5 Succession Planning Steps
Article By Serenity Gibbons
In business, there aren’t a lot of sure bets. One thing you can count on as a CEO or founder? Someday, you’ll need a successor.
Whether that “someday” is 10 months or 10 years away, the two key questions are the same: Who do you choose, and how do you prepare that person for the job? It’s no exaggeration to say that those may be the most consequential questions you’ll answer for your company.
But just because they’re crucial doesn’t mean that the answers are obvious.
Tips for Transition
Depending on your company’s structure, your board may steer the transition process. Even if you’re not the decision maker, you’re the transition’s most important consultant. To pick and prepare your replacement:
- Start early — years early. Although every team member’s contributions are valuable, finding an organization’s next CEO is critical to the company’s success. Credera, a management and technology consulting firm, took a long-term approach to its recent CEO transition. It began with the appointment of Justin Bell as president years ago, transitioning responsibilities gradually until Justin took the reins as CEO. The strategically timed transition of leadership set the organization and its culture up for success as it continued to grow.
Although Credera had the benefit of a three-year transition period, not all companies are so lucky. CEOs are humans, too: Their interests change, they receive job offers elsewhere, or they eventually retire. Considering that CEO tenure is declining, don’t put off succession planning until a surprise forces you to face it.
- Get multiple people in the pipeline. CEOs are all about risk management. Especially if you’ve got years until the actual transition, set up a series of potential successors. Korn Ferry’s Jane Edison Stevenson and Victoria Luby suggest a generational approach: Cross-train potential successors at the senior, mid, and entry levels.
Once it becomes clear that you’ll need to tap one for your top leadership spot, identify the most capable contender. Help him or her fill skill gaps. What skills should potential future CEOs focus on? Time management is critical: Leaders delegate tasks because they simply don’t have time to tackle it all themselves. Empathy is another. CEOs have to be able to listen to problems and respond compassionately. Just as important as interpersonal communication is public speaking. It’s the CEO’s job to inspire the team with his or her vision.
- Prioritize culture over skills. CEOs teach cultural expectations, as well as leadership skills, to their teams. The question: Which is more important to hire for? Mona Smith, GAIA HR Consultancy director, lands squarely on the side of culture: “Culture fit is very important — skills can be learnt,” she argues. In fact, she suggests candidates who “get” the culture but are challenged by transition tasks may actually find greater fulfillment.
Does Smith’s advice mean you shouldn’t consider external candidates? Not necessarily. If your goal is to maintain your current culture, an internal hire is probably the best way to accomplish that. But if you’re looking to reshape your culture, you might look for external applicants who can bring those elements with them. When in doubt, ask workers whether they’re satisfied with the existing culture.
- Digitize your expertise. Once you have an immediate successor in mind, the hard work begins: passing on the lessons you spent years learning. You could ask your replacement to interview you, but that requires her to know what questions to ask. Dumping documents on her might seem more efficient at first, but someone training to become a CEO doesn’t have time to dig through all that paperwork.
Instead, take your cue from Steve Jobs. Before stepping down in 2011, the late Apple CEO delivered his succession plan as Apple University. Based on Jobs’ experiences, Apple University is leadership curriculum intended to teach Apple workers to make decisions that Jobs himself would make. Although you don’t have to go to the trouble of setting up your company’s own “university” program, digitizing your lessons is a great way to make sure they’re accessible after you leave.
- Get candidates closer to clients. At many companies, CEOs start out as VPs and work their way up. On that path, however, they miss out on the perspectives of their most important stakeholders: their customers. Think about your key client relationships, and test candidates by asking them to manage those accounts.
When global consultancy ICF needed a new CEO, it chose someone who’d proven himself through client service. “John [Wasson] has been managing all our client-facing operations and groups, and the corporate business development function for quite some time,” writes Sudhakar Kesavan, ICF’s current chief executive. In Kesavan’s view, those responsibilities showed Wasson was “certainly ready” to do the job.
Succession planning is stressful. If you plan ahead, you may still have to surrender control to investors or board members. If you don’t, you may find yourself with mere months to prepare a new leader. Be proactive and collaborative, but most of all, be sure to set your successor up to succeed.
