a like position would use under similar circumstances.

We believe that the board should continuously strive to build an “expertise” board that is composed of persons each having particular competencies (i.e., knowledge, skills, experience and expertise) needed for the board to collectively achieve its future objectives. This is in contrast to a “constituency” board, which is composed of persons who represent the view of a particular constituency (such as the U.S. Congress or a state legislature).

Our experience is that this is best done if the board has first agreed upon the organization’s future strategic direction (see the July 10, 2014, post on involving the board in strategic planning). As part of the strategic planning process, the board should assess the core competencies among the board members and management team; prioritize the additional competencies necessary for its future strategic direction; and recruit persons having those competencies for nomination as board members (see June 12, 2014, and June 26, 2014, posts on board evaluations).

We find with succession planning ¾ as with strategic planning ¾ board members’ eyes tend to glaze over and it may be difficult to keep their attention. Often, the board will become more involved in the succession planning process if outside facilitation is used instead of management.

Our preferred method of engaging the board is to divide into groups of two or three for a customized simulation. Each group is told by the CEO that all of the other board members have resigned prior to the meeting and that legal counsel has advised that as the remaining members of the board, each group needs to fill the vacancies.  Facilitators then guide the groups in discussions on desired skill sets for new board members, gently pushing them toward building an “expertise” board composed of persons with competencies needed for the future success of the organization.

Advising a board member that someone else will be nominated in his or her place can be difficult unless the board has already reached the conclusion that it needs a different composition of core competencies for its future direction. Getting the board’s commitment on building its expertise allows the group to focus on filling gaps in skills rather than age, terms or the personal attributes of the director.


 
Posted by J. Beavers  in  Governance Best Practices  

 

 

 

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