What do you do as a board when you hear the words from your CEO of some 20-plus years, "I am planning to retire within the next few months?"

At first, the words do not penetrate. After all, your CEO has been in place for a long time, things were running smoothly and although inside you felt your organization may not have been quite leading edge, the comfort zone took over. If this is the case, this is a strong indication that the board has not been strategic in its thinking. A board should invest just as much time to contingency plans as they do to succession plans.

As part of the board strategic planning responsibilities, a succession plan should be in place. It should be actively reviewed as part of your annual planning session to be sure it is current. The plan should contain specific contingency actions to follow in case of an untimely departure of your CEO. An annual update of the plan is also an opportune time to have a conversation with the CEO about work or retirement plans. If the board and the CEO are aligned, it will help facilitate an orderly and brief transition.