For this reason, many private professional services firms turn to organizations like Spencer Stuart for tailored support and guidance. While not involved in the final decision, we help create the conditions in which the right decision can be made.
Here are twelve core principles that shape our approach to successful CEO succession planning:
1. Create clear governance
“Governance” refers to roles and responsibilities, term limits and voting thresholds, as well as campaigning rules and emergency succession. While no two professional services firms have the same exact approach, they all need to regularly review their processes to make sure they are fit for purpose.
2. Know what success looks like
A professional services firm is home to a wide variety of perspectives, opinions and approaches. In many ways this is a key strength, but it also means there will be an array of priorities and ideas that will jostle for precedence in leadership discussions. So, when it comes to identifying who will be the “best” person to be in charge, it is important at the outset to be clear about what “best” actually means.
3. Design role profile based on context and strategy
Understanding the core strategic principles of the firm should form a key part of any discussion about a change in leadership. Clarifying whether the status quo, incremental change or transformation is needed will help identify which candidate can best turn this ambition into reality.
4. Allow time for candidate development
Broader firm leadership capabilities are not the same as client leadership responsibilities. This means that identifying and developing potential leadership candidates needs to start far earlier than the actual leadership selection process itself. Development gaps of potential leaders need to be addressed before they are put forward for consideration for the CEO role.
5. Engage the partnership and key stakeholders
A professional services firm’s partners will expect to be consulted, kept informed and given the opportunity to influence the final leadership decision. Online surveys, one-on-one conversations, smaller group sessions and large or full partner meetings are all good ways to engage to fuel these discussions.
6. Communicate effectively
Communicating well is not just a case of doing it once — key messages need to be repeated, different audiences need to be defined and gaps in the communication process need to be addressed. At the same time, confidentiality is critical — a firm’s Nominations Committee (NomCo) has to ensure there are absolutely no leaks (which is a lot easier said than done).
7. Assemble the best candidate slate
Three groups are likely to loom large: those who appear qualified or credible and have indicated a willingness to run; those who appear qualified or credible, but who are reluctant to run; and those who want to run, but have very little or no chance of being selected. At the same time, it is important to look beyond the obvious geographies, sectors, business lines and/or practice areas — so don’t rush it.
8. Assess candidates rigorously
Assessing candidates requires a highly structured approach and even then, getting to the right decision is not easy. This demands a formal, objective and benchmarked assessment of all candidates conducted by a firm like Spencer Stuart, as well as NomCo interviews focused on the past, present and future.
9. Don’t rush decision making
In a contested election, where a short list of candidates is presented to the partnership, the priority is to ensure that the partners have all the information required ahead of time. Thereafter, it should be a simple case of conducting a partner vote to decide the outcome.
A selection process, in which the NomCo is expected to take the decision itself and present the chosen candidate to the partnership, can be more complex, especially when there is not an obvious choice. Working through different candidate trade-offs is not a quick process.
10. Make the most of year one
When a first term might be limited to four (or even three) years, CEOs of public or private firms can’t really afford a year just to “get up to speed”. Building, aligning and engaging the leadership team, and launching two or three “signature moves” to build strategic are just some of the key priorities for their first 12 months.
11. Take care of unsuccessful candidates
How to deal with the unsuccessful candidates is an important and often tricky issue. However stoic they appear in public, they may benefit from some formal support — from colleagues and sometimes from external experts.
12. Capture the learning
It is rare that everything goes perfectly with these processes, and it can be helpful to reflect on potential improvements while the succession event is fresh in everyone’s mind. The NomCo, the successful candidate, the unsuccessful candidates, the outgoing CEO and the board will all have their perspectives on what went well and where can be improved for next time.
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Conclusion
Managing leadership succession in private professional services firms is a high-stakes and complex process that requires care and dedication, not least because the outcome of a successful transition is frequently a pivotal moment in a firm’s evolution.
At Spencer Stuart, our experienced consultants bring deep expertise and experience in managing succession. More extensive information is available on our approach to leadership succession, an in-depth guide to the twelve principles and our advice on optimizing governance over the long term.
Please feel free to contact us for further details:
Janine Ames (Stamford), Laurent Blivet (Paris), Elise de Beer (Johannesberg), Patrick Hynes (London), Olivier Knapp (Brussels), Lucy Lopez (Chicago), Carrie Mandel (Toronto, New York), Samantha Mark (Melbourne), Emily Marsh (London), Ryno Matthee (Dubai), Julie Perkins (Philadelphia), Ulla Wiegandt (Frankfurt), Gus Zangrilli (Philadelphia), Silvana Zenere (Buenos Aires)