I’ve been involved in succession planning since the late 70’s. It was the first consulting job I did with clients and I still am actively working with organizations on their talent management and succession planning. I’ve worked on over 100 succession plans for key clients and partner organizations.
The first reason succession planning is not done is because there is always something more important to do. For most entrepreneurs, they are still actively involved in their business. They can find a hundred other things to do than talk to about who will lead their organization after their gone. Over 50% of my client s don’t put an emphasis on organizational sustainability. They are brilliant at what they do. In many cases, they’ve created visionary organizations. The problem for many is that they cannot see a time when they won’t be involved in their business. So why invest time into something that won’t build a lasting leadership legacy. My challenge is to get them to face their own mortality and still remain a long term client.
The second reason there is no succession plan is the founder doesn’t feel that someone else can do their job. For many in North American men, their lives are so tightly aligned with their careers, take away one and the other begins to falter. I have found than many market leading organizations begin failing when the founder can no longer see the future. Since many of my clients are technology based, the leader is unable to deal with disruptive technologies and capabilities in their markets. As their technologies mature, the type of leadership required also changes. Since many entrepreneurs are controlling by nature, when change begins to occur they may hold on tighter to the leadership of the organization. Leaders who have built significant organizations are not willing to bring in leadership that may add another dimension to their organization. In the worst case, they may begin chasing the out their successors, either because of fear of the unknown or they’re afraid they’ll be thrown out before they’re ready to go. The other part of this is that the leader can misread their own health and drive. They don’t notice health problems until it’s too late. I’ve seen several of my clients die before their successor is chosen. Sometimes it’s not a health issue but a random act the owner suffers. I’ve seen at least several senior leaders die in unexpected plane crashes and, in one case, it took out 3 of his successors. In the military, there are always succession plans to follow. You should have one too.
The final reason succession plans fail is that the leaders and their leadership teams underestimate the impact of a new leader on their organization. When Jack Welch named Jeffrey Immelt as his successor, several key executives left to run other organizations within several months. In the case of GE, they had incredible leadership depth to call on after the executives left. When a new CEO is named in a midmarket organization he or she may lose a critical member of the leadership team. If you’re in a small nonprofit, the moment you promote a new managing director, several of your team members may begin looking for roles outside the organization. You must be prepared to deal with these situations. The better you are prepared for the worst the less harmful it will be to your organization. We will talk more about how to do this in a future blog.
The challenges for a smaller business may also include a financial component to the succession plan. In many privately held organizations, when a team member on the leadership team leaves there is financial burden that the organization takes on. Since the stock is not publically traded many times the cash payout for private stock can cause additional hardship to the organization. I’ve also seen many smaller organizations struggle to pay both the former CEO and their replacement the compensation they feel due to them. This can undue and unnecessary stress during their transition.
Next week after the succession strategy conference, I will bring back the financial piece of the succession strategies process. For many of you CEO and Managing Directors, you will find this next blog incredibly helpful. I’ve got my copy of CFO for Dummies out and I’m not afraid to use it. Next week, we will share the financial secrets of succession strategies. See you next week.
The first thing is you must share expectations for the individual role. Make sure the person understands their individual role in the business. Check to be certain they understand what is expected in the new role they are taking on. Review with them the individual contributions of managing this this new position.
The second thing is to help this individual understand the role on an enterprise level. This includes a discussion on what you expect of leaders within your organization. Communicate how you expect them to work with others and make sure they have the right tools to begin building critical connections with other leaders with your organization. This could also include introducing them to others in your enterprise. Your communication to other leaders on your team is critical to help these people get off to a great start. I’ve seen many promotions fail over the years because people across the organization have not been aware of a recent promotion, the reason why a person is moving into their new role, or why they should change their habits to work with the new person.
The third expectation is to share your expectations with the individual as a member of the senior leadership team. During this conversation you could reveal how you work best with your fellow team members. What are their accountabilities as a member of the senior leadership team? What’s the best way to make sure that they get the support they need from you. I also think it’s critical to establish a communications framework so that the new person understands the best way to communicate with you. Most people have a preferred way of communication, for example, I prefer the phone versus email. Many other executives I work with prefer email. I negotiate with new team members to determine how they prefer to hear from me. I also ask new team members to share this with all their fellow team members during their initial time with the organization.
And finally, during this part of the onboarding process I also start my file on the new team member. This file includes their preferences and also personal information, such as birthdays and family members’ names, and special interests that will help make the transition easier for them. You’re investing significant time and resources in this new person and the personal connection to the individual is the glue to the new organization. Even the most senior people I’ve worked with may struggle with simple things during the initial phases of their new position.
Taking the new person to lunch or just dropping by to see if things are going as expected can help you make a person feel more welcome. I understand that many of these things may have been discussed during the interview process. Having spent many years in an executive search role, I have discovered most great executives have several interview processes going on at the same time. If it’s an internal promotion they may have received many different messages from different members of your leadership team.
If you do this with your new leadership team members, you will be surprised how quickly they begin making a large contribution to your team. It’s your responsibility to provide them with clarity, confidence, and capability in their new role. You’ll both be glad you did.
With Steve Jobs announcing his resignation from Apple, I want to take a look at one of his final lessons. Knowing Steve Jobs, the title may be premature. The man has made more comebacks that anyone can keep track of, but it seems like a good time to reflect on his final leadership lesson right now.
We all want to stay in our jobs forever. Most of us believe we’re contributing to the economy and creating a legacy for those that come next in our businesses. No one exemplifies that more than Steve Jobs. Despite medical issues, Steve Jobs continued to work, creating a legacy that will be very difficult to top. There were many people that were convinced that Steve Jobs WAS Apple. It ran on his vision, his view of the future. With Steve Jobs leaving the company, many are wondering what’s next.
Unlike many presidents and CEOs of US companies, Steve Jobs had a succession plan in place for when he did have leave. He’d already had his successor in place, taking over the day-to-day operations of Apple. Tim Cook is familiar with the role of Apple CEO, having filled in during medical leaves over the past several years. Though Steve Jobs is leaving, his company is in very good hands. After an initial drop in the stock price, Apple stock bounced back and continued to go up.
If you had to resign your position tomorrow, what’s your plan? Would your stock price or consumer confidence remain high? Do you have someone that knows what you do so well, they can slip you’re your role with barely a ripple? Statistics reveal that less than 35% of organizations have a succession plan in place. This could be for one of several reasons:
- You might think that no one else could do what you do.
- You think anyone else could do what you do.
- You’re too busy to even think about training someone to fill your shoes.
Regardless of the reason, you do need to consider your succession plan. Everything you work so hard to accomplish could be gone in the blink of an eye. When there’s confusion at the top of the organization, that’s when you’re most vulnerable to losing your top talent. And that’s when the downward spiral of the company begins.
No one wants to think about leaving. No one wants to consider stepping down from your current position. But what if something happened to you? What if your CFO stepped off the curb and got hit by a bus? What would happen to your company if you lost a key member of your leadership team? Do you have a plan in place? Or are you, like the majority of organizations, hoping it will all work out without intervention from you? If that’s your plan, good luck with that. I hope it works out.