Succession leadership: is your organization prepared?

Citation

Cashman, K. (2001), "Succession leadership: is your organization prepared?", Strategy & Leadership, Vol. 29 No. 4. https://doi.org/10.1108/sl.2001.26129dab.001

Succession leadership: is your organization prepared?

Kevin Cashman

Despite the effective leadership many organizations demonstrate in the competitive marketplace, the same leadership qualities are often lacking in their succession planning processes. With a large portion of the baby-boom generation nearing retirement, much has been written about the potential brain drain in Corporate USA. According to a recent article in HR Magazine, "a significant number of companies – especially large, older organizations – will see 40 percent to 50 percent of their executives leave in the next five years, and there are not enough people prepared to replace them" (Byham, 1999).

Today, organizations are challenged not only to identify their "high potentials" for specific leadership positions, they must also plan to retain them. Losing top talent is an expensive ordeal. Studies indicate that the cost of replacing lost talent is 70-200 percent of an employee's annual salary. While succession planning typically focuses on selecting an individual for a specific position, succession leadership takes a broader, organizational approach to creating, building and retaining internal bench strength. Some organizations are moving from succession planning to succession leadership, but they often focus merely on increased efficiency rather than real effectiveness.

The need to develop and recruit top-flight talent is on the minds of most companies these days. Yet, when the inevitable time comes for CEO succession, many companies are caught off-guard. They make the mistake of focusing all of their efforts on determining "who's next?" and fail to prepare the entire executive team for the change. If leadership involves "going beyond what is," are our succession systems leading us into the future . . . or not?

Allina's success

Take, for example, the experiences of Allina Health System, a health-care organization that employs more than 22,000 people in Minnesota, USA. Gordon Sprenger, Allina's CEO for many years, was planning to retire in 17 months. Mike Howe, the senior vice-president of human resources, and the Allina executive team had to design the succession process.

Howe, a believer in whole-systems thinking, saw a need and an opportunity to prepare himself and other senior executives for the succession. He understood that, when there is a change in leadership, there is a change in the system – the whole organization is affected. It made sense to him to approach the CEO succession process as a team and examine their individual and collective readiness for a change in leadership.

Howe, Sprenger, and the rest of the Allina executive team enrolled in the Executive to Leadership Institute (ELI), an in-depth program that provides assessment and coaching to executives. The program focuses on four skill areas: personal impact, communications, career, and lifestyle. The self-knowledge gained from the ELI experience helped team members to apply authentically their own leadership qualities within the company, and everyone gained greater personal and professional awareness. As a result, they began to modify their behavior in more effective ways.

Taking the succession process one step further, the entire team then experienced LeaderSynergy, a program that connects prior individual coaching to team and organizational effectiveness. To help clarify what Allina was looking for in a new CEO, the company's board of directors delved into questions about the future direction of the organization, how the goals are linked to that vision, and the values and beliefs that support the organization. The LeaderSynergy program helped Allina executives learn how they functioned as a team and visualize how they might have more impact.

The results of the ELI assessments sparked an interest in an executive team member, David Strand, president of Medica, an Allina division, for the CEO position. Strand's assessment results served as a base of information to help the board in its final selection. The information made it possible for the board to match Strand's skill sets with those specified for the prospective CEO. The board also was able to evaluate the candidate as a whole person, moving beyond skills and work experience to examine personality style, motivation and core purpose in life.

Allina spent more than a year preparing for this change in leadership and Strand's ultimate transition to CEO, which was time well spent. The executive team understood that this decision, one that would have a major impact on the organization for years to come, had to be thoughtfully planned and implemented.

Preparation points

When planning for CEO succession, keep the following questions in mind:

1. 1.

   How clear are members of the board, the CEO and the executive team regarding the profiles of key executives that the organization requires at this juncture in its development? Each of these people will have a unique and implicit view of the organization's succession needs. These perspectives must be brought together into a clearly defined, explicit model of the competencies, behaviors and talents that are required. Often a new model of leadership needs to be constructed, blending the traditional view of what has worked in the past with a future-oriented, progressive view that accounts for what may have been missing. Engaging an outside resource to help build this new model can add objectivity, clarity and speed to the process.

2. 2.

   How prepared is the retiring executive to move on to their next stage in life? The less prepared the executive is, the more difficult the entire process will be for the retiree, the successor and the organization. Without a clear, purposeful life vision that pulls the executive (and their family) into the future, effective succession is often unintentionally blocked or slowed by the incumbent. The retiring executive often needs proactive assistance to reframe the pending "retire-ment" as "inspire-ment." When this is accomplished, the retiring executive will be less likely to hamper or delay the process.

3. 3.

   How prepared are members of the executive team to move into new roles? Appropriate retention will be a major issue unless each person's development is managed appropriately. Succession is always a systemic issue with the primary system being the team which one or more executives are leaving and one or more new people are joining. Dealing with the career, role and development needs of each member of the team is crucial for success. Providing individual coaching through this period can be extremely helpful.

4. 4.

   How prepared is the executive team for a new team dynamic? It is a huge mistake to think that the team will remain the same when one or two new members are added. It becomes a new team. This new entity needs to form its own identity, values and ways of working together. In addition, feelings of excitement, fear and uncertainty must be dealt with by giving team members a forum to express their concerns. Providing an opportunity for the new team to gain a sense of continuity will greatly enhance the transition process.

5. 5.

   How prepared are potential successors to decide if they really want to be considered for the new position? The less prepared candidates are to assess their true desires and motivations, the less effective they will ultimately be in the new role. Assuming that everyone on the organizational chart actually wants to pursue the open position is a common succession mistake. Providing self-assessment and coaching to help the candidates sort out the career and life implications of taking the new position will ensure that the right people step forward for the right reasons.

6. 6.

   How are high-potential managers further down in the organization and the organization as a whole being prepared to deal with the cultural changes ahead? The entire organization is affected when there is a change in leadership. As the new team forms, one mantra should be repeated over and over: communicate, communicate, communicate. When you cannot stand to state the new values, vision and expectations one more time, you have probably reached 20 percent saturation of your new post-succession messages. Keep it up and, most importantly, go beyond walking your talk to systemizing your talk. Make sure that all compensation, development and other programs truly reflect the expressed values and vision.

Effectively answering these questions may be the most important job of the CEO and the executive team. Going beyond succession planning into succession leadership may be the foundation for our most important ongoing legacy – succession.

Reference

Byham, W.C. (1999), "Grooming next-millennium leaders", HR Magazine, February.