Succession Planning: The key to ensuring a
viable, thriving organization
Succession Planning, in its simplest terms, is the act of focusing on the future of your organization as it relates to the “people” side of the business. Usually people think of it as planning to replace a retiring CEO; however, it can be equally crucial to extend succession planning to the entire management team and other key employees. Doing succession planning could mean the difference between a viable, thriving organization and one that could quickly go out of business.

Many companies think about succession planning, but really don’t focus on it until it’s too late. There is no right or wrong process to follow – it’s more a matter of timing. As an example, assume a 60-year old CEO wants to retire in 2 years, but has no idea who will be the next leader of the company. He or she can explore two avenues: (1) go outside to recruit someone or (2) go through the process of selecting someone internally that could assume the position. The problem is that many organizations go about doing this without really understanding the profile and role of a CEO. Does this individual need a certain type of business experience, leadership style, and communication skills, in order to deal with the challenges facing the company both internally and externally?

Here are some frequently asked questions relating to succession planning:

When is the right time for succession planning?
Management should always be cognizant of who the best people are in an organization. They need to spend time understanding who those people are and delve into their backgrounds, experiences and talents. A CEO should identify 5-10 people that they are going to learn about over time, and observe them in various situations and scenarios.  Why 5 or 10? If starting from scratch, it is important to begin with a manageable number. As you become more comfortable with those 5 or 10, you can add another few to the mix. Observe them as much as you can but at least 4 different times during the year and in different situations.

How should I approach a likely successor?
Tread slowly! Don’t approach them in the beginning because people won’t be themselves. Wait until you feel that there’s something of substance, then verify it through a trusted advisor who can spend time with that individual and give you an objective second opinion. Only then, have a conversation with that person. The conversation might go like this…”You’re a high potential executive. We’ll try to give you other opportunities and exposure over the next few years.” When it comes to succession, you need to understand a potential successor’s strengths and weaknesses, figure out how to fill the gaps – through training, coaching, and mentoring. You need to think about how to develop and retain this person – job rotations, increased responsibilities, and a competitive compensation package.

Whose responsibility is it?
It’s the management team’s responsibility – not just the CEO. It is their collective responsibility to ensure that they understand the key positions in the organization that will drive and deliver on the business strategy, as well as top and bottom line results.

How big do you need to be to be worried about his?
Size doesn’t matter. All companies need to know their employees and have a plan to replace them if they resign their position.

How does CEO succession differ from that of general management?
For a CEO, the Board has to be involved in the process since they represent the interests of the shareholders. They ultimately will have the final decision about selecting the right CEO. If you are the current CEO, make sure that you are having discussions with the Board about your plans for the future, as well as the competencies you believe are needed for the job. Be sure to discuss the internal people that you think could take the CEO job and give them as much exposure as possible to the Board to assist them in the evaluation process.

What about non-profits and government agencies?
The issues are the same.

How can a company get started if they’ve never done it before?
At every management meeting, spend some time talking about who in your organization you cannot afford to lose. Put a list together of key players – that’s the 1st step. Second, get to know a little about each of those key players – watch them more closely. Third, after those fact finding sessions, have an open discussion as a group. Do those candidates have the potential to move forward in the organization or someday move to a higher level position? What do you see as their gaps? Fourth, how am I going to work towards plugging those gaps and developing those individuals?

Finally, go back and review those people and have discussions about what each of you has seen transpire in the last 12 months – the good, the bad and the ugly. You must have dialog. Observe and comment on actual situations, not hearsay.

What might a succession planning engagement by Vienna look like?

1. We begin by having a discussion with the CEO and management team to understand why they want a succession planning program.
   
2. As we get to know you better, we will try to figure out what the right kind of process is – very detailed and sophisticated like GE, or start small and grow into a more elaborate process – based on the company’s culture and environment?
   
3. Then, we work with the management team to develop the right process – developing a particular form or survey, identifying key jobs in the organization, defining roles, responsibilities for certain jobs, etc. Putting the right process in place is so important; it must be a living, breathing, and manageable part of any organization.
   
4. Our initial engagement would likely extend to identifying the top 20 people in an organization, a gap analysis and individual development plans including the person’s coaching and training needs.