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  • Service: Enterprise, Family business
  • Type: Business and industry issue
  • Date: 6/23/2014

Grooming the next CEO 

Grooming the next CEO
Extract from the book “Governance in Family Enterprises – Maximizing Economic and Emotional Success”, 2014 , reproduced with autorisation, Palgrave Macmillan ©

Choosing the right successor is so essential to the long-term success of a family business that all three layers of governance should be involved: family, board, and CEO. The owners let the board know if they with the next CEO to be a family member; they also make sure that the family values are transmitted to the next generation. The board will review competence, screen CVs, interview the candidates, and at times act as mentors. The current CEO and the executive committee will groom the potential successors.

Grooming the next CEO it an important task of the CEO and the executive committee, not only because of its impact, but also because of the length of the process – another way in which family businesses differ from non-family businesses. In family businesses, it is frequent to see potential successors being groomed for a period of time, in excess of then or even 15 years. In family businesses, because the number of potential candidates is much lower, the process is more obvious to the entire organization and the heirs apart are more visible earlier in the process.


Having a clear established process during the long grooming time helps. Here are a few points to consider:


  • The next CEO must have been in the business for a number of years, demonstrated good management skills, have established good relationships with employees, throughout the organization, and have earned their respect.
  • To avoid lengthy processes and false illusions, identified candidates need to know what is expected of them and have a clear competence development plan, which highlights the different stages they need to go through to prove themselves.
  • The duration of each stage may vary depending on the importance of the job and its scope of responsibility.
  • Each stage needs to consist of a project involving direct responsibility of candidates, and the scope of responsibility is increased form on stage to the next.
  • Each stage of the competence development process needs to be baled with care.
  • The conditions for moving from one stage to the next should be known from the outset.
  • The evaluation of how well and how quickly these objectives are achieved is the basis of the evaluation process and of the performance assessment.

 

To read more about the details of preparing the next CEP, consider: Governance in Family Enterprises – Maximizing Economic and Emotional Success, by Alexander Koeberle-Schmid, Denise Kenyon-Rouvinez and Ernesto J. Poza, Palgrave Macmillan, ISBN 978-1-137-29389-3, http://www.palgrave.com/products/title.aspx?pid=649676,entitled to a 20 % discount with the promotional code WORLDPALGRAVE20 if ordered through http://www.palgrave.com.

Denise Kenyon-Rouvinez

Denise Kenyon-Rouvinez
Denise Kenyon-Rouvinez, Ph.D, is the Wild Group Professor of Family Business and co-director of the Global Family Business Center at IMD, Switzerland.
 

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