Whether you are owner of a family business, CEO of a privately held company, or on the Board of a publicly held organization, you need to have a written succession plan.
Ask a Minneapolis based firm whose CEO died tragically in a plane crash. Or the McDonald’s Corporation who lost two CEOs in successive years, one to a heart attack and another to cancer. Maybe the Board, like GE Corporation, decides that the current CEO is not up to the job and fires him. You don’t always have the luxury of an orderly transition at the top or at other key positions. Even if you do have a planned exit of your top executive, it pays to have thought through the process well before hand rather than “making it up” on the fly.
Most organizations do not want to think about the eventuality of the CEO leaving, and many incumbent CEOs feel threatened when the Board wants to talk about succession. Be transparent with those discussions because having this process in place is a part of a comprehensive Risk Assessment, and continuity plan.
- The Strategic Plan
Like most plans at any company, you need to begin with the strategic direction. Where you want to take the organization is the start of deciding what type of skills, experience, and personality needed for the future leader.
- Leadership Principles and Behaviors
In addition to the standard position description, a key decision will be what are the desired characteristics of your future leader? Do you need someone to “drive” the organization or “settle it down”? Do you need a “visionary”, “operator” or a “maintainer”? These represent some rather distinctive personalities, and if not agreed upon early in the process can result in an incorrect choice that might require you to start the selection process over again in a short period of time.
- Inside or Outside
Develop your list of candidates with an idea of looking both inside and outside of the organization. Many companies utilize a search firm to look outside and assist with the process. Answer the question, “Are we just looking at the next person up inside the firm or looking at the organization’s needs objectively”?
Take an objective review of all candidates including formal assessment instruments, psychological interviews, and 360 reviews. Once you have decided on a final candidate or slate of candidates, the hard work begins. Set a firm schedule to evaluate each one of them. Give each some challenging assignments to test their abilities. Hire an executive coach to help them navigate the process. Have informal meetings to observe each candidate outside of the work environment. Gain as much insight as possible to make informed judgements.
- Review and Decide
Once you have completed the assessment period, sit down and review your requirements, actual performance against those requirements, and how each candidate faired. Test your results against the established criteria, and weigh the pros and cons. Then decide!
- Transition Plan
The announcement is the culmination of the succession process, but must be preceded by a detailed transition plan, both for the incoming AND outgoing CEO. Don’t make the mistake of not including the predecessor in the process. That can help smooth the waters.
According to a January 2017 CIPHR article by Barry Chignell, “results of a recent survey, showed that 92% of respondents felt it was risky not to have a succession plan for key employees, yet only 25% of the companies feel they have identified adequate successor candidates for those positions, and less than half have a formal process for developing such candidates. Don’t be part of the group caught having to “make it up on the fly”. And once you have this in place for the CEO, look at the next level or two in the organization and identify “gaps” and “High Potentials” to keep the long-term prospects for your firm healthy.
At The Bailey Group, we have experience helping organizations plan for and successfully implement the succession process. Give me a call or shoot me an email to discuss your needs!