Every company needs a good succession plan, but not just for its CEO. The best companies plan for replacing every key employee. That’s even more true in the time of the great reshuffling going on in today’s job market, with a record number of employees thinking of leaving their current jobs. Leadership development and succession planning is particularly important for employee ownership companies, which often have distinctive cultures requiring leaders to have not just the right set of traditional job skills but also an ability to work within and further develop highly participative management systems. Effective leaders in employee ownership companies are not “do this” leaders but rather people who can help others figure out how to take more responsibility for their own jobs.

This book, now in a revised and enlarged second edition, is a must for every employee ownership company. It provides hands-on, detailed guides from leading ESOP experts and companies on how to plan for succession at every level, how to create a career path for every employee in your company, how to ask the right questions when interviewing outside candidates, and how boards can manage executive succession successfully.

Product Details

Perfect-bound book, 86 pages
9 x 6 inches
2nd (April 2022)
In stock

Table of Contents

Corey Rosen

1. Leadership Development and Succession in Employee-Owned Companies
Virginia Vanderslice and Kathleen McInerney Kane

Why Succession Planning Matters
Phases of Succession Planning
Insiders vs. Outsiders in the Top Executive Role
Considering Diversity in Succession Planning
The CEO’s Role in Succession
The Board’s Role in CEO Succession
For Sustainability: Build a Succession System
Leadership Development
Common Questions About Succession Planning
Leadership Development and Succession Planning in Employee-Owned Companies
Appendix A: BL Companies Competency Model
Appendix B: Sentry Equipment A Players
Appendix C: Sentry Equipment Leadership Competencies

2. Evaluating Your CEO and Planning for Succession
Corey Rosen

Evaluating Top Leadership
Sample CEO Evaluation Survey

3. Hiring Leaders Who Fit at Your ESOP Company
Mike Frommelt

Culture and Fit
Interviewing/Assessing: General Tips
Interviewing/Assessing Examples

4. Business Succession Planning at SRC Holdings
Keith Boatright

Building Bench Strength with Succession Planning
The Basic Structure of Succession Planning


From "Leadership Development and Succession in Employee-Owned Companies"

The effective transition and integration of an external successor into the CEO role may take longer than anticipated for several reasons. First, it is common that additional members of the executive team will leave with the arrival of an external successor, which may cause confusion and disrupt decision-making. This may be because members of the executive team do not want to work under the new CEO or because the successor wants to bring in their own executives. Also, an outsider may lack intimate knowledge of the company’s people, customers, and culture in addition to not understanding internal politics. A strong mismatch between the company culture and a new CEO can result in either the need to replace a number of long-term employees or the inability of the new CEO to shift the culture, both of which can hurt the company.

Several groups and individuals have a role in the integration of a new CEO. The board needs to articulate clear expectations about its goals and priorities for the incoming leader as well as expectations regarding reporting. Integration is facilitated further when the board asks the new leader how the board could be helpful to them in achieving company goals. Integration of any external successor includes internal stakeholders partnering with the new hire to help them learn the culture; understand the company’s strategic goals and strategies, organization dynamics, and potential political pitfalls; and establish important relationships, both internal and external. If there were internal succession candidates who were not selected, the successor will need to determine whether those people will continue to be contributing team members who add value. If so, it will be necessary to build a relationship with each person who was a candidate to decrease the chance that they will leave. However, at times this result is unavoidable, whether a different internal candidate is chosen or an external candidate is selected.

Internal successors for any key role may face challenges related to moving up to lead a group of which they have been a part, changing power relationships and friendships, and learning to focus on leading rather than “doing the work.” People moving into C-suite roles will have to extend their focus from their department or discipline to thinking about the whole company. CEO successors who have not been CEOs before will need to change their focus from working in the company to working on the company, Often, internal successors are changing their work identity, which can take some time. Previous peers may resist accepting the new identity and authority of an internal successor. These dynamics illustrate why it is important to include those who will be direct reports of the successor in the selection process whenever possible. In addition, a successor may need support in structuring initial conversations with their team or others to develop strong working relationships in the new role configuration.

