Moving Forward With Succession Planning
May 25, 2023 – Planning is critical in succession strategy, but it’s neither foolproof nor a guarantee that a transfer of power will go smoothly. Succession planning is a process that ensures your next generation of leaders are capable and the transition of power is seamless. It’s a journey that both family-owned and privately-owned companies must take. Succession planning can be emotional, even dramatic, as companies struggle to chart the best course for a successful future. Retirement, change of ownership, and company culture are all contributing and complicating factors, and every executive search is different based on the culture of the organization and the core competencies within the current team, according to a new report from Executives Unlimited.
Succession planning requires a good deal of emotional intelligence and foresight on the part of the current leadership. “From what we’ve observed, a majority of companies seem to be suffering from ‘paralysis by analysis’ and have stalled the succession plans they were considering pre-COVID,” said Executives Unlimited. “Still, there are those companies that responded to the pandemic as a call-to-action to future-proof their businesses. Despite their concerns about an unpredictable economy and operating environment, executives can and should take steps to move forward. Now is the time to create or revisit a succession planning strategy, regardless of whether your current executive is 45 or 65.”
While no two succession plans are exactly the same, there is a basic framework that applies, said Executives Unlimited. It starts with communication and transparency:
1. Identify Key Decision Makers Early
Who are the decision-makers responsible for identifying and hiring/promoting a new executive? These leaders will be accountable for making decisions about internal vs. external candidates and how they’re evaluated, said the search firm. It’s important that these key decision-makers come to a consensus on the framework of the succession plan prior to engaging with a search firm. It will help to eliminate some of the surprises that can occur during the search and will allow an organization to move quickly when the right candidate comes into view.
Related: Changing the Focus in Succession Planning
The key decision-makers will ultimately be responsible for assessing a candidate’s performance and potential, measuring their key activities and results, and determining how those factors tie into executive compensation. They should not gamble on past performance as a predictor of future success in a new role and instead use a variety of effective ways to assess potential with relevant, consistent criteria.
Tomilee Tilley founded Executives Unlimited in 2001 and today serves as a coach and mentor to her firm, as well as their clients. As an advisor to her clients, she helps companies define how they envision their goals, and examines all aspects of her client company’s operations, laying the groundwork for a successful search process.
She leads the Executives Unlimited team using her extensive skills to advise companies in qualifying, selecting, and engaging executives. Ms. Tilley Gill specializes in working with entrepreneur founders and family-owned businesses. She possesses expertise in a variety of industries and clients ranging from entrepreneurial middle market companies to PE firms to billion-dollar multinational corporations, publicly and privately held, including non-profits.
Collectively, key decision-makers must make sure succession planning aligns with business strategy, said the report. They should also be able to clearly articulate the case for taking the time for succession planning now vs. dealing with the consequences of postponing it. They should be able to manage the irrational, political, and emotional dynamics of succession. Just ask anyone who’s ever been in the thick of a succession planning program, or talk to any CEO that’s faced with the prospect of “letting go.” It’s not for the faint of heart, and clear-headedness comes with experience and emotional intelligence.
2. Be Open with Employees so You Can Identify Top Talent
Your next resilient leader may already be within the ranks of your company. For instance, GM CEO Mary Barra started on the assembly line, while Wal-Mart CEO Doug McMillon loaded trucks as a teenager at a local distribution center. In terms of “entry-level executives,” IBM cleared a pathway for senior vice president Virginia Rometty to become the company’s first female CEO in 2012. Coca-Cola took a similar approach in 2016 when then-CEO Muhtar Kent named his successor, James Quincey.
Each of the aforementioned companies took a “pipeline” approach to development, with the identification and development of talent at all levels of the organization. “Talent development has to become part of the corporate culture, and companies should make a serious commitment to their program through time and resources,” said Executives Unlimited. “An example of a good structure/format is regular talent reviews. The board can review talent with the CEO, the CEO reviews talent with the executive team, each executive team member reviews talent with their respective teams, and the process cascades down throughout the organization.”
Takeaways
Remember that succession planning without investing in development is nothing but an exercise in futility. Unfortunately, companies sometimes underestimate the time and commitment it takes to develop and administer retention programs, said the search firm. Most organizations today are running lean, and that means most employees’ time is spent on day-to-day tactical issues vs. strategy. This puts retention programs in the category of “nice to have” vs. “must-have,” which is a missed opportunity.
“Also, keep in mind that the best companies spend more time developing candidates than they do creating lists, and succession planning is not a super-secret process conducted in a smoke-filled room,” said Executives Unlimited. “It’s a process that should be transparent and integrated with performance management, recruitment, selection, development, and rewards. Support from the top is required for these programs to be successful. Leaders need to know that time spent mentoring, setting performance goals, and giving employees cross-functional opportunities are valued.”
Related: Creating Purpose in the Workplace
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
