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Baton Must Be Passed On Diligently

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There is something evidently common between Apple, Amazon, Tata, Wipro, Infosys, Samsung, News Corp and Microsoft. They all had apparently given out 'one-man leadership' signals at various occasions but have either secretly or publicly managed to follow a succession plan well.

While there is no straight jacketed approach for Leadership, success of a company largely depends on how the Chairman or the Company Board envisage and how their thought line seamlessly blends with the capabilities and style of their Top or Senior Executives and Managers. Globally, organizations are realizing the fact that there are young professionals that are taking up the leadership ranks now. Cultural agility is also taking precedence in business matters resulting in a need to develop leaders locally. Managing and retaining talent is always the bigger task at hand and the hand should never be seen shrinking. 

Globally, there are three critical challenges that matter to the people industry: talent pipeline, acquiring people for leadership positions and succession planning. While all three are interlinked, Succession remains an interesting topic of debate than the rest. Needless to say it is a very tricky aspect of what follows in a replaced or a displaced leadership.

The case of Manchester United had some revelations on succession planning and why insider replacement seems a safer bet than bringing in an outsider who may cart radical development carrying fresh ideas and innovation. Alex Ferguson's service of over 30 years had created a position extremely difficult to fill in. While insider succession here seemed a plausible solution the same at Microsoft had undergone an inordinate delay of fixing Satya Nadella in place of Steve Ballmer.

Succession Planning has no lead time. Yet, it is a must for a Chairman or a Company's Board to chalk out succession plans much before a CEO retires or the business may see a downfall. It is a proactive rather than a reactive exercise. As a part of an overall business strategy, succession planning is a significant aspect in both a professional run organization or in a family owned outfit. It is naturally much larger than writing a will as there are many stakeholders involved. A plan in place will make decision making easy and effective. Following are few broad guidelines in Succession Planning:

Set The Goals
It is not just CEO's position, any critical role or position needs a successor. Whether a succession is planned for meeting a contingency or running business-as-usual or driving higher performance gains, short and long term goals of a replacement will therefore vary. It is important to point down immediate objectives that should be achieved or gradual changes that may be desired with successful succession planning. Often, done in haste, it backfires miserably resulting in loss of not just share price but corporate reputation as well that usually has taken decades of sweat and hard work building it up.

Identify And Build The Successor
  • Internal or external sourcing: While it is great to check out the external market that holds potential creativity and fresh ideas, the board must also familiarize itself with talent two or three levels below the top layer to get a hang of personal characteristics, texture of the company's culture, how it has weaved in it industry knowledge and how have the managerial skills being developed.
  • Advance Planning: Lead time is important as there is no fixed time period and may vary from 6 months to 5 years and more. In GE, the guessing game about Welch's heir had started couple of years ago. For internal sourcing, grooming and testing the successor on the job would take some years. It is imperative he experiences different situations and learns desirable response and actions in such market circumstances. What to do when no market growth or exponentially higher growth, how to extend or close a manufacturing or product line, how to expand or penetrate markets etc.
  • Weight pros and cons of like mindedness: Citing the example of GE again, there were four shortlisted CEO candidates out of a discrete and diligent selection of more than a dozen CEO aspirants. It was evident the paradigm and realm of Jeffrey R. Immelt, the one chosen was different  and away from influence than what Welch had held so long. IBM's Lou Gerster, Ford Motor's Alan Mulally are some names who successfully led organizations without prior industry knowledge but with their  excellent operational, intellectual, strategic skills , they had set benchmarks for others to follow.
  • Factor the qualities of a future leader: The CEO should hold characteristics and qualities of a future leader with progressive market skills to assess changing market conditions. He must possess a system of value, vision, passion that his teams will imbibe and posterity will follow. He should have the acumen to identify disruptive changes vis-a-vis dynamics of external markets, hold efficiencies to execute it and make it an intrinsic part of the company culture.
Incumbent To Feel Secure
The entire process in implementation may take few months and even few years. A successor has the right to refuse, however in case of his agreement as per company's vision and succession plans, delays in appointment should not leave him disillusioned or insecure of his future in the company. There are times, where there are slips between the cup and the mouth and in the bargain companies lose great deal of talent. Idea is to keep the incumbent engaged and involved in the process. There will be early departures or internal strife despite however precautions are taken. Overall compensations have to be worked out accordingly to minimize the damage in losing relevant talent of all others in the race. The other potential CEOs should not be left frustrated.

Communicate To Make It Formal
There are grapevines where news travels faster than any other information dashboard or internal communication newswire. It is suggested there should not be uncalled-for delay in writing succession and once written immediate teams should be kept informed of the tentative plan, at least closer to the formal announcement. It should be gradual settling in rather than a cat out of bag thing. After the modalities are worked out with managerial, HR and administrative functions, let it be communicated in a general meeting and other formal newsletters, intranet or company's internal dashboards or emailing systems. Gestures are important in any relationship, a farewell to an old and a welcome to a young really keep spirits warm and corporate texture intact. Triumphs come easy to companies that exhibit maturity in stressful times. It is advisable for the board to allow time for an incumbent to settle down.

Demonstrate Trust
Prejudice, biases and judgmental behavior may make things extremely taxing for a person at a new task. He may bring with him his own unique style of working, managing or controlling things which may seem unusually longer to the onlookers. Doubts, uncertainties and opinions will limit his thinking and performance drive impacting the business in a negative way. Like it happened with David Moyes at Manchester United, it seemed he wasn't allowed time to settle, was repeatedly made to feel the burden of Ferguson's legacy and was judged too soon. No matter how a predecessor must have worked hard and built an empire right from scratch with winning team, it will be highly unfair on part of management or the board or the HR departments to expect too much too soon from a new person to deliver.

Be Prepared
Even with a diligent process followed at GE, post Jeffrey R. Immelt's appointment the other three potential CEOs had left within couple of years to become CEOs of other renowned brands. Their skills were still needed at GE. Be realistic. There is no one-size-fit-all approach. Even if your well designed thought and sought after plan does not work, there should always be a Plan -B to ensure business longevity.

Succession Planning is 'A crown of Steel, a road of thorns'. While it will never be easy or very simple, all efforts must be put in to make it as seamless as possible - a collegial process with an intention of creating a sound handoff with least disturbance.

The content including all the data, information, illustrations, graphs, tables or other visual representations written or compiled in the manner as above is owned by Dr. Yasho V Verma. All or part/s of the document cannot be republished without prior permission and consent from the holder.


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