The Epic of Succession: Part 2

The case for routine and methodical succession planning has already been made in Part 1 of this series. To summarize vigorous succession planning:

*mitigates risk

*is cost effective

*enhances corporate culture

*is motivating to employees

*minimizes disruption and uncertainly within the organization and

*is proactive

There are certainly more reasons why this business practice makes sense yet it is surprisingly underutilized. While there is no guarantee of success and certainty of circumstances, planning for turnover and the development of employees should be considered a best-practice.

So why isn’t succession planning more prevalent? Many of the reasons relate not to objective business methodologies but rather to a more obscure and opaque issue. Personality, psychology, values and a whole host of other subjective determinants really come into play when making decisions about this issue.

When a business is running smoothly most executives are resistant to discuss succession. The idea is “why rock the boat?” In the same way that people may avoid preparing a will or purchasing insurance there is a general tendency to want to stay away from pessimistic and unfavorable issues and scenarios. In the case of CEO succession the board of directors may not want to risk offending a successful CEO by bringing up the topic of succession. The idea of succession also implies at some level mortality and the termination of one’s productivity which are hard ideas to accept at any level.

The concept of handing over power, clout and prestige is just so contradictory to the very traits that made a leader as such in the first place. It takes a courageous and assured executive to consider who might be up to the task of replacing him or her.

The executives in the company may also (erroneously) feel that there are no internal candidates for whatever role requires succession. This may in fact be the case but it is a decision best come to after a careful and objective evaluation of the team rather than simply the leader. It is rarely one individual who is responsible for a business or business unit’s success.

The other side of this coin is the perception that there are numerous candidates to promote for a particular role. Even if this were true, succession planning is still necessary. This preparation process involves not only identifying the next leader in a company but training, developing and motivating him/her as well. Knowledge must also be transferred which takes time and careful organization.

Another reason why succession planning is sporadic is because the limitations, flaws and peculiarities of internal candidates are generally known. Thus the decision makers see a whole and therefore accordingly imperfect picture. What needs to be remembered however is that external candidates have weaknesses as well. Clearly one thinks of the old idiom: “better the devil you know than the devil you don’t”!

Correspondingly the belief that somehow there is a “savior” out there who can come in and solve all of the problems of a company is a familiar one. Look at Bob Nardelli who was brought into Home Depot or Carly Fiorina’s stint at Hewlett Packard. A recent study conducted by the world renowned European business school Insead found that there was virtually no correlation between fame, a strong reputation and actual performance. Commonplace lists of most admired CEO’s do not always correlate with the highest performing CEO’s who oftentimes are company insiders with less of a reputation.

As they are focused on the current functioning and success of the business many leaders feel that they do not need an emergency (a.k.a. succession) plan. Indeed, according to data from The Conference Board 1,484 CEOs left their positions in 2008. In 2009 this number declined to 1,227 but is still considerable. Having an actionable succession plan at all levels of the organization is important but within the domain of the CEO it becomes even more essential due to the highly visible nature of the role both within and outside of the company.

Along the lines of focusing on the current performance of the business, succession planning may oftentimes be viewed as a luxury rather than a key and critical component of continued business operation. Succession planning is not a separate event rather it should be elemental and inseparable from business, strategic and even operational planning. It does not take away from the company focus but rather adds a dimension and completeness to the process.

So there are a multitude of excuses and seemingly rational reasons why succession planning is avoided. But as we have seen here and in Part 1 of this series, proper, thorough and regular planning for succession is an exemplary business convention. The word success is in fact embedded in succession and thus the connection cannot be refuted!

Email the writer: