Building Sustainable Leadership: Addressing C-Suite Succession Failure

1. Building Sustainable Leadership Patrick M. Wright

2. Building Sustainable Leadership • Why Executive Succession? • C-Suite Failure • Frequency • Costs • Causes • Building the Talent Pipeline

3. Research Foundation • 2015 HR@Moore Survey of CHROs • C-Suite Failure Study (interviews with 10 CHROs) • CEO Succession Success Study (interviews with 20-30 board members)

4. C-Suite Succession • Why Executive Succession?

5. Why Executive Succession? • https://www.dropbox.com/s/tmovclb1fvhso2w/CHRO_Succession.mov?dl=0

6. C-Suite Succession Failure • Research shows the increasing prevalence of forced turnover among CEOs (Huson, Parino, & Starks, 2001) • CEO failure seems prevalent today, with roughly 35% (800 of 1800) of CEO turnover events being forced (Bushman, Dai, & Wang, 2010) • Anecdotal estimates suggest up to 30% of C-suite succession decisions end up mistakes.

8. C-Suite Succession Failure • Research shows the increasing prevalence of forced turnover among CEOs (Huson, Parino, & Starks, 2001) • CEO failure seems prevalent today, with roughly 35% (800 of 1800) of CEO turnover events being forced (Bushman, Dai, & Wang, 2010) • Anecdotal estimates suggest up to 30% of C-suite succession decisions end up mistakes. • The cost of these mistakes is immense…$1.8 Billion in market value for CEOs according to Price Waterhouse Cooper

9. C-Suite Promotion Failures

11. Building Sustainable Leadership • So, what causes C-Suite Failures? • Supply Side – Candidate Characteristics • Demand Side – Decision Makers’ Biases

12. Supply Side – Candidate Characteristics * * *

13. Supply Side – Candidate Characteristics Successful CEOs Failed CEOs Arrogant Fail to Listen Selfish • Humble • Feedback Seeking • Unselfish

14. Demand Side: Decision Biases • In-group Bias • Repetition Bias • Bandwagon Effect • Confirmation Bias • Escalation of Commitment • Overconfidence Bias

15. Building a Sustainable Pipeline • Given that the prevalence and cost of failure is higher with external hires, firms devote more attention to developing a pipeline of talent • How do firms attempt to build a sustainable pipeline of executive talent?

16. Building the C-Suite Talent Pipeline • Canvassed literature to identify practices for managing talent • Identified practices in three categories • Identification • Development • Retention • Asked about importance of each practice as part of the talent strategy (6 = Critical; 5 = Very Important; 4 = Important; 3 = Somewhat Important; 2 = Less Important; 1 = Not a Part of Our Strategy)

17. High Potential Identification Very Important Important

18. High Potential Development Critical Very Important Important

19. High Potential Retention Critical Very Important Important

20. Innovations in Pipeline Development

21. Conclusion • Most activities focused on development, particularly exposure to senior leadership, job extension/rotation, special projects • Trend is toward systematic, integrated approach including assessments, developmental experiences, and formal customized learning. • Challenges remain around building global perspectives when people have become less willing to move globally

22. Summary • C-suite succession presents tremendous risk • Little systematic research exists that gets at the process through which decisions get made, yet that is where many of the problems exist. • Building strong process can help reduce this risk

23. Contact Info For questions: • Patrick.wright@moore.sc.edu For copies of the reports: • www.moore.sc.edu/ces

24. Stay Connected: DCU Leadership & Talent Institute Dublin City University, Glasnevin, Dublin 9. Phone: 01 700 6956 Email: lti@dcu.ie