How to Succeed at Executive Succession Planning

Executives leave organizations for many reasons. Many organizations are not successful in their executive succession planning. The prime reason is that they do not devote enough time to prepare, according to Stanford University’s CEO succession study.

The study reported that boards of directors typically spend less than 70 minutes discussing succession planning if they take the task on at all. This lack of preparedness and proactive planning puts an organization at risk. Most boards operate in crisis mode when there is an unexpected departure of an executive. They appoint an emergency candidate as a temporary bandage. Often it takes a board a year to permanently fill the role. This delay is irresponsible.

Graveyards are full of indispensable people.

Life must go on, even after the irreplaceable have left. So, an organization should be ready to continue when essential figures move on. However, most businesses do not grasp it happens regularly.

As a CEO of six organizations over the past 25 years, and now as the founder of a firm providing strategic insights, talent assessments and coaching, I have seen it all. I enjoy helping executives develop employees into problem solvers and leaders, plan for succession and more.

Make it a Board Priority

A CEO’s departure highlights the danger of organizations not having a succession plan in place. However, rarely will the chief executive officer have the self-confidence to put the question of his or her departure on the board agenda. Given these realities, boards should include:

in the CEO’s employment contract a duty to maintain a current succession plan for C-level positions and review the program with the board annually
in the Compensation Committee’s mandate a responsibility to oversee the succession planning process and have one of its members serve on the CEO’s succession planning group
at least an hour on the agenda annually to review the organization's succession plan and provide direction to the CEO regarding its completeness
as part of the CEO’s bonus that reflects the quality of the succession plan

Behavioural DNA — The Secret to Career Success and Satisfaction

What if, like chromosomal DNA predicts a person’s future health, we could analyze a candidate’s unique behavioural make-up and their career interests (let’s call it your behavioural DNA) to predict their potential success across more than 500 of the most sought-after job roles?

Our elegant solution gracefully extends from the individual or team to the organization. We provide a platform for evidence-based decision-making across the employee lifecycle:

recruiting→onboarding→development→performance→succession

What makes us different? We predict career satisfaction and success with up to 85 percent predictive validity. We capture the unique complexity of individuals’ behavioural profiles to provide deep insights regarding the person’s superpowers. Along with skills and experience, these traits are crucial differentiators in determining performance. High performers share a common subset of behaviours that they are extremely adept in using.

Ladder of Leadership

“Failing organizations are usually over-managed and under-led." — Warren Bennis

The insights from behavioural DNA to help leaders grow and find fulfillment is profound. We have a behavioural competency model for driving the highest level of performance at three corporate leadership levels. Our program helps you find your top potential employees. This is used for succession planning and other talent management initiatives.

Our model uses behavioural propensities or styles that are proven to characterize exceptional performance at each level of leadership. Identifying the strengths and development opportunities helps individuals know if leadership roles are right for them. This insight facilitates their progress up the leadership ladder. They will understand the core competencies needed at each level. It also provides a basis for meaningful individual career planning one, two and three moves ahead. Moreover, they learn how to address the transition between levels.

Using our model across your entire team provides a common language for management development. It also allows you to assemble teams with a diversity of behavioural competencies in addition to technical skills and knowledge. Such groups will produce better outcomes.

Here are some of the formal steps an organization can take toward succession readiness and preparing future leaders for the next level.

Institutionalize Evidence-Based Decision Making in the Process

We believe that evidence-based decisions will drive long-term organizational success. Helping team members climb the leadership ladder is no exception.

The final choice of executive successors may fall into the hands of a board. However, the development of potential successors needs to include a range of stakeholders, including individuals currently in the positions. Often they may be the best ones to lead the development given their vast knowledge of the roles. Moreover, the incumbents know what the successors have in store as far as expectations, mandates, and culture.

To ensure an unbiased, data-driven approach to executive selection, consider the following best practices:

Form a group to oversee the selection process. This team of not more than five people may include the CEO, board members, and other C-suite executives including human resources.
Create an outcomes-based executive job profile. This document is used to post the role, and a benchmark to evaluate potential successors.
Obtain a behavioural benchmark for the role. The baseline needs to set out the required behavioural traits and competencies, along with the discriminators for the position.
Conduct a behavioural assessment that provides a validated predictor of success for the candidate in the position.
Include a section to assess the candidate’s alignment with the organization’s values. The behavioural assessment is helpful in this area as it shows values including integrity, accountability, responsibility, innovation, and teamwork.
Use a talent assessment partner to ensure validity and objectivity throughout the process of assessing
Ensure anonymity as team members force rate or evaluate potential candidates.

