Succession planning is the double-edged sword of business: essential for continuity, yet fraught with complexity.
We often see leadership transitions making headlines. But behind those announcements should lie a meticulous process, filled with strategy and foresight.
When I was building my second business, my understanding of succession planning was profoundly shaped by two influential figures: Jack Welch, through his insightful book “Straight from the Gut,” and Brad Smart, the architect of the “Topgrading” methodology. Their teachings resonated with me, not just in theory, but in practice. Having built and led a global organization, I’ve seen the challenges and rewards of succession planning firsthand. It’s not just about announcing a new CEO or the latest executive shuffle. It’s about the intricate dance of identifying, nurturing, and positioning talent for the future, ensuring that the organization’s legacy is in capable hands. This applies at all levels of the organization, not just the top table.
Whether you’re at the helm of a startup or a global business, ensuring a smooth transition is a critical responsibility. With the right approach and understanding, succession planning can be less intimidating and more about opportunity.
Succession planning: a love-hate relationship
Simply put, succession planning is ensuring that when key roles in an organization open up, there’s someone ready and capable to take their place.
When Lou Gerstner took over as CEO of IBM in the 1990s, he transformed a company on the brink of collapse into a service-oriented giant. Yet, his real success was ensuring a smooth transition to his successor, Sam Palmisano, who continued to build on Gerstner’s legacy. With a clear vision and commitment, IBM ensured that its leadership transition was smooth, allowing the company to continue its trajectory of growth and innovation.
Unfortunately, not all companies share IBM’s foresight and success in this area. For every IBM, there are countless companies that struggle with succession planning, turning it into an annual ordeal that employees dread. But how does such an essential process often become the bane of an organization’s existence?
For starters, the very thought of succession planning can instill fear in employees and leaders alike. They may feel that actively finding and training their successors could inadvertently speed up their own departure. If someone is nearing the end of their career, or they’ve been in a position for a long time, they may even see succession planning as a threat, a sign that their time is drawing to a close.
Let’s not forget the cost, either. Effective succession planning is resource-intensive, demanding not just time and effort but also significant financial resources. As a result, some companies might hesitate, wondering if it’s truly worth it. A word of warning, don’t put off planning until it’s too late.
Instead, address fears head-on, allocate resources wisely, and ensure everyone understands its value. After all, the future of your company depends on it, and when done properly, succession planning offers numerous advantages other than just filling a spot.
Beyond candidate selection
Many organizations often miss the mark on understanding the true purpose of succession planning. While candidate selection is important, succession planning is more akin to cultivating a garden than simply picking the ripest fruit. In the corporate landscape, it all starts with identifying your top performers and developing them.
Brad Smart’s “Topgrading” methodology covers a vital piece to this intricate puzzle –– the significance of choosing the right talent. But while his ideas are very important, they cover just one aspect of a more expansive succession framework. Genuine succession planning is about nurturing and preparing individuals for bigger roles and responsibilities, possibly even yours. In short, it’s about career development, and that is measured in years or quarters, not days or months.
Yet, this long-term vision doesn’t come without challenges. For one, the intricate process of identifying and developing talent can be both complex and time-consuming. Moreover, high employee turnover rates present another hurdle. Companies might hesitate to invest in the long-term development of their employees for fear they might jump ship before stepping into the roles envisioned for them.
The book “The Talent Masters: Why Smart Leaders Put People Before Numbers” by Bill Conaty and Ram Charan offers a deeper dive into this perspective. They emphasize the importance of identifying and developing future leaders as a critical aspect of talent management. Companies like GE, under Jack Welch and with Bill Conaty’s HR leadership, have effectively managed succession planning to ensure leadership continuity and organizational success. These companies identify high-potential individuals, develop their skills, and prepare them for leadership roles. This approach helps companies navigate challenges and capitalize on opportunities more effectively.
Interestingly, one of the most effective succession planning models has been around for centuries: the military. Their rigorous succession and development processes consistently produce leaders who are thoughtful, articulate, and well-organized. It’s a wonder that more business organizations don’t draw inspiration from the military’s approach to leadership development and succession planning.
True succession planning is a commitment. It’s a pledge to see beyond immediate needs and to invest in the future, nurturing talent and ensuring the organization’s continued success. Beyond candidate selection, it’s about crafting the leaders of tomorrow.
Common mistakes of succession planning
Succession planning can cause even the most seasoned professionals to stumble. The biggest and most obvious mistake they make is not having a succession planning process at all. The second biggest mistake is promoting people based upon their technical skills, as opposed to their interpersonal skills. While technical competence is paramount in entry-level positions, it doesn’t guarantee success in managerial roles. Success in one role does not automatically translate to success in another.
Take the hypothetical story of Jane — a top performer in her technical role. She was promoted and given more responsibility, but her lack of emotional intelligence and interpersonal skills became glaringly evident. Her former peers, now subordinates, struggled under her leadership, leading to dissatisfaction and resignations. Jane’s story shows the importance of recognizing that some individuals, while exceptional in technical skills, might be best left as individual contributors, not as team leaders or enterprise leaders.
As employees advance in a company, especially into supervisory or managerial positions, interpersonal skills often become more critical than the technical skills. Yet many organizations, in an effort to retain and reward top talent, promote employees to managerial roles without considering this important shift in skills. The business may also simply not have the budget to pay the employee more in their current role, so they elevate them in a managerial role instead, hoping for the best. But how often do you think that works out? The answer is not very often, potentially 10 or 20%, on a good day. To quote Brad Smart again, it really is about the right person, in the right role, at the right time, with the right paycheck.
By sidestepping these common pitfalls and learning from established models, organizations can pave the way for a robust and effective succession strategy, and do better than just filling a vacant seat.
The overlooked benefits of succession planning
Succession planning offers countless multifaceted benefits beyond the obvious. When employees and executives can envision clear, long-term pathways for growth and advancement, morale is boosted. This not only aids in employee retention but also attracts top talent, enhancing the company’s reputation as a desirable workplace. For stakeholders, from investors to partners, a robust succession plan instills confidence. They can trust that the organization is future-ready, giving it a distinct competitive edge in the market.
Furthermore, as seasoned employees move up or transition out, there’s a risk of losing institutional knowledge. Proper succession planning ensures that this invaluable knowledge, built over years of experience, is retained and seamlessly transferred to the next in line.
In my own experience as CEO, when my executives were tapped for a bigger opportunity, either inside or outside the organization, I stood firmly behind them. Why? They ensured that their roles would be seamlessly taken over by successors who not only matched their competence, but also brought fresh perspectives. The organization, instead of being rudderless, was poised for continued growth.
After an executive’s exit, we then had an ally or friend at another organization in the industry. Many of my former teammates are now in pivotal roles across the sector. They’re not just doing well; they’re outperforming their past selves. They are the right fit, for the right role, at the right time, in the right organization for them.
By fostering an environment of growth, continuity, and knowledge preservation, succession planning solidifies an organization’s position both internally and in the broader industry landscape.
Bottom Line
Navigating the intricacies of succession planning is a tricky thing to do. More than a strategy, it’s a vision that ensures continuity, fosters growth, and builds resilience. Avoiding common pitfalls, like misjudging the skills needed for leadership roles, is essential to this vision.
As leaders, our role isn’t just to lead today but to ensure that tomorrow’s leaders are ready to take the helm. The path may be challenging, but the destination—a thriving, enduring organization—is worth every effort.
Image by Jehyun Sung from Unsplash.
