Why CEOs Need to Plan Their Exits

Even the best execs can wear out their welcome. Smart CEOs create pipelines that build future leaders and successors.

Don’t you think it’s time you quit?

For many CEOs reading this, the answer is probably “not yet.” Though the average CEO tenure in the corporate world has stayed relatively steady in recent years, there is also a growing phenomenon of “forever CEOs,” those who’ve stayed in the job for a decade, or decades.

There are upsides to a long-tenured exec—stability, institutional knowledge, experience with common crises, and more. But there are also challenges, as a recent article in the New York Times Magazine points out: A steady hand at the helm also means a risk-averse leader who misses opportunities to innovate. The chief example of this in the article is Microsoft’s Steve Ballmer, who managed the company through a “lost decade” where it let the competition pull ahead on search, smartphones, and social media. The company stayed afloat, but it didn’t—forgive me—excel.

Apple is facing this challenge now as its current CEO, Tim Cook, nears retirement age, and every stakeholder has an idea of what a successor needs to be. “An Apple CEO needs to either be the visionary to bring new products to market, or needs to be able to find who the visionary is and partner with that visionary to bring those new products to market,” Bloomberg’s Mark Gurman recently told the Economic Times.

Even if you’re not heading out the door anytime soon, it’s crucial to be thinking about what succession planning will look like.

You don’t need to be running a company with a trillion-dollar market capitalization to be dealing with this stress. The challenge for a small-staff association executive is no different—even if you’re not heading out the door anytime soon, it’s crucial to be thinking about what succession planning will look like in your organization. That means training up your board on the issues that your organization will face in the coming years, and developing a pipeline internally that ensures there are staffers who are ultimately equipped to manage those issues.

Some organizations are taking this process to extremes: One governance expert recently told the Financial Times that some boards are so anxious around risk management and continuity that “they need a plan B and a plan C.” 

But for many organizations, the question is likely more straightforward: What will you need in the coming years that you don’t currently have? Here, the Times story has an example as well: Former Levi’s CEO Chip Bergh, who led the company for 13 years and dedicated most of his efforts around upping the brand’s cool quotient. When he planned to leave, though, he wanted “someone with new talents” and selected Michelle Gass, a retail pro.

Bergh represents what business professor Jeffrey Sonnefeld calls the “ambassador” CEO, neither the long-tenured royal nor the job-hopper. It’s the sweet spot of servant leadership—long enough to dedicate the best of your talents to making an organization better, short enough to know that the job is never up to you alone. The exact amount of time for that will different from executive to executive. But whatever that answer is, the responsible leader has the task of ensuring that they’re preparing somebody else to lead as well as they have. Even if they’re not leading the same way.

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