Use the Criteria That Are Essential to The New Executive's Success

One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective, so that it's almost a non-event when it happens. — Anne M. Mulcahy

Make hiring decisions based on relevant job outcomes criteria and the specific behavioural traits for the role. The team members should not rely on just instinct. It is an essential factor in effective leadership planning and succession. Many organizations do not have a clear set of criteria for finding their top performers.

These criteria are essential for choosing their future leaders. The relevant job criteria include the target outcomes of the role and the talent stack needed to achieve those outcomes. The talent stack includes skills, knowledge, wisdom, behavioural traits, and accomplishments. Together these are necessary for on-the-job success.

Executive succession is a notable example of when talent assessment data is useful. Here are some tips for selecting a talent assessment:

Choose an evaluation instrument that uses up-to-date research for measuring job-relevant skills, knowledge, and abilities. It must provide a validated predictor of success in the role.
Choose an instrument that measures both skill and cultural fit.
Ensure the evaluation measures the knowledge, skills, and traits that you need for the job.
Ensure that the appraisal supplies a valuable experience for your candidates and your employees. Feedback from the assessment should highlight their strengths related to the role and those areas that may be a challenge. This feedback is crucial for a meaningful development plan for the candidate.

Create an Effective Onboarding and Transition Process

You need to invest in creating effective onboarding and transition processes. Many organizations assume that senior executives, due to their high-level backgrounds, need less extensive onboarding. However, it is critical to invest in robust onboarding for senior executives. You want them to be successful in their new roles and have a more significant impact on organizational success as quickly as possible.

By using a traits-based approach, you know the characteristics of high performers in the role. You also see how the new executive matches this set of traits. They will have some strengths. However, they will also have some challenges that they need to manage. In addition to development, effective strategies include finding others on the executive team to fill the gaps.

Start Developing Leaders Early

Succession planning allows organizations to identify and develop those rising stars within the organization who will be capable of stepping up in the event of a turnover.” — Tom Moran

Your successful succession programs should be an element of a more comprehensive system of leadership development and talent management. Many organizations treat succession as a short-term issue. However, a long-standing, structured process includes developing future leaders early in their employment.

Two essential steps in investing in the future of your organization are:

discovering the talent stack of your existing employees
benchmarking your high performers against the critical skills and traits needed for executive positions in your industry and your culture.

Talent assessments find the hidden gems — current employees who have a high potential for significant roles within the organization.

Succession planning driven by objective talent assessment data provides organizations with a clear path to a robust pipeline of leadership talent. Once found, potential successors can receive help from accelerated development plans. You want to get them from where they are today to where they need to be. Base your development plans on the talent stack required for success in the job, and the future needs and goals of your organization.

When Business Needs Change — Adjust Your Leadership Criteria

Market dynamics, business conditions, and strategy change over time. The skills required for executive leadership will also evolve. Ensure that you base your criteria on the future direction and market conditions that the organization will face down the road. Organizations that are exceptional at executive succession planning update their candidate-selection criteria with every change in strategic direction.

Review and update the job criteria regularly. Ensure that they are always current and forward-looking. I recommend that you do it annually. Keep it fresh.

Concluding Thoughts

Executive succession planning is a dynamic part of talent management — with the right data behind it — is beneficial for your organizational performance today, not just tomorrow.

Build a structured process for finding and developing future leaders. It starts with recruiting. Hire some high potential people that you want to build for future roles. You need a robust recruiting process to hire high performing employees. Develop your current employees to see the progress you want in your organization.

Our ladder of leadership can help guide your leadership development efforts and recognize the staff’s potential for leadership. It identifies the specific areas for development. Candidates learn the necessary skills for leadership roles. Set up a mentorship program for leadership roles. Prepare them for promotions.

Executive succession planning provides you with a backup plan for sudden vacancies. The absence of rigorous executive succession planning is a severe risk to your organization. By taking the time to create thoughtful succession plans to reduce this risk will pay big dividends. In the case of business continuity, preparation is the best policy.