Five Major Ways to Improve Executive Succession
Executive Summary
Surveys show near 40% of companies are not prepared for senior leadership succession. Likely even higher for small to mid-sized companies and family offices. No “ready now” candidates to step in can mean long, frustrating projects to find a successor. Organizations need to do better as effective leadership succession adds shareholder value. There are effective succession fixes and best practices to apply, but managing succession is often not the highest priority for organizations.
1. Make Roles Attractive to Top Candidates
Organizations often turn quickly to successor candidates who have the same background as the outgoing executive. The reasoning - “the background, experience and skill set of the departing executive were fine, let’s recruit someone similar”. Understandable on one dimension yet lacking certain foresight about future strategic fit.
The executive departing was likely in the role for several years. Every major role at turnover requires a fresh strategic and operational rethink. Roles evolve strategically sometimes without hard notice. Many organizations do not refresh nor update what is required in the next executive leader. They find later, the successor does not really have the skill set required for this dynamic world. There is even more to think about.
Role specifications do not need to be lengthy, but they do need to be forward looking, very well-thought out and leading-edge attractive. This should not be thought of as routine. It is often the first communication a potential candidate gets from a recruiter or through a contact. Candidate first impressions of the role are pivotal and come quickly.
Candidate self-assessment goes like this -
Do I essentially have this role today or not?
Will this new role widen my leadership scope and let me build on my strengths and aspirations?
Can I get involved with new things not experienced?
Where could this role lead next?
If a role cannot pass these quick tests, then desirable, ideal candidates will pass. They know other opportunities will arise. They are confident.
Shape the role description to where it resonates with the best fit candidates. Do not let great candidates immediately say “not interested” without engagement and discussion. Ask what would make the role attractive to you, could expanding it in some way make it more interesting to you. Their ideas may seal the deal.
We see this often when top functional leaders like CMOs or CFOs seek broader next roles adding line operations or P+L responsibilities. We see it also from business and product leaders wanting to be a No. 2 ultimately when a CEO is a few years away from retirement.
The role description especially at executive levels is not just a box to check. Make it persuasively interesting to candidates you want attract and get to know.
Best Practice: Landing your top candidate may only be one role tweak away. Learn to work with the best candidates in shaping a role that is highly attractive.
2. Coach Ideal Candidates for Success
Occasionally, good internal candidates perform poorly in succession interviews and assessments even when labeled “ready now” successors. Expectations are not met creating surprise and disappointment. Discouraged, these candidates may even decide to leave the organization. These outcomes are many times driven by several scenarios, all of them detrimental to succession, morale and culture.
Often, the candidate was likely not a true “ready now candidate” even though they were told they were, and their name appeared in succession plans. Another frequent scenario is when decisionmakers begin to feel an outside successor is now likely needed. External candidates are scoring better in interviews especially against leadership and competency criteria. The external candidates appear better prepared and seem a better fit.
Our experience indicates that these scenarios often come from poor candidate preparation. The candidate did not prepare adequately for the interviews and assessments. There may be overconfidence. The candidate took the discussions too lightly. Answers to key interview questions were not succinct, they ran long or were uninformed. Answers to questions like, what would you do differently in this role, were not well thought out.
Keep in mind good outside recruiters coach their candidates well. They prep on critical issues, on competency success factors and on key selection criteria. They fully prepare the client as well with comprehensive candidate reports and oral briefings. The same should happen for internal candidates whether there are external candidates or not.
Best Practice: Assure candidate preparedness and knowledge consistency amongst both internal and external candidates. Prepare internal candidates as if they are outsiders.
3. Create a Potential Candidate Knowledge Bank
When searching for those “ideal fit” external succession candidates, the window of opportunity to find them is small, usually two to three months. The remaining succession time is for interviewing, assessment, decision making, negotiation and onboarding. Total end-to-end succession time averages four to six months. Unacceptable, and more needs to be done.
First, “ideal fit” candidates may not be interested during that two-to-three- month window, or they were never contacted. In that window, outside recruiters deliver good candidates from their databank as they are well known to that search firm.
Thinking rationally, the hunt for top successor candidates should not just rely on that one off search, in that short window in time. Or just from one firms best known candidates. Executive succession is far too important and mission critical.
An organization’s succession planning team should consider building its own potential candidate databank developed all throughout the year. It makes so much sense as it informs all of succession planning all throughout the year.
Every organization has available good candidate information sources and channels. There are many individuals in the organization linked to: direct industry and sector contacts, former colleagues, individuals attending industry events, speakers and panelists, industry newsletters and industry analyst reports, etc. Organized well, this intelligence leverages succession planning with informed strategic possibilities. It also helps to jumpstart internal and external recruiters, and to benchmark internal candidates.
Best Practice: Build a knowledge bank of prospective and benchmark candidates and rankings. Expand your potential candidate universe throughout the year without solely relying on an outside firm.
4. Benefit From Lean Succession
Executive succession projects can be frustratingly long. Four-to-six-month projects are the average when there is no ready successor. Weeks can elapse attracting candidates, completing interviews, and closing with the finalist candidate. When succession expectations are not met, CEOs, Board Directors and even investors can raise concerns about succession planning and succession effectiveness.
Proof is in looking back – the slow start, the time to organize resources, launching the search firm, the weeks to complete candidate interviews. Long CEO searches are the most visible examples as delays begin affecting enterprise performance and shareholder value.
We believe lean succession techniques similar to lean manufacturing techniques are relevant. Removing unproductive time and sequencing delays can mean a successor onboards more quickly and gets right to strategic execution.
Where can an organization start with lean succession? First, every organization needs a succession project blueprint on the shelf defining project leadership, steps by whom and when, preferred on-call search firms and clear timing expectations. The lack of a tight project plan can add weeks to succession.
Next, get a cracking fast start. A major time sink comes from delays in -- critical launch communications; slowness in informing, preparing and scheduling candidates; weeks to find and select the right search firm, getting time on executive calendars. These delays can add a month.
It is easy to feel no critical urgency at the beginning of an executive succession project, but as each month passes though without a successor, urgency builds and stakeholders notice. Go lean and develop a sense of urgency.
Best Practice: Drive lean succession, eliminate dead spots. Lead with a tight, proven project plan. Assign a dedicated project leader having authority, sense of urgency, commitment and backing.
5. Effective Succession Requires Champions
Research proves real value coming from effective leadership succession and real costs to poor succession. Many Boards and insiders feel their organization is not prepared for succession, i.e., no ready successor or no effective plan to find one. Organizations that manage succession well, do outperform, others pay the price.
Research indicates why organizations are not prepared – succession planning is a low priority, jammed governance agendas, stale succession plans, overwhelmed HR managers, lack of leadership commitment and not being able to translate future leadership requirements into a plan. With so much on the line, why do gaps remain and what can be done to close them.
We have concluded organizations need Succession Champions. Individuals who know succession best practices, who are great project leaders, who have authority to assign resources and assign accountability, who are committed to meeting expectations and in a timely fashion. An individual with clear backing from the CEO, the CHRO and the Board. Someone who gets executive succession and can make things happen.
We are finding that executive succession often times has no real “owner”, someone who is responsible for the process and the quality of the outcome. In some organizations, it seems the solution is hiring the right executive search firm and then waiting to see what develops. Where does ownership reside even in HR organizations?
Best Practice: Empower Succession Champions with authority, resources and commitment then look to derive enterprise value, performance and sustainability. Everyone will benefit and notice.
