Not only has Sarbanes-Oxley changed the composition of public company boards of directors, it has also added to the responsibilities given to board members. And some of those responsibilities are easier to handle than others, it seems.
BusinessWeek reports that many boards don't do as well as they would like when it comes to succession planning -- even though directors acknowledge it as one of their most important responsibilities. Writers Dayton Ogden and John Wood, of executive search firm Spencer Stuart, say boards can avoid this shortfall by doing two things -- become better acquainted with potential leaders inside the organization, and increase their knowledge of external leaders, those in companies competing with their organizations.
When familiarizing themselves with the available talent, Ogden and Wood say, board members should keep certain things in mind. First, the company culture. Bringing in an executive who's not equipped to thrive within that culture limits the chance for success. Secondly, they should be mindful of the company's vision for the future. "Riding the coattails" of the outgoing CEO might be easier, but again, it's not always best for the company.
Overall, board members must remember that just as companies are dynamic entities, succession planning must also be flexible -- not to mention ongoing. As Ogden and Wood point out:
A comprehensive, objective, and ongoing succession-planning process is not merely good governance--in today's business environment, selecting the right CEO is critical to performance and sustainability. Management succession should be a continuous process in any company and should begin the day a CEO starts in that role.