Ceo Succession Case of Study

ESCUELA DE CIENCIAS ECONÓMICAS Y EMPRESARIALES
GOBIERNO CORPORATIVO
CEO SUCCESSION CASE OF STUDY
ALUMNOS:
Alejandro Cisneros Alemán
Santiago Alonso García Junco
DOCENTE:
Mr. Leobardo L Quiroga Almaguer
AGUASCALIENTES, AGS., 20/10/2023

CEO SUCCESSION CASE OF STUDY
CASE SUMMARY
The succession of a CEO is a process of vital importance in the management of a

company, as it can have a significant impact on the organization's results and the
motivation and stability of its executive team. Managing this succession is a complex
task that involves several crucial steps to ensure a successful transition.
First, it is essential to identify the cause of the crisis that has led to the change in the
company's leadership. This could be due to various factors such as the CEO's
retirement, a merger or acquisition, or a strategic reorientation, among others.
Understanding the root of the crisis is fundamental for addressing it effectively.
Succession can be planned or unplanned:
● In the case of a planned succession, the Board of Directors has prior

knowledge of the CEO's departure date, allowing for an organized planning
process. In this scenario, the creation of a Succession Plan is recommended,
outlining a timeline, and identifying internal candidates who could assume the
role. The transition occurs more smoothly, minimizing disruptions to the
company's management.
● In unplanned successions, managing the crisis can be more complex, as the
CEO's departure may be sudden, and there may be no clearly identified
successor. In such cases, the Board of Directors must make rapid decisions
and determine whether internal candidates can assume the role or if an
external CEO needs to be sought. Additionally, clear rules for the transition
and integration of the new leader must be established.
Communication plays a fundamental role throughout the succession process. It is

essential to inform members of the executive team, key personnel, and external
stakeholders about the changes in the company's leadership. Transparency and
clarity in communication are crucial to avoid rumors and maintain trust in the
organization.
During the transition period, it is crucial to maintain a focus on critical aspects and
manage the company as usual, despite the crisis. Planning for the new CEO's
onboarding and ensuring an effective transfer of knowledge is also essential.
Once the new CEO has been onboarded, the crisis should not be closed abruptly. It
is important to facilitate their integration into the organization and ensure they have a
good understanding of the company. Additionally, the work of the team that led the
transition should be recognized and rewarded.
In summary, the management of CEO succession is a complex process that requires

proper planning, transparent and effective communication, and a focus on the
motivation and retention of the executive team. How these issues are addressed and
how the crisis is managed speaks volumes about the company's culture and its
ability to face challenges. A well-organized and successful succession can have a
positive impact on the company and its reputation in the market.
CASE QUESTIONS
1. What is the big challenge in CEO succession?
The main challenge in CEO succession is managing the complex process effectively,
ensuring a smooth transition and minimizing disruptions to the organization, while
maintaining the motivation, performance and support of the leaders and employees.
If this process is not carried out optimally, it could seriously affect the company in
several ways from declines in performance, conflicts of interest to, in the worst
cases, the total bankruptcy of the company.
2. Is the procedure for the succession of a CEO the same for a Private
Corporation as for a Family Business? Yes, No, Justify Your Answer
The procedure for the succession of a CEO can have some similarities between a
private corporation and a family business, but can also have huge differences, that's
why our answer is no, they are not the same.
In the context of private corporations, the CEO succession process is typically

characterized by a strong emphasis on merit and professional qualifications. The
selection of the next CEO often involves a rigorous assessment of leadership
competencies and relevant experience. This process is generally overseen by the
board of directors or a specialized succession committee. The aim is to identify the
most competent individual to lead the company, and internal as well as external
candidates are considered. The procedure in private corporations is typically
formalized and structured, involving leadership assessments, performance
evaluations, and the clear delineation of job descriptions for potential successors.
The focus is on maintaining and enhancing the corporation's competitive advantage
and long-term success. Shareholders may have a voice in the succession process,
but the ultimate authority typically rests with the board of directors. CEO succession
in private corporations is often driven by a commitment to the company's
performance, profitability, and competitive positioning. The primary goal is to ensure
that the individual best suited to lead the organization takes the helm, with a focus on
the strategic direction of the company and achieving its business objectives.
In contrast, CEO succession in family businesses is a unique process marked by a

complex interplay of family dynamics, emotions, and long-term considerations. While
qualifications and professional merit remain important factors, family interests and
emotions play a more significant role in the decision-making process. Family
businesses may prioritize the preservation of the family legacy and maintaining a
sense of continuity. As a result, it is common for family members to expect a
significant say in the CEO succession process. This involvement often leads to
familial conflicts and rivalries, which can complicate the transition. Formalized
succession plans do exist in some family businesses, but many operate with an
informal approach, often without the involvement of a traditional board of directors.
Decisions are made through family discussions and agreements, which can make
the process less predictable and more influenced by family emotions and
relationships. In family businesses, the choice of CEO may reflect a commitment to
the long-term interests of the family, even if it means sacrificing short-term financial
gains. The preservation of the family's ownership and control may take precedence,
and the selection of a CEO may be influenced by the desire to keep the business
within the family.
In summary, while private corporations and family businesses both aim to select a
CEO who can lead the organization to success, the process, and the factors that
influence the decision differ significantly due to the unique dynamics and goals
inherent in family businesses.
3. Specify the General Procedure for CEO Succession
CEO succession planning can be carried out in various ways, depending on the
company's specific circumstances. In general, this process involves several
fundamental steps:
1. Establishment of a Succession Committee: This committee, often composed

