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What skilled boards look out for in CEO succession – Business Daily

The Golden Age in the Kenyan corporate world was in the early 2000s when homegrown CEOs were at the helm of Kenyan blue-chip companies. During that time, there emerged a narrative that an engineer with a Master of Business Administration (MBA) was a perfect fit for CEO. This is because top Kenyan CEOs were engineers with MBAs.
Lately, the challenge that has emerged concerns how boards replace foreign CEOs with Kenyans. KCB and Safaricom, seen as the heart of corporate Kenya, have faced this challenge. But then, why is CEO appointment board’s most important decision and how is CEO’s succession planning performed in Kenya?
Nothing good comes out of having the wrong CEO. Mentoring, coaching senior team members with complementary skills and special help from the board can’t compensate. Yet, some boards still pick CEOs who aren’t right for the job – repeatedly.
For more than two decades, I’ve been involved in CEO successions as either a director, an advisor, or a member of the selection committee in Europe, Asia, and America and lately Africa. I have witnessed both situations in which the boards made terrible choices and those that were extremely skilled at selection, thereby creating enormous value.
In my experience, boards that made great succession decisions were driven by one or two directors, on whose judgment and expertise the board relied on as hiring is not everyone’s strength. But in boards where everyone participated and sometimes involved voting, the outcomes were terrible.
Board members who are skilled in picking CEOs do four things. First, they work painstakingly to clarify the essential qualities needed to succeed in the job. They need to be strategic in their outlook, analysing not only the current context of the company but also the future.
For instance, if the company is going through expansion, they may go for a marketing CEO, during financial challenges they would like an accounting or finance CEO.
Second, they keep an open mind about where the best candidate will come from, creating enough pool from which to select. It’s not a choice of bad verses good; rather of the best from the pool of good, better, and best. Third, they go deep to understand which candidate is the best fit: not only job fit but also organisational fit.
For instance, even if you care about religious equality, you can’t hire a Muslim as CEO of a company that sells pork products. Fourth, they allow for imperfections in the chosen candidate because every human has a downside, and CEOs are human. Often the gap can be plugged by a coach or some members of his executive committee.
Dr Ogola is senior lecturer- Strategy and Competitiveness
Academic Director – MBA Programmes at Strathmore University

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