This is a Conversation Starter, one in a series of invited opinions on topical issues. Read the essay, then share your thoughts by commenting below.
When Ken Lewis announced last September that he would be stepping down as CEO of Bank of America, he declared it was “time to begin to transition to the next generation of leadership” at the company. There was just one problem: the largely new and recomposed board had not coalesced on a succession plan and had to embark on a CEO search that was resolved only when Brian Moynihan was elected in December. Through this lack of preparation in strategic planning, Bank of America had opened the door to scrutiny and criticism.
The economic crisis—with its imperative to break with the past for a variety of reasons, from new government pressures to disoriented consumers—highlights the perils of neglecting CEO succession. Bank of America was far from alone in doing so. While 84 percent of directors believe that the importance of a CEO succession plan has increased,1 the sad truth is that only about half of boards actually have one in place.