May 26, 2020 – As a consequence of the COVID-19 pandemic, meetings, interviews, workshops — even general assemblies — are being managed online via conference calls or video technologies. Globally, business leaders are navigating an unprecedented crisis. Hour-by-hour, they have been changing the way their organizations operate to cope with uncertainty, risk, restrictions and lock downs, according to a report by Spencer Stuart’s James Citrin and Michael Vad.
At the same time, the report said they are preparing their top teams and stakeholders for a new reality — a world in which the need for visionary leadership is greater than ever, where strategies are turned upside down, where innovation and sustainability focus are prerequisites, and where the modus for collaboration is redefined, internally, externally, locally and globally.
“In the midst of the turmoil, a key question for chairmen, CEOs, nomination committees and CHROs is how to keep pace with — if not accelerate — executive succession practices and ensure timely completion,” said Mr. Citrin. “As transboundary as it may seem, a new standard for virtually delivered top-talent succession is evolving.”
“Preferably not replacing face-to-face meetings and interviewing, a fully digital succession process — where clients and candidates meet, assess and negotiate through video ‘hangouts and meets’ — should be considered a real and necessary alternative,” said Mr. Vad.
Spencer Stuart said that boards should not be too concerned about making a leadership decision virtually when the new CEO may have to lead the company in a virtual environment. “As we observe and learn from the evolving situation, here are some recommendations for how to manage increasingly virtual board and C-level succession processes with a successful outcome,” the search firm said. Certain foundational principles should be observed, the firm said, regardless of circumstances:
- A future role specification aligned with the board’s expectations.
- A stringent research strategy.
- Thorough assessment of internal and external talent.
- High-quality, comprehensive material about candidates.
Five Steps for Digital Succession
The Spencer Stuart report laid out five steps to help manage C-level succession in a digital environmen
1. Providing your leadership consultant with detailed contextual information
To be fully effective, your leadership consultants need a clear understanding of the business context and the resulting leadership implications, said the Spencer Stuart report. “This means ensuring that they have good visibility into your organization, for example the current strategy; the aspirations of the company going forward, including potential changes to current strategy; the strengths and weaknesses of the management team and their respective leadership styles; the dynamics between the board and management; and the company’s market and competitive position,” said Spencer Stuart. “The more insights the leadership consultants can take away from upfront discussions with members of the board and management team, the better the outcome.”
Jim Citrin leads Spencer Stuart’s North American CEO practice and is a member of the firm’s board practice. During his 25 years with the firm, he has worked with clients on more than 750 CEO, board director and other top management searches and succession assignments. In addition, he has served as a member of the board of directors for 20 years.
2. Planning an inclusive, seamless process
Designing a robust time plan upfront — involving key constituents — has always been critical, the report said. While technology offers more flexibility and can speed up processes, the inevitable virtual distance puts great demands on the phasing of interviews. “It is important to allow all members of a nomination team to spend sufficient time with the finalist candidates, preferably designating specific roles for individual interviewers to probe on different dimensions,” according to Spencer Stuart. “This is virgin ground for candidates too. In order to comfortably accept an offer following a true virtual hiring process, candidates require interactivity and accessibility throughout.”
3. Identifying cultural impact
Research by Spencer Stuart and other industry experts indicates that assessing the likely cultural impact of a candidate is a key aspect of any board or C-level succession. “Of course, before a candidate’s cultural alignment can be assessed it is imperative to define and articulate the organization’s culture — its values, goals and practices. In situations where this is not practically possible, then as a minimum it is vital to articulate the culture of the team that the candidate will join (e.g. executive management, board of directors),” said Spencer Stuart. Boards are increasingly interested in a CEO candidate’s engagement scores. It helps to understand how a candidate’s leadership style will engage the organization so that it can align around a plan for the current crisis and whatever new strategy may emerge for dealing with the post-crisis world.
Based in the firm’s Copenhagen office, Michael Vad leads Spencer Stuart’s business in the Nordic region, bringing more than 15 years of executive succession, leadership advisory and assessment experience. He also champions the firm’s family business efforts in the EMEA region. Mr. Vad specializes in CEO and board succession projects in the technology, media & telecommunications, consumer and private equity practices.
4. Probing values, motives and stress factors
In best-practice processes, finalist candidates are thoroughly referenced. Their career history and experience are scrutinized and their leadership capabilities carefully assessed. “This is often supplemented with selected psychometric profiling,” Spencer Stuart said. “Take the opportunity of adding new or additional psychometric data points to further identify areas to probe and increase consistency. Our longstanding relationships with candidates fuel insightful referencing. Deeper, richer references become all the more important in a virtual world.”
5. Predicting executive potential
“The ability to predict leadership potential is crucial and needs to be fully integrated into the CEO succession process,” the Spencer Stuart report said. “For a nomination committee, understanding the executive intelligence and learning agility of the finalist candidate is probably the most important factor in making a final decision. In a process limited to calls and video meetings, we recommend broadening the use of executive potential measures for both internal and external candidates in all C-level successions and other business-critical hires.”
Mr. Citrin said that a nomination committee chair recently asked what he might do to replace the informal dinner he usually had with the finalist before closing. “Well, over the past hectic weeks, virtual gatherings have evolved rapidly and seem to be working fine as a means of illuminating personal style and chemistry between individuals,” Mr. Citrin said.
“Adapting to the new realities of a digital succession process does not mean lowering standards or compromising on results,” Mr. Vad said. “Our five steps for succession in a virtual world will help you mitigate the risks that may arise from less face-to-face contact. We recommend that you work closely to bring your leadership advisors up to speed; plan carefully to allow everyone involved to be comfortable with the process; ensure that there is a strong cultural fit; prioritize thorough referencing and consider additional psychometric testing; look beyond past achievement and focus on establishing the executive intelligence and potential of candidates.”
Last but not least, think carefully about how to onboard your new executive. “She or he may have to lead the company virtually, remotely — working from home with the rest of the organization and the leadership team,” said Mr. Citrin. “Virtual leadership is becoming the new normal. The future belongs to the brave.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media