University of Hertfordshire

A decision-making process for CEO succession

Research output: Contribution to conferencePaper

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Original languageEnglish
Publication statusPublished - 25 Jun 2019
EventBritish Academy of Management Corporate Governance Conference 2019 - Southampton, United Kingdom
Duration: 24 Jun 201925 Jun 2019

Conference

ConferenceBritish Academy of Management Corporate Governance Conference 2019
CountryUnited Kingdom
CitySouthampton
Period24/06/1925/06/19

Abstract

The extant literature on CEO succession has produced a voluminous literature; however, it still remains a domain that needs considerable attention by scholars, as the results were not always conclusive. Casual relationships such as the effects of succession on firm performance or different types of succession have been explored. Additionally, academics have investigated how the characteristics of the new CEO or various environmental factors affect the succession process.
Nevertheless, researchers have not yet focused on how the decision making is conducted within corporate boards. To set the scene, this study, starts from the different succession types namely: the relay succession, the horse race succession, Coups d’ Etat and comprehensive searches. Subsequently, the CEO succession as a strategic decision is discussed. Long now researchers have identified the big division that exists in the literature regarding the view that academics adopt to explore CEO succession. The majority of the studies has embraced the event focal lens, however, in this study the process view is followed.
Along with the literature, recent examples form the industry are presented to support this view. Since succession is a strategic decision in which boards arrive through a rigorous process, we argue that CEO succession can be the outcome of a thorough, systematic planning process. Taking into consideration the paramount importance of this strategic decision, we propose that succession can be the result of strategic planning. Planning processes typically include goal-setting, scanning the environment, searching and evaluating alternatives, taking the decision and evaluating the outcome. Utilising several dimensions of strategic planning such as, the formality, the sophistication, the comprehensiveness and the functional coverage of the process we try to explain the procedural ascendants of the succession. Additionally, in our proposed model we also propose that the power of the incumbent CEO, the role of the succession committee (or the responsible committee for the process) and the role of Chief Human Resource Officer are crucial for the decision-making process. Finally, the presence of shareholder activists might play the role of a catalyst for the whole process.

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