Relation between the attributes of executive successor and organizational performance

Abstract

Although a dispute if executives' effect organizational performance is still open, the researchers agree that executive succession becomes a critical event in business organizations. The selection of new chief executive officer (CEO) is an important decision, which has implications for future performance of organization. However, there are no consistent agreements what attributes of executives' are likely to be associated with organizational success. The paper explores the attributes of executive successor and identifies what skills and traits of successor and personal characteristics are related to the organizational performance after succession. Besides, the paper revealed that most of the studies were carried out to identify the link between executive successor and financial organizational performance. A limited number of works analyzed the employees' reaction to the executive's change and a number of changes implemented by newly appointed executive. This paper aims to answer the question what attributes of executive successor's relate to financial results of organization, implemented changes and turnover of employees after succession. After exploring the attributes of executive successor and organizational performance indicators the conceptual model was developed. To test the relationships between attributes of executive successor and organizational performance variables a quantitative research methodology was employed. The survey was implemented in rapidly growing or most profitable Lithuanian organizations which experienced the CEO change within last 3 years. The results of the survey revealed that there is a tendency to promote a man as a successor with higher education at the age from 31 to 40 years having more than 5 years of experience in the sector and a top management experience from 4 to 10 years. It can be said, that external candidates were not considered more favorably than internal employees. The results of the survey allowed to identify what attributes of executive successor relate to organizational performance. There were found relationships between a) relation skills of successor and changes in working policies and practices, b) the education of successor and changes in organization and c) the age of successor and employees' turnover in organization and number of implemented technological changes, d) traits of successor and changes in organizational culture. The survey disclosed that there is no relationship between financial organizational performance and attributes of successor. Moreover, the relationships revealed between the attributes of successor and organizational performance variables was weak, and thus they lead to the confrontation of previous findings emphasizing the executive succession impact on organizational performance. Therefore, further research should be carried out solving the complexity of the executive succession.