Risk & Compliance

Boards: CEO-picking Skills Are Lacking

Directors give their own executive selection abilities poor marks, a new survey says.
Stephen TaubDecember 13, 2006

Even though they identify CEO succession as a leading concern, a large number of directors admit they are not equipped to choose a new chief executive officer.

About 50 percent of 1400 board members surveyed at public, private and non-profit corporations consider themselves less than effective in the area of CEO succession.

What’s more, only about half of the boards have a succession plan in place, according to a series of surveys published by The National Association of Corporate Directors’ (NACD) research arm, The Center for Board Leadership, in collaboration with Mercer Delta Consulting.

Directors on public boards identify CEO succession as the second most critical board concern, up from third last year, while directors on private boards rank it as the third most important issue, up from fifth last year.

According to the report, less than 15 percent of directors view their boards as “highly effective” in executive talent management and leadership development. In fact, approximately half of all boards surveyed consider themselves less than effective in the area of executive talent management and leadership development.

“This may be an opportunity for boards to make an investment in this area, which is necessary to develop and groom CEO-designate candidates internally,” said Roger W. Raber, President and CEO of NACD.

Although the order varied, all of the survey respondents cited the same top four concerns: succession, leadership, strategic planning, and corporate performance.