As HP and Apple Show, CEO Succession Planning Is Key

It might be a scandal. Or an illness. Or the CEO could simply decide to call it quits. Regardless of the cause, major corporations can't afford to wait until a sudden crisis dictates the need to find a new chief executive. Instead, firms need to be proactive about succession planning, with a well-thought-out strategy in place, according to Ana Dutra, CEO Korn/Ferry Leadership and Talent Consulting.

Last month, tech giant Hewlett-Packard (HPQ) showed its CEO, Mark Hurd, the door after a sexually tinged accounting scandal. Hurd has apparently landed on his feet, securing a new job as co-president of Oracle (ORCL), the software giant run by Hurd's tennis buddy, Larry Ellison.

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HP has now embarked on a CEO search to replace Hurd, and Todd Bradley, executive VP of HP's personal systems group, is among the leading internal candidates. Meanwhile, the quest to guess who might one day replace Apple's (AAPL) legendary CEO Steve Jobs has been a hot topic in tech circles -- especially given Jobs's recent health struggles -- and a secret closely guarded by the company.

In a video interview (see below), Dutra emphasized the importance of succession planning.

"We have had multiple examples of companies that were caught off guard by losing a CEO for a number of different reasons -- sudden deaths, scandals, you name it -- and not having even having a candidate to put in place," Dutra told DailyFinance. "Every board needs to have a name, in case the CEO gets hit by a bus, who is the person who takes charge, even in an interim period, so that the company is not without a CEO, is not without a leader? That should be board effectiveness 101."

"You cannot stand headless for a period of time without a leader," Dutra says, who adds that good succession planning makes good business sense.