Creating Detailed Succession Plans is Critical for Business Continuity
11 Apr, 2017
I was recently contacted by the human resources department of a small regional bank asking me what tools I use to asses for leadership. “Why do they want to know?” I asked.
She seemed taken aback by the question. She went on to explain that they wanted to update their process of succession planning and wanted a way to identify leadership traits in their senior staff. “What will you do with the information?” I asked. She explained that they were “just beginning the process” and didn’t really have a program yet.
“I would need to talk to the executive team and the board to see how they think about future leaders in terms of their corporate strategy,” I said. She told me that the executive team “wasn’t ready” to deal with that. They didn’t want a program. They wanted a tool. I wondered when they would be ready. When the CEO is suddenly fired for misconduct? When the president gets cancer? When a member of the senior executive team suddenly decides that he needs to spend more time with his family?
It made me think, “If you want to build a sky scraper, don’t start by buying a hammer.”
Numerous articles on succession planning in Forbes, Harvard Business Review and others stress the importance of robust succession plans. Yet this vital aspect of business continuity is too often given short shrift. Often boards look to the human resources department to find “tools” to assess candidates. They look for charts, evaluation methods and reports. The search begins for the low cost tool. The “carpenters” (read: consultants) who use these tools may be brought in to start work.
But what are they working on? What are they trying to build? Why are they trying to build it?Thousands of dollars are spent to develop voluminous reports and plans that do not reflect the needs of the business. Many large-scale succession processes fail to deliver value, not because the tools are bad, but because they are not part of an overall strategy.
Businesses need a good blueprint and a reliable foundation for developing and retaining talent. The design must be done with the future of the organization in mind. The “commercial developer” of the corporate strategy must conceptualize what the skyscraper needs to look like to take the business into the future.
A CEO and board of directors would never delegate the development of key strategic initiatives to the “carpenters.” Curiously, when it comes to succession planning and decisions about people, they tend to accept a hands-off approach. What is more important than future leadership?
Truly outstanding companies have succession planning and leadership development programs that are comprehensive and integrated into the corporate strategy. The CEO and boards of these companies are directly involved in determining what capacities, roles and talent will be needed to execute the strategy of the organization. Absent clear objectives and agreement among the board, any method is arbitrary.
In these organizations, the C-suite recognizes that for the business to thrive, development must occur throughout the organization, creating a pipe-line to meet future needs. There is an ongoing assessment of the executive team’s bench strength so that they are ready for both the planned events, as well as the sudden unanticipated departure of key executives. Talented people are identified, and given recognition and opportunities to develop. Metrics are in place to measure program performance and business impact.
The task may seem enormous. That’s because it is. Well-meaning people in human resources might suggest options. They may diligently do research about the best tools, the best practitioners and costs.
They likely have good insight into the organization and its culture. Yet, they are in it and are operating within the restraints and practical realities of organizational life. They must have a role in the process but cannot be the owners of it.
The board of directors and the executive team, led by the CEO, must be the owners of the succession plan if it is to be part of a strategy that will ensure that the organization thrives in the future. An outside architect can provide the expertise necessary to design a system that will meet those corporate needs. The architect can provide a perspective and the leverage – virtually impossible to have internally – as well as technical knowledge of best practices.
In the end, it is the collaborative effort between the executives and the architect that ensures success.
Organizations positioned for the future have senior leaders who:
- Govern their executive development programs and succession, actively, and at the highest levels, CEO and board.
- Intensely focus on leadership development as a key strategic initiative.
- Define what the business needs in its senior leadership now and in the future.
- Invest in succession planning as the critical business lever it is.
- Recognize that comprehensive and continuous succession planning is a powerful aspect of the company’s brand.