Why Succession Planning Should Be a Top Priority For All BusinessesJanuary 01, 2021
Even if it seems like everyone in your organization plans to stick around, you never know when a situation will arise that will force your organization to fill an executive level position.
Does your organization have a plan in place in the event of a c-level departure? Making sure that a top internal candidate will be well prepared to make the leap to a new position depends on careful and diligent planning, and in some cases, re-organization. How do you make sure that you are doing what’s best for the business, and best for the successor? The board and incumbent CEO should work together to determine what (and if) reorganization is right for your company.
How far in advance should you start planning?
The transition from one CEO to another is a critical moment in a company’s history, and it can be tricky if you don’t plan correctly. Because CEO vacancies can be unplanned at times, it is crucial to make succession planning a priority even when there are more immediate issues to deal with. All too often, organizations will be caught unprepared by unexpected crises or opportunities and forced to begin an outside search for their next CEO.
Experts suggest that planning must be immediate and ongoing. Some suggest planning 3 years before an anticipated retirement or change in business, but this is often unrealistic. In some cases it’s impossible to know when someone’s time at your organization is coming to an end.
Some other suggestions:
- Look closely at successor options within the organization. Think about conducting coaching sessions, and individual development plans. The more time you spend grooming an internal employee for a move up the corporate ladder, the better.
- Have your board (and existing CEO) define requirements and carefully assess the capabilities of CEO prospects. When you are at a point where you need to fill a position, steer away from interviews. Try leadership simulations instead. The best teacher is experience, and simulated situations can test a prospective leader’s ability to act quickly and strategically in critical times.
- Make the growth of your organization’s top leaders a board priority. While perhaps there is no viable internal candidate for the open position at the current time, it doesn’t hurt to constantly cultivate and grow top leaders’ capabilities. This investment often times increases retention of key employees.
Looking outside for a successor?
If you don’t have anyone internally who can fill a potential open role, you have no choice but to fill the position with an external candidate. Often times organizations hire “external” prospects as “successors in waiting”. This way, you can give them time to learn the ropes of the company before they officially become the CEO.
The incumbent CEO knows best.
Make sure that the existing CEO is part of all succession planning efforts. Transferring power can be tricky, but no one knows the role better than the incumbent CEO. It might be best for the existing CEO to be a key advisor to the new executive.
The existing CEO can help the board define the job and corresponding responsibilities. This does not necessarily mean that they have decision making authority in the new hire process.
While your organization might be comfortable in its current state, nothing is ever certain, so it’s crucial to get the ball rolling on succession planning as soon as you can! Questions on succession planning? Reach out to KLR Executive Search Group, LLC.