Governance: The View from Both Sides

CEO and seasoned board member Maggie Wilderotter discusses innovative ideas for succession planning with columnist Beverly Behan

by Beverly Behan

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In the 1990s, CEO succession planning was largely driven by the CEO. Today, boards are taking a much more active role in what is arguably their single most important decision. They're also expressing greater preference for internal candidates rather than "going outside" for a new CEO absent a crisis or turnaround scenario. These shifts have led board members to demand increased and meaningful exposure to key company executives so that they can get to know them better for succession-planning purposes.

Maggie Wilderotter has considered this issue from both sides of the board table: as chairman and CEO of Citizens Communications (CZN) and as an experienced director who currently sits on the boards of Xerox (XRX) and Yahoo! (YHOO). She's implemented a host of innovative ideas that provide Citizens board members with greater exposure to high-potential executives and draw on the directors' business experience to mentor senior leaders. She recently shared some of these ideas with me.

Edited excerpts of our conversation follow.

Maggie, let me start by asking about your strategy for succession planning at Citizens.

For every one of our seven top positions, our six senior leaders and the CEO, we develop two great "candidates in waiting." Realistically, each may be at a slightly different level of development at any given time. However, it's important that we identify and actively develop two executives who we feel have the potential to succeed each of our top positions.

What role do you play in this?

I work with each of my six direct reports to help them define the capabilities his or her successor must bring to the role; identify the most promising two internal candidates; and create development plans for each. We discuss this formally twice a year, and I ask for regular updates on how they see each candidate progressing.

Once a year, typically in October, I present this slate to the board. That leads to the "hit by a bus scenario" (BusinessWeek.com, 2/7/08) where we discuss succession for me and each of my direct reports. It's also a time to check our progress in developing other internal candidates who could ultimately assume these top positions.

That's 12 senior leaders you're talking to the board about: two potential candidates to replace each of your six direct reports. Do board members get exposure to these people or are they just names on a chart?

Exposure (BusinessWeek.com, 3/25/08) is a very important part of the process. We have six board meetings a year and typically have four executive presentations on various aspects of our business at each meeting. That's 24 opportunities for executives to present to the board. We make sure all 12 get at least one of these opportunities and maybe more, if appropriate. We also make sure they are invited to the board breakfasts and dinners held in conjunction with board meetings throughout the year.

Tell me about your innovative mentor program, which pairs key executives with members of the board.

Our board consists of 13 directors, me and 12 independent directors. Each independent director is assigned a company executive to mentor. Board members are asked to meet with their mentees at least three times a year outside of board meetings. Typically, they do this over a meal, to allow them to get to know each other one-on-one. The meetings enable the board member to gain a deeper understanding of the executive and provides the executive with the benefit of the directors' experience on whatever issues they discuss.

We make it clear that none of these conversations should involve compensation, or career counseling about moving out of the company—that would put the director in a pretty awkward position! We also switch the assignments every two to three years. This allows board members to have a mentor relationship with more than one person and avoids a director feeling that he/she is the "sponsor" of a particular executive when it comes to succession decisions. We also solicit input from each executive's mentor when we conduct our annual succession-planning review.

What are some of the other ways you've broadened the board's exposure to your leadership team?

We schedule our board meetings so that at least one meeting a year takes place in one of our markets. It includes a dinner where the board sits down with key customers in the region, and we also invite the board to spend time with managers and leaders in that location. This expands the board's understanding of key issues in the region and provides them with exposure to our regional leaders, giving them some sense of the "depth" of our talent pool below the very top levels of the organization.

It also allows them to see these leaders in the regions they manage, which offers a very different perspective than you get from seeing someone present at a board meeting at the head office.

Beverly Behan is the managing director of the Board Effectiveness Practice of the Hay Group and co-author of Building Better Boards: A Blueprint for Effective Governance. She writes "The Boardroom" for BusinessWeek.com/Managing/.