From "Evaluating Your CEO and Planning for Succession"

CEOs should provide a brief (typically three-to-five page) operational review for the board before each meeting describing the state of the company, key challenges, and important opportunities. This can be used by the board to help focus on critical issues, but it also provides insight into how well the CEO is conceptualizing the issues facing the company.

Some companies have used employee surveys to help boards evaluate the CEO. This can be helpful in a few ways. It can provide insight from the people working with the CEO that the board would not normally receive, but it also shows employees that their opinion matters. Some companies (usually smaller ones) ask all employees to fill out the survey; others limit it to direct reports or to managerial-level employees.

Because employees may be concerned with anonymity, the survey should come from the board itself or an outside party, not from an officer of the company. The company’s HR department could help create a platform for the survey, but the results should be sent directly to a member of the board. Employees should be able to respond anonymously.

While boards may want to develop the surveys themselves, effective survey construction is difficult. There are firms that provide well-tested surveys that can provide comparative data. Below, is a survey example from our NCEO members-only document library at

From "Hiring Leaders Who Fit at Your ESOP Company"

To hire according to your company core values, you must first fully understand and document those core values. It’s important to note that core values are never “created”; rather, they already exist in the company, and the work lies in uncovering them. There are many processes as well as multiple consultants who can help uncover your true core values, but the basic idea is to closely evaluate your behaviors and actions and look deeper to identify the principles (values) underneath.

Dr. Edgar Schein, the preeminent psychologist in the area of core values, states that each of us as human beings have five to seven core values, and these values dictate 90% or more of our actions and decisions. Since companies are really just groups of people, the idea is similar. There are about five to seven core values that underly the great majority of your actions.

Knowing these core values well gives you an amazing template for evaluating leadership candidates. Those candidates who share your core values are a potential fit, and those who do not are out.

Getting to the core values level in your interview is the real trick, but when you do, interviewing and decision-making become pretty straightforward. The next section provides interview questions that can be used to determine whether a candidate shares your core values.

From "Business Succession Planning at SRC Holdings"

Once the current organizational charts are developed, we begin to drill down by creating replacement charts that list three candidates to fill each of the key positions we recognized earlier in the process. Generally, individuals are responsible for developing the replacement chart for their current position, as they most clearly understand what is needed to be successful in that role. Participants are asked to specify in a few lines the kinds of skills necessary to complete their job. After the candidates are identified, we use a “method summary” for assessing who is ready now, who might be ready in one to two years, and who might be ready in two or more years. We also begin the process of reviewing (if already in place) or creating an individual development plan (IDP) for each candidate. This includes recommending training or other objectives they must complete before they are fully prepared for the role. Throughout the year, we monitor the candidate’s progress and continually reevaluate their readiness as a succession candidate.

If your organization has many divisions or departments, like SRC, it might be necessary to create an IDP tracker. This identifies all employees with IDPs and encourages inter-company coordination. This is particularly useful for an employee who is a succession candidate for more than one position; we want to make sure we have one profile, one assessment, and one IDP for each succession candidate. For many people, the purpose of developing IDPs is to make sure people maintain the skills needed to perform at a high level in jobs that often change and expand. We also avoid getting fixated on developing a person for just one position—we teach people to be businesspeople because we never know what kinds of skills they might have or develop to make them candidates for jobs in other areas.

A key first step in the IDP process is mapping what people are doing now through a profile of each person. For example, what are their current skills? What do they want to do in the company? What are they willing to do (are they willing to travel/relocate, for instance)? Working with leaders, we outline the competencies each position needs so we can ensure the IDPs coordinate with the overall plan. The IDP process is designed to provide a detailed individual development plan review form that includes goals, position, measurements of progress, delegation, quality and quantity of output, and so on.

We dive into our workforce and employment data to evaluate succession planning results while actively supporting progress and alignment of our strategic workforce goals. During this process, the big objective is to complete detailed strategic workforce planning that meets the needs of the five-year strategies shared during high-involvement planning. The goals of the process can be achieved by answering four basic questions: Where are we going? What we will need to get there? Who do we have now? What are our talent gaps? Let us take a closer look at each of these steps: