Succession Isn’t:Why Succession Plans Fail

Lucinda Doran — Wed, 04 Nov 2009 14:09:49 +0000

     In my opinion, many succession planning efforts in organizations do not work because they fail to take into account the fact that jobs at the top are simply different from other jobs. For one thing, as jobs near the top they become increasingly ambiguous. It is difficult to describe them in any way that truly captures the complexity, variability and context sensitivity of the roles. No two CEOs, CFOs, HR Heads, CIOs, CMOs or COOs necessarily operate similarly across organizations even when their content knowledge is comparable. Second, no matter how “strategic” lower level roles may be described, they are more internally focused, functionally narrow, and tactical than higher level roles. It is only at the top or next to the top level of the organization that peers are, defacto, across rather than within a function and that strategic considerations within and across expertise begin to take shape. The top level is the only place where both the external and internal factors salient to the business meet.
     A.G. Lafley, Chairman and CEO of Procter & Gamble, adroitly points out in his article published in Harvard Business Review how the top job is different from any other job in the organization (What Only the CEO Can Do, May 2009). While it is generally conceded that the best successors come from inside an organization unless there is a burning platform, it is rare that their training and development actually gives them the opportunity to practice “in vivo” for the responsibilities of higher level positions articulated by Lafley.
     Too often, executives rise within a function without the benefit of broadening their capabilities and perspectives. Very often, executives obtain titles that gain them entrée into the higher order by jumping to other companies. Both efforts can lead to mediocrity. The time is rarely taken to assess and select for the attributes and armed with the arsenal of skills and knowledge that will make them outstanding in their roles, particularly in turbulent times. How often have I seen the “Peter Principle” at work where truly outstanding professionals at one level rise to “their highest level of incompetence.” The justifications typically look like; (a) to fill a vacant space because it seemed the natural choice even where there are questions about the candidate’s potential success, (b) because the candidate is politically astute and knows how to “fit in,” even if that means lacking the ability to think independently, or (c) a candidate’s past results in a vastly different context have been taken as a sign of his or her ability to perform in the current one without further examination. The push for early and rapid decisions lay at the hands of board members, chief executives, and internal and external search functions, often with the notion that if the candidate doesn’t perform he or she can be traded out. It is no wonder that, by any standard, we see an increase in the turnover of CEOs and executives over the last 10 years. If they survive, it often is a trial by fire….necessarily risky for them, their companies and their shareholders.
     There is more written on executive and leadership selection and development than almost any other topic on organizations and we talk as if we are preparing middle or senior managers for top roles in our efforts. Better we are honest with ourselves and others and call it “Replacement Planning” rather than Succession Planning. I concur with Bower & Neilson (Directorship, April/May 2009) that, to truly be succession planning, companies need to take risks, identify those with the breadth of understanding and personal and managerial characteristics and potential required for higher level roles and intentionally and thoughtfully invest in the experiences and tutelage that will prepare them.

Making the Most of a Short Courtship: Reducing the Risk in Executive Succession

Lucinda Doran — Thu, 28 May 2009 13:33:39 +0000

In many ways, executive succession is like a brokered courtship and marriage, especially when external candidates are involved. Both parties usually present their best selves, position for best advantage and look for confirming evidence of their initial positive impressions. Unlike many courtships, however, executive selection rarely includes the time or process necessary to reality test the relationship before the marriage is consummated.
Mistakes are expensive. CEO turnover has risen over the past 10 years (Directorship, April/May 2009) as has that of senior management. The typical cost of failed hires or promotions is easily upwards of $500,000 in the first year, not including recruiting or organizational costs such as lowered productivity or morale. In response to escalating costs and the need to reduce decision risk, many organizations are looking to increase the accuracy of their predictions, particularly when there is a short time frame for a hiring or promotion decision.
Assess the Context and the Individual and Optimize the Match
Executives typically are hired or promoted because of their strengths to meet specific goals, strategies or competencies. Once decisions to move a candidate to the next step are made, decision makers can find it difficult to evaluate the potential negative “ramifications” (or flip side) of these strengths. Because, in my opinion, one rarely needs to manage a new executive’s strengths, a key element in making the best decision is to discern whether or not the flip side of the candidate presents is significant enough to put the potential hire at risk.
There are several steps that can help you improve the probability of successful executive succession:
1. Assess the context: Executive succession is a strategic process and, as such, scenario planning should be used to determine the best candidate. Decision makers need to think through and elaborate the multiple dimensions, possibilities and desired criteria that will be used to match these against a candidate’s history, skills, potential and attributes. At the CEO level, this includes external constraints and board dynamics. There is ample evidence to suggest that a significant mismatch on any major dimension, including current or desired corporate culture, can either limit or derail a potential high performer.
2. Assess the final candidate(s). For most candidates who achieve this level of accomplishment, it is rarely an issue of whether or not they can “do” the job. It is more about their abilities to do the job in a particular time and culture and with a particular set of challenges and opportunities ahead of them. Ultimately, the process is about making choices and understanding the tradeoffs of any particular decision path. A well designed executive selection process that includes an in depth objective assessment by a professionally trained selection psychologist can reliably and validly do this for you and formulate appropriate steps that will help ensure a candidate’s successful performance.
3. Optimize (vs Maximize) the match. Although rare, there are cases where too strong of a fit between a candidate and a role can limit the potential of both the individual and the organization to make changes. This is a greater risk with internal candidates. On the other hand, lack of fit also can undermine individual and corporate performance. One often sees this in external candidates brought in to reinvent the organization when it has no “burning platform” or neither the organization nor board is strongly committed to a change direction. The best choice often is by matching the candidate with probable environmental change demands.
4. Ask for and Take advantage of frank discussions with service providers. It is usually a frank conversation that will be most helpful in making an effective decision. During these conversations, the assets and potential liabilities of each candidate can be compared, hypothetical scenarios played out, additional questions asked about the importance of specific criteria and, should the finalist(s) not be appropriate, can guide continued search efforts.
Even when engaging fully in these steps, risks can be managed further by taking the candidate who ultimately is hired through an early onboarding process to jumpstart his/her performance, clarifying short, medium and first year expectations and holding the new executive fully accountable for aspects of the business that are under his or her control. In my experience, even taking a small effort in onboarding by providing candidate feedback and clarifying expectations between the hiring manager or Board Chair and the newly hired executive can elucidate how to avoid pitfalls early in the relationship.

This blog is an update from an article written by the author that appeared in the Boston Business Journal (July 31, 1998).

CAG Solutions » CEO Succession

Succession Isn’t:Why Succession Plans Fail

Making the Most of a Short Courtship: Reducing the Risk in Executive Succession