The concept of planning one’s successor to power certainly predates the rise of Capitalism and contemporary C-Suite functions, making the prominence of future leadership structuring for business purposes an interesting phenomenon. Whether it’s planning the recruitment process, highlighting potential internal candidates to take over a certain position in the future or simply planning how to plan for the next major executive change, succession planning should be a crucial part of every business’s outlook. Why then, do so many organisations not have a roadmap in place?
KPMG conducted a survey back in 2016, for example, which stated that amongst a global survey of “2,300 directors and senior executives in 46”[1], only “31 per cent reported having either a formal succession plan in place or in process”[2]. That’s a shocking result. What’s worse is that I suspect, as according to the research I’ve conducted in following the succession planning white rabbit, that these plans primarily focus on replacing the CEO, but not other positions of the C-Suite. It, of course, makes sense to prioritise the top man over smaller positions - especially so given that tenure rates for CEOs in my old home of the UK are now at a low of “4.8 years”[3] on average – but it seems ludicrous not to me to not have more in place to minimise any possible disruption periods in times of transition: prior planning and preparation prevents pathetic poor performance as the old adage goes.
A perfect example of a lack of succession planning leading to a less fruitful outcome comes from a recent assignment I was set, finding an executive for an IT position: there was great discrepancy between what the board wanted (a CDO) and what the executive team were hoping for (an IT Manager) and this led to heads butting whilst, all the while, the role was unfulfilled. In the end, my solution of hiring a General Manager for IT was taken on board which led to a happy end for both parties, but, as much as I was happy to help with an outside perspective (knowing, sometimes, that the spectator can see more of the game than the players), I can’t help but wonder how much time and cost could have been saved had this discussion taken place at an earlier date.
Furthermore: not being prepared for the eventuality of the changing of the guard can leave you blind to some excellent potential opportunities. On another recent assignment, I was asked by the CEO and board of one company to search for a new head of digital and astounded the CEO when I simply walked him to the other side of the open place office to find his perfect candidate. The person in question was a fantastic technician with a whole lot of talent and I knew they were ready to step up to new challenges. As such, it left me a bit dumbstruck that they hadn’t already been considered for the role before my suggestion of the idea. I can only think that this was another case of missing an important small detail which could have led to a big cost if I hadn’t have stepped in when I did. Thankfully, I know the company well and love the team there so was happy to waive my usual search fee for such an easy find – it’s always good to pay a little forward.
Having had these experiences, I wondered what the results would be if the KPMG survey were to be translated to the 2018 market and if the New Zealand environment was any different from the rest of the world. As such, I reached out to 800 CEOs, MDs and Directors as well as 450 board members and asked them if they had a succession plan in place. The response that came back was that succession planning “Is a rare occurrence”[4] in the Southern Hemisphere with 65% of the first category and 80% of the second both saying there was no such concept in place. Having said this, there did seem to be a buzz amongst a few to sort out such a plan so as to enable “Creativity and innovation”[5] and “Respond to the digital economy”[6] in future.
In wake of these results, I have this advice: get planning! My competitors in the Executive Search industry, Russell Reynolds Associates, would argue that you need “Two or three finalists”[7] ready to go “Two years”[8] prior to any predictable changeover at the top. I wholeheartedly agree with that notion as a starting point, but I think they’ve missed a trick. The connotation of this suggestion is that candidates are only internally sourced or that outside candidates are static in their business lives and won’t even consider staying in place or moving elsewhere when the time for change arises. Secondly, their idea, like many others in my field, is blinkered in its vision, only focusing on who the new pup will be when the top dog exits their firm. I’ve consulted many on this idea and the idea I always bring to the table is one of creating a Multi-Level Succession Roadmap. Why only focus on the CEO? What if the CFO retires or a General Manager moves on. Companies need to start clocking onto the idea of succession planning as a concept first, but then take the idea as one of creating a living document, constantly changing, which outlines procedures for before, during and after a change up in staff to ensure “The next generation [is] ready to fill roles at all levels”[9]. Succession planning is surely critical for all business, but only Multi-Level Succession Roadmapping, as I suggest, can “Reduce the effect of lost talent or underperforming employees” to smoothen transitional periods and maximise business value.
My final advice is this: it's definitely not too late if you haven’t considered succession planning before and I hope I’ve helped to give insight on a key area of business that not everyone is up to standard on. Sure, it would be brash of me to suggest that you can plan for everything in life, but wouldn’t it be better to have some sort of idea on how to proceed than to be left in the dark when the unknown rolls up on your doorstep? I wish everyone the best going forward, but I do hope everyone is more prepared than they are now when the future inevitably arrives.
Citations:
[1]Anonymous, Global Pulse Survey – Building a Great Board, (Amstelveen: KPMG, 2016), 3. [2]Ibid. [3]Anonymous, UK CEOs Have Less Time than Ever to Make their Mark, Strategy& (London: PwC, 2015). [4]Anonymous, Succession Planning, (E-mail, 2018). [5]Ibid. [6]Ibid. [7]Anonymous, A Practical Guide to CEO Succession Planning; Ensuring a Successful Leadership Transition, (New York: Russell Reynolds Associates, n.d.). [8]Ibid. [9] Marie Pawlak, Roadmap Succession Planning At All Levels Is The Key To Success, Forbes, (New York: Forbes Media, 2018).
Comments