Success Planning for a Ceo
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Succession Planning for a CEO
Lone Star Bank, based in Amarillo, is the fourth largest bank in Texas. The president and CEO, Harry ” Tex” Ritter, has been with the company for 30 years, the last 12 in his current position as president and CEO. The last three years have been difficult for Lone Star, as earnings have been below average for the industry, and shareholders have grown increasingly impatient. Last months quarterly earnings report was the proverbial last straw for the board. Particularly troublesome was Ritters failure to invest enough of Lone Stars assets in higher- yielding investments. Though banks are carefully regulated in terms of their investment strategies, Ritters investment strategy was conservative even for a bank.
In a meeting last week, the board decided to allow Ritter to serve out the last year of his contract and then replace him. An attractive severance package was hastily put together; when it was presented to Ritter, he agreed to its terms and conditions. Although the board feels it has made a positive step, it is unsure how to identify a successor. When they met with Ritter, he indicated that he thought the banks senior vice president of operations, Bob Bowers, would be an able successor. Some members of the board think they should follow Ritters suggestion because he knows the inner workings of the bank better than anyone on the board. Others are not sure what to do.
1. How should Lone Star go about finding a successor to Ritter? Should Bowers be recruited to be the next CEO? Bowers should be recruited to be the next CEO. In order to make this decision, Lone Star needs to conduct a complete job analysis for the position. This will ensure that Lone Star has a complete “understanding of the jobs to be filled” so they can efficiently “describe the specific requirements” needed in or to be the candidate for the job (Heneman III, Judge, & Kammeyer-Mueller, 2012).
2. How should other internal candidates be identified and recruited? The board of Lone Star should look into current management to see whose qualifications match what is needed for the position as CEO. Even though I think Bowers would be a great match, there could be others in the organization that is equally or even more qualified than him.
3. Does Lone Star need a succession plan for the CEO position? If so, how would you advise the board in setting up such a plan? Yes, Lone Star needs a succession plan for the CEO position. In order to develop an appropriate placement for the CEO, the board should consult with the Vice President as well as the Human Resources department. They will have be able to offer suggestions to the board in order to provide training and development, coaching and mentoring. In addition, the board will be able to determine the skills, abilities