of board members or key stakeholders, is responsible for selecting the next
CEO.
2. Determining the Type of Succession: Decide whether the CEO succession will
be conducted internally, externally, or through a hybrid approach.
● Internal Succession: This involves promoting someone from within the
organization.
● External Succession: In this case, the company hires a CEO from
outside.
● Hybrid Succession: Consider a combination of internal and external
candidates for the role.
3. Identifying Potential Successors:
● For internal succession, identify and assess potential candidates from
within the company.
● For external succession, establish the criteria and qualifications
needed for the ideal candidate.
4. Selection of the New CEO:
● For internal candidates, the succession committee should evaluate
potential successors based on their performance, skills, and alignment
with the company's values and culture.
● For external candidates, a thorough selection process is necessary,
often involving executive search firms or recruiting experts.
5. Transitional Leadership: During the transition period, appoint an interim CEO
to oversee the organization's day-to-day operations and ensure a smooth
transition.
6. Communication and Transparency: Clearly and transparently communicate
the succession plan to employees, stakeholders, and the wider public to
manage expectations and prevent rumors or uncertainty.
7. Integration of the New CEO: Support the new CEO's integration into the
organization by helping them understand the company's culture, processes,
and key stakeholders.
8. Ongoing Evaluation: Continuously assess and evaluate the CEO's
performance to ensure they are meeting the organization's goals and
expectations.
9. Contingency Planning: Develop plans for unexpected CEO departures or
crises that may necessitate immediate action.
4. What factors can the selection of an internal and/or external CEO depend
on?
There are a lot of circumstances or particular situations that can define or make a
company decide whether they pick an internal or external CEO, in every company
the case is different.
Internal candidates offer a deep understanding of the company's culture and
operations. They often result from succession planning, ensuring they're adequately
prepared. Their familiarity with the company's culture and teams can facilitate a
smooth transition, boosting employee morale. Additionally, selecting an internal
candidate can save on costs and time.
External CEOs bring fresh perspectives, ideas, and experiences to the organization.
They may possess specific skills or industry knowledge not readily available
internally. They are often chosen for change management situations, as their
impartiality can help with tough decisions. Their independence from internal politics
is seen as an advantage. External CEOs can address succession gaps and provide
a positive signal to investors and the market, especially in merger or acquisition
scenarios.
CASE CONCLUSIONS
In conclusion, the manner in which a company initiates, manages, and resolves

crises like these reflects its corporate culture, the effectiveness of its Board of
Directors, and the capabilities of its executive teams.
Typically, no one is adequately prepared in advance to confront and navigate such
crises, but the efforts undertaken during these critical periods can be instrumental in
identifying key individuals who can set aside their differences for the greater good of
the company.
Recommendations for guiding the succession of a CEO in a company include
understanding the root causes of the crisis that necessitates the change. If there
exists a pre-established "Transition Plan" agreed upon with the Board, managing the
change becomes more straightforward. The Chief Executive Officer (CEO) is a
pivotal figure in this transition, and, therefore, it is the responsibility of the Board to
lead this process.
Establishing a support committee to delineate the transition model and oversee its
implementation is an essential function. Identifying a prominent leader, whether from
the executive team or the Board of Directors, is crucial to prevent any voids of
authority during this period. Leaning on the executive team with transparency and
open communication, utilizing their knowledge and experience, proves to be effective
in averting the departure of significant personnel during a critical phase for the
company. Vigilantly monitoring the integration of the new CEO to ensure a seamless
transfer of knowledge.
In managing a leadership crisis, the company's stakes are much higher than the
mere transition from one CEO to another. It extends to the executive team's stability
and the company's public image, which often appears more transparent to the
market than initially presumed.
Confronting the management of a leadership crisis with direct Board involvement,

effective communication, transparency throughout the crisis, and the motivation of
teams involved or awaiting results cannot guarantee success but undeniably
contributes to a more orderly succession and a more favorable outcome for the
company.

Ceo Succession Case of Study

Uploaded by

Copyright:

Available Formats

Ceo Succession Case of Study

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ceo Succession Case of Study

Uploaded by

Copyright:

Available Formats

ESCUELA DE CIENCIAS ECONÓMICAS Y EMPRESARIALES

CEO SUCCESSION CASE OF STUDY

Alejandro Cisneros Alemán

Santiago Alonso García Junco

Mr. Leobardo L Quiroga Almaguer

AGUASCALIENTES, AGS., 20/10/2023

The succession of a CEO is a process of vital importance in the management of a

Succession can be planned or unplanned:

● In the case of a planned succession, the Board of Directors has prior

Communication plays a fundamental role throughout the succession process. It is

In summary, the management of CEO succession is a complex process that requires

1. What is the big challenge in CEO succession?

In the context of private corporations, the CEO succession process is typically

In contrast, CEO succession in family businesses is a unique process marked by a

3. Specify the General Procedure for CEO Succession

1. Establishment of a Succession Committee: This committee, often composed

In conclusion, the manner in which a company initiates, manages, and resolves

Confronting the management of a leadership crisis with direct Board involvement,

You might also like