The document discusses the importance of leadership succession planning in organizations. It argues that companies that foster leadership throughout the organization, rather than just at the top, will survive and thrive. The document uses the example of Colgate, which struggled when it lacked succession planning and top management talent in the 1920s, while Procter & Gamble groomed internal successors and avoided similar leadership gaps. It outlines best practices for boards to select the right CEO through an open and fair process involving the whole board and consideration of both internal and external candidates.

1. Leadership Succession By Nisha Hariyani

2. THINK ‘ ACTS OF LEADERSHIP’ NOT ‘ LEADERS’ The great sociologist Max Weber said, over 100 years ago, that the organizations that will survive and thrive will be those that foster acts of leadership throughout the system, rather than assuming leaders only exist at the top.

3. Opening case Colgate : an extraordinary company. 1806 1900s : steady growth rate equal to P&G 1920s: company starved of top management talent and chose to merge with Palmolive 1940s: P&G was double the size & 4 times profitable. Colgate fell behind never to catch up

4. What happened to Colgate this vibrant company that survived the American civil war?

5. On the other hand P&G rarely suffered the Leadership gap P&G also moved from family Governance like Colgate but groomed it next generation leaders Cooper Procter groomed Richard Deupree – an insider who joined P&G in 1909 He took over providing stable leadership to P&G in tumultuous times. 1938-1960s: Edward little ran Colgate as a one man show. By the time he retired Colgate was in trouble

6. Objectives Leadership succession – an overview Importance of the right CEO Insider Vs Outsider for CEO job Choosing the right CEO Women CEOs

7. Leadership succession – an overview Succession is the right or act of taking over another person’s place in office, rank, or attention. Though its important not many give in a serious attention E.g.. Phil Condit resigned as a CEO of Boeing in 2003 there was no successor to take his place. To avoid the embarrassment company appointed the ex president as CEO. Why do companies not give attention to leadership succession?

8. Importance of The Right CEO Nitin Nohria – Harvard Business School study: the impact of CEOs on the company performance differed greatly from industry to industry. Michael Poter: successs of organizations is nearly as important as the industry in which the firm is operating

9. A company’s success is determined by its culture and strategy. Culture is energized and strategy is designed mainly by the CEO

10. Insider Vs Outsider For CEO JOB Insider CEOs deliver 5.5% higher returns than outsider. Study by Booz Allen Guidelines for hiring outlines: Look up for his past performance and company’s performance Check track record of head hunting firm Choose the CEO from the same industry

11. CHOOSING THE RIGHT CEO Involve the whole of board of directors Directors should Design Detailed Criteria for the successor Boards to be given with a list of outside candidates to choose from Directors should base succession decisions on real Human Interaction Boards should no too much on Headhunters Have an open and fare process Smart HR people should be involved Succession Planning should be a Continuous Process

12. Women CEOs trends are changing Indra Nooyi – president at Pepsi Co Naina Lal Kidwai – HSBC, Vice chairman & Managing Director Lalita D Gupte – COO at ICICI Aruna Jayanthi – principal at Cap Gemini Ernst & Young (india)

13. Summary Leadership succession – an overview Importance of the right CEO Insider Vs Outsider for CEO job Choosing the right CEO Women CEOs