Horse racing has a long and distinguished history. It has been practised in civilisations across the world from Ancient Greece to the Middle East to North Africa. Today, horse racing has benefited from technological advancements. For example, the Information Age has made it possible to record and analyze real-time speed and position data. This has led to a number of advances, one of which is race safety.
A horse race is a method for selecting a new leader. Unlike other succession techniques, such as executive search, it is a direct way to determine the best person to succeed the current CEO. When used correctly, a succession horse race can provide a lot of benefits to organizations.
For example, the race can help an organization establish a culture of leadership development. A company with several strong internal candidates shows that the board is committed to the development of high performers. As a result, employees feel a sense of accountability for the performance of the company. They also see competition for top jobs as a healthy form of motivation.
However, some executives may not be comfortable with a race-based approach. Many directors are sensitive to increased scrutiny of the organization’s performance and want to avoid disruptions to business momentum. By adopting strategies to minimize disruptions, a board can ensure that a successful succession horse race does not negatively impact the organization’s performance.
A classic succession “horse race” involves two or three senior executives competing against each other. The winner of the race becomes the next chief executive officer. Often, the winner is chosen based on a combination of factors, including the board’s evaluation of the candidate and his or her track record.
Another aspect of a horse race is the use of exotic wagers, which involve multiple horses in a single field. These types of bets offer better odds and have the potential to create a larger payout. One popular exotic bet is a “Trifecta,” which involves three horses.
While a succession horse race can be a positive tool for assessing the best person for the role, it can be disruptive when poorly executed. Especially if the race is run over a lengthy period of time, a protracted succession race can lead to a drop in business momentum. In addition, companies that choose a winner risk losing other senior leaders deeper in the organization.
If a company has several outstanding internal candidates for the top job, it is important to consider their capabilities. However, many executives have concerns about a race-based succession approach. To address these issues, a board should consider the organizational structure and other factors before deciding on a winner.
Choosing the right person for the next CEO requires that the board carefully evaluate the skills and abilities of each candidate. This includes understanding the company’s organizational structure, resource sharing, and the ability of the leader to work in a collaborative manner. Ultimately, the best person to succeed the current CEO is the most qualified for the role.