Just about every week, there is an announcement about a Board appointing an interim CEO or manager to run the company until a successor is found. It is my opinion that this is a key indicator an organization’s succession plan is not working.
From my perspective, I see 5 common challenges for Board’s and their organizations regarding succession planning.
1. Succession planning is seen as an HR process run by the HR department.
In successful companies like GE, the succession planning processes is integrated into their business processes and reported upon quarterly where senior leaders are responsible for delivering business results and the future company leaders.
2. Roles and responsibilities are not clear between all the stakeholders.
Focusing on having everyone understanding their roles and responsibilities in the succession planning process enables organizations to hold all the stakeholders accountable for the viability of the business future.
3. Succession planning is seen by many Boards as a yearly exercise or one that is not done because the effort is seen as too much.
The reality is succession planning is a continuous process done many times throughout the year. This continuous work allows Boards to be prepared to effectively deal with sudden or unexpected loss or departure of key people.
4. Many senior leaders have learned not to expect every member of their team to have common succession planning goals.
The differing goals amongst the leadership team do not promote effective results. Boards need to ensure that the succession planning goals are clear and specific so they can measure the effectiveness of the leadership team in sustaining the company’s future leadership.
5. The board must decide if their succession planning efforts are to focus on filling vacancies or fulfilling on the company’s strategic direction.
Boards that focus on developing the talent for the company’s future are ensuring the talent management efforts are aligned and support the strategic objectives.
These are 5 common challenges that Boards of Directors must deal so they are beyond the reactive mode that most companies are in today. When a Board is able to announce the CEO replacement or a new member of the leadership team at the same time as a departure, it is a clear signal the Board is actively involved and handling their succession planning oversight and understanding the risks to the corporation and their shareholders’ value.