The Golden Eagle Health Diagnostics, Inc. Executive Brief: CEO Succession and Selection Plan
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Student’s Name
Professor’s Name
Course
Date
The Golden Eagle Health Diagnostics, Inc. Executive
Brief: CEO Succession and Selection Plan
Golden
Eagle Health Diagnostics is a California-based, privately owned company specializing
in manufacturing health care and diagnostic equipment. The company is run by a
board of directors and has witnessed rapid development in the health sector and
innovation in the pipeline. Even though a board of directors runs the company,
the CEO has played a major role in rapid development, which has been witnessed
in the company for the last five years. However, the company is currently
facing a dilemma as the CEO has announced her retirement in six months, and it
does not have a succession and selection plan. Therefore, the organization
should develop a succession and selection plan to ensure the achievement f the
strategic plan and smooth running of daily operations. Therefore, a succession
and selection plan is important to the organization for the following reasons.
Succession
and selection plan helps minimize the risks associated with sudden leadership
changes. Organizations should plan for leadership years in advance instead of
beginning the process after the announcement of retirement. Prior
identification of a pool of internal and external candidates makes it easier
for the company to operate even if there is a sudden leadership transition
since looking for the replacement of a senior leader can be very expensive. However,
as discussed in the successive chapters, it may also lead to bad hires. Therefore,
succession and selection plan is important in mitigating disasters associated
with rushed hiring, such as selecting a disappointing candidate.
Secondly,
a succession and selection plan is important as it helps to ensure board and
shareholder trust. Shareholders' confidence is critical to the organization's
success. A well-articulated succession plan demonstrates to stakeholders that the
organization is not only managing the current but also preparing for the
future. The succession plan will help the organization focus on growth,
avoiding duplicated efforts and confusion, resulting in inefficiencies. A
succession plan also aims to create clear communication alignment, which is
crucial in any business as it aids in avoiding estrangements and hurt feelings
that may result from the transition process. However, the succession should fit
in the organizational strategic plan developed by the leadership as it aids in
predicting organizational direction. Based on factors such as competition, a
succession plan is crucial. It determines how the organizational leadership
would look in the future, hence boosting stakeholders’ confidence in the
organization.
The
plan is also crucial as it will help the organization focus on business goals
freely. A well-defined succession plan will help the employees focus on the
main organizational goals since everybody would be working within a
well-defined business environment. A clear succession plan will also help the
organization gain a competitive advantage within the market to maximize its
production. Therefore, the succession plan will aid the organization to capital
from the public due to confidence in the leadership structure and its selection
process.
Components of CEO Succession and Selection
Plan
These
components are critical because they assist the company in developing and
maintaining a effective CEO succession and selection procedure. Proper
maintenance of these components helps minimize the risks associated with the
leadership transition, ensuring the best outcomes. The components also ensure
the directors are operating to lead to business efficiency and effectiveness. Additionally,
the components help ensure that the CEO succession-planning program is
transparent and unquestionable. The succession planning steps are as follows.
1. Establishment
of Board Ownership, Involvement, and Oversight
Stakeholders
look to the board of directors to have full control over the CEO succession
process. The responsibility, on the other hand, will be handed over to a board
committee, which will be required to oversee the entire selection procedure.
Care should also ensure that the directors do not delegate their oversight
powers to a single entity. It's important for the process to be more than
simply who supervises it and why. It is important to properly understand
interpersonal relationships between the board, the directors, and the CEO. Consequently,
the process’s success depends on the non-executive chair who oversees the board
ownership process.
2. The setting of
the Succession Time Frame
The
board of directors will ensure excellent CEO leadership to ensure a smooth
transfer of power from one leader to another. Based on the complexities
surrounding the CEO’s role, there should be enough time to allow for the
preparation of internal candidates. The leaving date of the former CEO, as well
as the time it takes to train internal experts, must all be taken into account.
As a result, the number of board meetings required to complete the succession
process will be evaluated.
3. Preparation for
Emergencies
Preparation
for emergencies will ensure the smooth running of executive duties and protect
shareholders’ interests and reputation. The board must ensure the presence of
leadership to ensure that the organization maintains its market share and value.
Since the board is always unaware of when they might have an emergency
succession plan for the CEO, it is always important for the board to consider
succession plans.
4. Align strategy
and Profile
The
board needs to consider individual skills, leadership history, and organization
knowledge before deciding who becomes the next CEO. The board must also agree
on the company’s strategic direction and on the specific abilities to drive the
organization into a given future. The board must also consider the organization’s
mission, market position, strategy, and short- and long-term goals. The board
is consequently tasked with getting broad-based information and agreeing on it
before deciding who becomes the next CEO.
5. Build a Talent
Pipeline
Creating
a development culture is also important as it helps ensure leadership
acceptance among the organization’s employees, making leadership transition an
easy process. Building a talent pipeline will minimize the chances of outsourcing
the CEO in case of an unplanned departure. Constant discussion and appraisals
of a given talent pool must happen, and suitable candidates are given assignments
to aid in their development.
6. Sourcing of
External Talents and Managing Search Firms.
Outsourcing
of external talents comes with different disadvantages, such as higher annual
compensation and higher chances of failure as they are less likely to stay for
a longer-term. This comes with greater risk as internal talents may leave the
organization leading to further hiring of external talents. Additionally, the
stock prices may also be negatively affected due to ineffective leadership.
Therefore, the board needs to conduct a thorough search before assigning
external talents to minimize such risks.
7. Selection of
CEO
The
decision to appoint the candidate to be CEO must be arrived at after a thorough
assessment of the candidates. The board, therefore, requires insightful
information and thorough interaction with each of the candidates. The
candidates’ skills, social intelligence, and competencies must be examined to
ensure the selection of the rightful candidate. Moreover, trustworthiness and
integrity should also be taken into consideration.
8. Proactive Management
of Transition Process
It
is empirical for the board to ensure a smooth transition of power between the
outgoing CEO and the incoming. The integration process should take at least one
hundred days to ensure that the new CEO is well acquainted. Performance
measurement and progress improvement are also important to identify weaknesses
and improve on them.
9. Evaluation of
the New CEO
After
the new CEO has been selected, it is crucial to monitor and evaluate their
performance. This helps ensure that the right candidate was selected and also
helps in providing feedback for further improvement. Additionally, this process
also allows for identifying any challenges that the new CEO may be facing.
Specific Qualities of Potential CEO
Candidates.
Inspirational: The CEO as a leader,
should be in a position to inspire his staff to ensure motivation. This is
achievable through effective communication with staff to increase their
productivity and creativity at work. An inspirational leader should also invest
in their organizational employees to help them acknowledge their strengths and
help them to work on their weaknesses.
Trustworthy: A leader must be
trustworthy to earn the trust of the organization’s employees. Trust is crucial
for the organization’s adequate flow of information, resulting in production
efficiency and effectiveness. Trust also helps in ensuring greater
interpersonal relationships within the organization.
Loyalty: A loyal leader plays an
important role in inspiring the staff to be loyal to the organization.
Therefore, Loyalty has long-term benefits to the company as it reduces the cost
of hiring and training. In addition, a loyal CEO is important as it helps keep
the company’s values, inspiring others to follow in their footsteps.
Conclusion
A
successful CEO succession plan is crucial for any organization. It helps to
ensure that the right candidate is selected and that the transition process is
smooth. Additionally, it helps to monitor and evaluate the new CEO’s
performance. Therefore, the board must put in place a robust succession plan to
minimize any risks.




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