Succession planning, it ranks as one of the primary responsibilities of boards and executive leadership. Not all have planned for it and of those that have, not all did so in a procedural way. When it’s done right, it extends deep into an organization. When it’s done casually, it can easily disappoint.
In a perfect world, succession can be almost seamless if participants are in lockstep with each other and the organization is well informed and aligned. But… whether voluntary or involuntary, a key leader’s unplanned departure with no ready successor can easily derail the rhythm of an enterprise and the impact of multiple departures can be even worse. Some disappointments from the roads I have walked:
Succession was unplanned: A client retained me to ‘look into’ a company in which he had a seven figure investment. The company had recently acquired another that was six times its size and the combined entity was losing money, more each month, hemorrhaging cash. The president was in over his head but unwilling to admit it and his ego had long before prevented him from developing, let alone tolerating, a successor. I quickly became familiar with the strengths and weaknesses of the combined leadership teams and concluded that the president of the acquired company was far more capable of leading the enterprise. We acted and promoted him to president, ‘retiring’ the ‘acquiring’ president. We were lucky.
Succession was unplanned: Two separate client experiences, nearly identical. One president had become openly arrogant and was beginning to verbally abuse key staff members and the second had disconnected from his staff, limiting his responsiveness and interaction with them. Both had been called out by their boards, each had paid lip service to the admonitions and yet both continued to march to their own drummer. Each had been hired from the ‘outside’ to lead existing senior leadership teams with years of experience. Neither had ever given a thought to developing a successor nor had their boards. We acted and both left involuntarily! We were lucky.
In these two cases a board member had to step in as managing director until new leadership could be found. Not exactly what most directors anticipate when they ‘sign-on.’ The existing senior leadership teams were supportive of the changes and both companies survived and prospered but, we were lucky.
The palace revolt: We were hired to stabilize a prominent regional distributor after three of its top sales executives left without notice to start a competitive company. There was no succession plan, not even a backup plan for such an event. Because the company’s top five customers were at risk senior management reacted too impulsively. They got through it but with scars. The easy part was protecting the customers by legal means; the mistake was reassigning those top five customers to two high producers who remained with the company. Without thinking through the consequences, those two ended up with control of nearly 40% of the company’s revenues, were paid full commission on the accounts transferred to them and easily morphed into the next ‘high maintenance’ challenge the company faced.
In all four experiences, formal succession processes were set in place once the ‘barn door’ was again closed. Key elements included:
• Regular oversight by the board including frequent interaction with internal candidates
• Categorization of the candidates as short term vs. long
• Formal development plans for candidates in either category
• An understanding that completing development plans meant ‘ready’ but with no guarantees
• Mentoring by executive leadership and ‘C’ level board members and
• An overarching philosophy that advancement is more likely if one makes him/herself replaceable by nurturing others to higher levels of performance
We all have examples of succession executed with precision; some of us have just as many where we were caught flatfooted with no plans to deal with the unexpected. Critical business practice…don’t leave succession to luck!
Read more: Boards: Set Up Your New CEO for Success