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Clearing the Roadblocks

May 28th, 2012

Author: Darryl Judd, COO, Logistics Executive

Getting real about leadership and succession planning.

As Executive Search Consultants we find there are certain challenges that our clients are faced with, no matter what industries they come from.  One of the main themes we come across when undertaking a new search assignment is the subject of succession planning.  Even more critical to company survival is the subject of CEO and Leadership Succession.  It is not surprising that we touch upon this daily as the subjects of talent acquisition, retention and development naturally feed into each other.

There is an increase in turbulence and uncertainty in today’s market, there seems a greater requirement than ever before for strong, stable leadership.  There increasingly seems to be a unilateral awareness of this across all levels, not just from the Human Resources team but also across the Board to the lowest ranks of the company.  There is a clear anxiety about the line drawn between the company’s future successes and its present leadership contingencies.

This new emphasis on the CEO replacement strategy was manifest in 2009 with the US Security and Exchange Commission removing the right for companies to avoid disclosing their CEO succession process to shareholders.  The result has been an avalanche in the media of close reporting on the likes of Warren Buffet and his leadership exit strategy from the Berkshire Hathaway which makes headlines every time there is a shareholders meeting. 

It is surprising therefore that what we have found on our daily tackling of this issue at Logistics Executive that there still seems to be a high level of resistance to the implementation of a succession plan or a leadership exit plan.  Perhaps this is due to human nature and the lack of perceived interest in changing the status quo.  Perhaps it is due to the overwhelming nature of adding this new task to what is already a highly tasked management function.  Whatever the reason, it is still the case that when we ask the question we are met with a lack of information.  Our standard practice when we tackle a new assignment is to ask about the succession planning process involved in a new role and more often than not we find that the answer is yes but the outline of this plan is often hazy.

The reason for this lack of contingency can be attributed to the many mistakes, obstacles and roadblocks that most companies find themselves navigating when trying to successfully implement a succession plan. 

Our clients have most commonly articulated these road blocks/obstacles with an emphasis in the detail of executing succession plans as:

• Lack of leadership support - As mentioned above this is not as big an issue as it used to be as top managers realize the importance of business continuity.  The challenge here is maintaining an ongoing interest and support by the management team.  This is achieved through communicating and reporting to keep them engaged and owning the process.

• Agreement on the criteria for the talent assessment - This is a critical step as providing managers with talent data that supports their company and staff needs makes it easier to identify and develop talent.

• Lack of reporting - This area is often considered quite daunting but can be simplified by having a good succession plan as a foundation.  Putting some simple metrics in place that tie in with business objectives is the key to this.  Integrating succession planning into performance management is the simplest approach.

There are many theories published by academia, consultants and professionals on how to put a successful succession plan and leadership exit plan in place.  We will not try to navigate through these in this article. Suffice it to say that succession plans need to be tailored to individual company requirements and whilst there are some best practice guidelines these seem to be very basic and overshadowed by the many contrasting points of view. 

However in terms of best practice there are two basic guidelines that need to be mentioned, as follows:

1. Communication - up and down the line. Leaders within a business must be not only chosen but also developed, mentored, and cultured as well.
2. Agreed acceptance that the succession and leadership exit plan is of critical importance by the whole company and in particular by the incumbent leaders. 

Succession plans need to be visible if they are to create credible and respected leaders.  As a guide for succession planning the company mission statement and business objectives need to be clarified. It is critical that the current leader must help the future successors learn and lead within the company.  The current leaders must also supervise the continuing success of the business and ensure their successor understands and is capable of executing business objectives and achieving the company vision.  In this sense succession planning is the learning tool used by the incumbent to train and direct their successor. 

On a basic level the succession plan also safeguards against unlawful discrimination.  The current leaders avoid preferential treatment in the succession planning stages if they are seen to use the mission statement and company objectives as his/her guide to selecting potential successors.

As part of our processes upon taking the brief of a new recruitment assignment at Logistics Executive, we ask our clients about their exit strategies.  This question is often met with confusion.  However our aim in asking is to seamlessly design the right skill-sets and cultural fit in the role we are recruiting for, not just for the present need but for the future.  It is also an acknowledgement of the incumbent leader's responsibility to think of their replacement. 

Agreement at all levels that a leadership succession plan is good business practice is paramount to its success due to organizations facing increasing complexity and uncertainty in their operating environments. 

In a future that is increasingly unpredictable and uncertain it is the CEO's  who provide surety.  They see opportunity in volatility and find creative ways to navigate problems, balance the needs of the company with social responsibility and hold on to uncertainty until the optimum time to make a decision. 

It is no wonder that shareholders and executives on the board to ordinary company employees are now showing a sharp interest in the exit plan strategies and talent management of their leaders and why it is a risk mitigation strategy to have a strong plan in place for the future.

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