Former Mastercard chairman Richard Haythornthwaite and current chairman Ajay Banga discussed rules to systematically plan a successful CEO transition in a recent article for Harvard Business Review.
In 2009, Mr. Haythornthwaite was leading the search for a new CEO to replace Mastercard's previous chief executive who had tripled the organization's revenue, increased its net income sixfold and grew the company's market capitalization from $30 billion to $300 billion in his 10-year tenure.
He interviewed Mr. Banga, then a Citigroup executive, as a candidate for the CEO role. Together they planned what Mr. Banga's successor would look like and how to move Mastercard into the future — all before he even officially had the job.
Mr. Haythornthwaite and Mr. Banga outlined five rules for a smooth transition:
- Cast a wide net; Mastercard considered more than 40 internal employees and a handful of external candidates.
- Commit to inclusivity in decision-making by asking the board to participate.
- Look for a leader to solve tomorrow's problems, not today's.
- Invest in candidate development and retain current and future stars.
- Encourage impartiality until the moment the final decision is made.
"CEO succession decisions are never easy," Mr. Haythornwaite said. "But they are made much less difficult if you start the conversation extremely early and stick to certain rules."
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