Time marches on, and with it go corporate leaders. Everybody retires at one time or another, and to maintain solvency in the leadership ranks, companies must know in advance how they’re going to deal with these departures. The traditional way of addressing this is with succession planning.
It’s important to have a plan in place to make the changing of the guard for executive management positions smooth and uncontroversial. The plan itself, however, is not as important as what the plan mandates: development of personnel who are ready, willing and able to assume top spots such as chief executive, chief of operations, chief financial officer, chief technology officer and others.
Succession planning – or succession development?
A lot of companies are big on planning but not so great on development. Where succession planning is concerned, this is often simply a problem with how the process is viewed. Planning is a system with so many aspects, it can seem to go on forever and grow to the point where nobody really understands the plan anymore. Development is quite different.
If you think “succession development,” then you’ll be starting out on the track that will lead you to the results you want. Common sense tells you that in leadership succession, the goal is to prepare future leaders, not to plan. You already know what’s going to happen – new leaders will replace retiring leaders or those who leave for other reasons. The key is to make the “plan” simple and concise while focusing the majority of efforts on developing these future leaders.
Where will your future leaders come from?
Aside from executives you may hire from without, all your future leaders will come from within your own ranks. Assume it’s your CFO position that’s in question. Your succession development activity will launch around questions such as:
- Who in our company has demonstrated a desire to remain with us long-term?
- Among these, where are they on the management ladder at this point?
- Which potential candidates regularly show critical management skills such as personal responsibility, leadership, team-building, delegation, etc., – or, in which candidates could these skills be developed with proper guidance?
- Which candidates’ resumes show a solid background in finance – both academically and in the work history?
- Will the candidate(s) we target be able to pass the scrutiny of those who will select the new CFO? That is, will there be any conflicts between the candidate and the selection committee members?
Personnel fitting these and other crucial criteria may be found in a number of departments, performing under a variety of job titles. The current leadership team must know their employees well enough to be able to determine three things:
- Who could possibly be a good fit as CFO
- What these individuals need to add to their skill sets in order to be successful in this position
- How long this development will take
If your CFO is slated for retirement in three years and one of your candidates would need more than three years to acquire the skills necessary for that position, that candidate is not a candidate. This is where the actual planning comes in. Company leadership must be able to “groom” candidates in time for them to replace retiring executives. In some cases, you may have 10 years to work with, so your candidate pool will be larger. In other cases, you may have less than a year, which is why ongoing succession development is so important.
At the end of the day, the most successful companies are those that make leadership development an integral part of their operations. Nothing can take the place of preparation, especially when it concerns the replacement of current leaders with new leaders for the future.