Dynamics of succession planning
The transition from one CEO to another is always a critical moment in a company’s journey. While on one hand, a smooth transition is essential to maintain the confidence of investors, business partners, customer, and employees, on the other hand, it provides an incoming CEO with a solid platform which in turn can be leveraged to move the company forward.
Indeed, it is the responsibility of the board to make succession planning a priority, even in the face of more immediate and tangible issues. The art of succession planning by no means is an easy task for corporate Board of Directors. This task reaches a different tangent when corporate attempts to retain a senior leader who may have earlier lost out on a CEOs role.
The crude reality, however, is that in any CEO race, senior executives who don’t bag the top job often leave. Equally tough are the scenarios wherein organizations have to look within its set-up to fill up the CEO post in cases of sudden exit. However, more often than not, it’s the ego that gets hit and the board needs to spend a lot of time with those leaders who did not make it and take them to confidence.
In the light of probable scenarios, it is extremely important that at a leadership level, organizations take ownership of chalking out a well thought-off potential talent strategy for every C-suite role. Creating a strong framework enables senior executive development by aligning the leadership of the enterprise with strategic needs of the organization.
Adopting some tried and tested industry guidelines can make the task of succession planning a smoother affair-
- Every organization should put together and agree upon an over-arching succession planning mechanism. Every key stakeholder within a company should have clarity on how C-suite successors are to be chosen and the respective roles of a CEO, the board and the various board committees in the succession process. Agreeing on these elements including emergency succession procedure helps ensure an orderly transition while avoiding uncertainty and destabilizing steering of events.
- Any talent management and development planning should be linked to a company’s long-term business strategy. A focused succession plan thus needs to be strategically executed. HR heads along with Board of Directors should gather feedback from senior executives who may be contenders for a CEO position and figure out the types of roles they may wish to take charge of, in case they lose out on the top spot. A move like this allows organizations to deep dive into distinct qualities that senior leaders possess. At some level, organizations should also accept the fact that retaining such talent becomes difficult and nurturing the second in line talent becomes important. However, this needs to be done in a subtle manner to avoid ego clashes.
- CEO succession planning is a long drawn process and should be viewed as an ongoing process designed to develop the talent pipeline rather as a one-time activity. Success planning ought to start early and well before the existing CEO’s tenure finish timeline. It needs to be executed by engaging the board in a strategic alignment process and by defining the short- and long-term business priorities. The key is to link strategic priorities to experiences, competencies, and personal traits required in the future CEO. Based on this approach, HR heads could put together agreed upon guidelines which in turn can be used at the time of evaluating both internal and external CEO candidates. At the same time, a board should also use this opportunity to observe successful CEOs from outside its immediate industry and identify traits that have contributed to particular success cases.
- Potential CEO candidates especially those within an organization should be given focused on-the-job training, intensive executive coaching and mentoring. HR departments should leverage experienced coaches to accelerate growth and close critical skill gaps by putting together tailored development plans that match an individual executive’s needs and what a particular organization is more likely to require in a future leader.
Succession planning requires an investment of time and commitment on the part of companies and their boards. There are many examples in the corporate arena that prove that creating leaders involves years of planning, mentoring and guidance. The ever-changing business landscape needs dynamic leaders and the time to start ought to be NOW!