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How Can You Secure Your Business’ Succession Plan?

Several areas of business have been left in limbo as a result of the Covid-19 pandemic and building a succession plan is no exception. Not that this is an entirely new idea: reports have shown that the frequency of CEO transitions regularly goes on the decline during times of recession or other crises. Even before the pandemic, companies have left succession planning to the side, as a past study states that 39% of boards didn’t have any considered candidates to replace their CEO should it be necessary.

Putting the future on the backburner to handle a present crisis is understandable, of course, but that doesn’t mean the future shouldn’t be in consideration, especially with how transition periods can make or break a company in some cases. Neglecting the matter of succession in this way not only is risky because of the topic of the pandemic, but also simply because C suite and board members age out and retire. To avoid a decline in quality leadership after your retirement, you can ensure smooth and effective succession planning for your company by keeping these ideas in consideration.

There is no such thing as too early.

While deciding and training a successor for any C-level role when there are no plans to step down or retire may not seem like a massive priority, Covid-19 has proven that there are no real guarantees. To ensure their longevity, boards need to have both emergency and long-term succession lines in place in the event that multiple C-suite members should fall ill or face other unprecedented obstacles keeping them from work. Additionally, looking forward even with uncertain present times can create a sense of stability that will help a company in the long-term.

Along with acknowledging that emergencies can occur at any point, an early start for succession planning will also ensure that the step-up of a new principal company head isn’t too far of a stretch upward.  Becoming a leader hardly happens overnight, or even within a few months. Oftentimes it can take years for any worker to foster their leadership skills, so the earlier you start a potential candidate, the more equipped they’ll be for their future position when the time comes.

Consider what you need.

Another problem newly appointed leaders run into is not being able to meet expected performance, as many companies experience a decline after power transitions. This can be for various reasons: a lack of general confidence in the new person’s abilities, the person not completely synergizing with the company’s needs, or even simply a basic lack of preparedness. Transitional periods being rocky may be unavoidable, but that doesn’t mean bumps in the road can’t be smoothed.

Again, an early start is beneficial in the search for potential candidates, as it provides time to search and train candidates, along with deciding the specific qualities a successor needs and where you want to find one from.

Recruiting leadership from an outside firm is an increasingly popular option, given their previous experiences outside of the company giving the chance for a fresh perspective. However, external candidates are often more expensive hires and brought in for struggling companies, so it can be hard to tell whether external board hires will work or not. As such, if you want to be able to personally train a successor, an in-house hire may be a better choice for you.

Evaluate your Talent Pool with Multiple Lenses.

Regardless of where you get your succession candidates from, it’s best to have a concrete idea of what you’re looking for and what you expect from your successor as soon as possible and decide the approach you want to take in the evaluation.

There are several ways that companies decide who in their pool of successors is the best fit for the job: on the concrete process side, companies will either have a competitive training process to see what candidates excel or a checklist of qualities deemed necessary for leadership to see what candidates meet the most of them. There are also processes focusing on the more people-oriented aspects of leadership in evaluating what candidates foster a sense of camaraderie and trust into the company culture or which candidates are able to best balance objective decision making and empathy.

Source: Deloitte analysis

None of these approaches cover everything on their own, so it’s important to look at elements of all of them to decide your priorities in the selection process.

Honesty is the Best Policy.

In the past, the matter of succession planning has been seen as the operation of a behind closed door, but a shift in work culture and Covid-19’s impact has begun to change that. Many firms admit regarding succession that their approach in consulting has changed to advising that companies act with transparency in telling candidates about their consideration as an interim CEO or successor. Again, preparation is key, as transparency allows a candidate to know the role they will have to properly prepare for.

Do not Neglect Any Positions.

While many succession planning research focuses on training a future CEO, you need to remember that the CEO is not the only member of a company, and not the only one who requires a succession plan. A company requires a well-equipped CFO, COO, CMO, and others to function to the fullest, so of course leaving one position without a proper successor would lead to future decline. All members of the C-suite should have potential candidates for future successors and interim members in case of emergency and have a similar process in place for preparing and deciding on their candidates tailored for whatever those specific roles require from a person.

Test Skills in Practice, Not in Theory.

One frequent obstacle that succession planning even when it’s put into place is a sense of passivity when it comes to training. To avoid passive planning in your own succession process, it’s good to ask yourself how specifically to get a candidate ready and try to focus on learning as well as performance despite corporate culture’s prioritization of the latter.

Training successors is of course necessary, but as many standing C-suite members have likely found over the course of their careers, experience is frequently the best teacher. It would benefit both your business and your candidate to start giving management responsibilities gradually and before a crisis hits--for example, having a candidate fill in for a managerial role that’s currently on leave for vacation. This will give you both a practical assessment of where your successor excels and where they need to improve and give the successor a sense of accomplishment and confidence in leadership roles before a crisis occurs.

Conclusion

Succession planning may sometimes feel like looking for your replacement, but in fact, it’s an essential step to ensuring the longevity of your business. Time shifts and generations retire, and oftentimes the best way to ensure that your company doesn’t fall victim to shifting tides and instead thrives under new leadership is to orient your focus towards the future that will be another leader’s present.  

“When it comes to succession planning, we at Latin America Executive Search Consultant are aware of the challenges that companies often face when choosing and training leadership, with the help of a diversely experienced staff and their own insights into leadership. We hope to help make the decision as painless as possible for any position you are hoping to fill so you can focus on the present with a secure future.”

Jean Callahan

Managing Director Latin America Executive Search and Corporate Partner at Intercontinental Executive Search

References

Harrell, E. (2016, December). Succession Planning: What the Research Says. Harvard Business Review. https://hbr.org/2016/12/succession-planning-what-the-research-says

Routch, K., Doherty, M., & Monahan, K. (2018, September 27). The holy grail of effective leadership succession planning. Deloitte Insights. https://www2.deloitte.com/us/en/insights/topics/leadership/effective-leadership-succession-planning.html

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