Succession: Are You Ready?

August 27th, 2009

Quote for the Day

“Succession planning is a huge issue for companies. Many don’t to it properly, if at all, resulting in disruptive management transitions that are bad for morale and business.” -Jack Connors

Marshall Goldsmith has written a new book: Succession: Are You Ready? (Harvard Business Press, 2009)  I am reviewing it here for two reasons: 1) Two of my clients are anticipating succession planning within the next few years; and 2) Goldsmith makes a good case for two of the practices I recommend for my clients.
The book is a very easy and fast read (1 – 2 hours depending on the number of interruptions). While Goldsmith focuses on the position of CEO, the same principles can be applied for cross functional and other C-level succession planning.

There are some of the salient points:

1. The succession process is an emotional one for both the CEO and the successor. Among other things, it requires acceptance of personal change, which for most people is a challenge. These changes include life style, personal behavior, and managing the ego.
2. Goldsmith likens the process to a relay race in which the first runner (CEO) must slow down as the new runner (successor) is running as fast as she can. All the time the spectators are watching and keeping score.
3. Goldsmith recommends the identification and coaching of the successor prior to the incumbent CEO leaving.
4. He identifies three major areas of activity for the Coach CEO: leading (still need to produce results), developing the successor, and planning for next steps – building a life – after the transition.
5. Goldsmith discusses the respective value of appointing a successor from inside the organization and outside the organization. While he clearly favors an internal successor in many situations, he suggests doing a cost benefit analysis to support a decision either way.  While an external successor may come with a fresh perspective, Goldsmith names several risks in appointing an external successor including: may replace proven talent with external talent known to her; may be costly (in remuneration and in turnover cost if the appointment fails.); may take precious time to come up to speed on the internal workings of the organization.
On the other hand, Goldsmith makes a case for the appointment of an internal successor: knows the internal workings and likely shares and will carry on the vision developed over time; may already have the support of stakeholders (that any successor needs to succeed); can immediately involve the stakeholders in 360 feedback to create developmental plans.
6. Goldsmith writes that there are exceptions to his preferences, such as an environmental situation that demands fresh and unsullied talent.
7. He uses behavioral coaching and makes it clear that the successor’s behavior is now at a different standard and it is important to know what the behavioral standards are.
8. He cautions against appointing a successor who has not proven that she can ACT, follow through on development plans, and get the job done.  He quotes Arnold Schwarzenegger, “No one has ever got muscles by watching me lift weights.”
Goldsmith’s concepts are in alignment with my recommendations for CEOs.

Here are some of my leadership development practices that align with what Marshall Goldsmith’s concepts:

1. A whole-person assessment that aids in the selection of and developmental planning for a successor.
2. A coaching and leadership development process involving the CEO and successor.
3. 360 input from key stakeholders.
4. “Closing the loop” process (for 360 respondents) to further learning and develop relationship:

a. Thanking those who took the time to give input
b. Sharing something of the experience of the succession process
c. Specifying the learning
d. Naming an intention regarding that learning
e. Asking for help in the learning process (could take a number of forms including giving unsolicited feedback and using a data gathering technique such as the two below:

i. What can I do more of to improve ____
ii. What can I do less of to improve
or
iii. What can I Continue in order to improve ____
iv. What can I Start in order to improve ___
v. What can I Stop in order to improve ___

Bottom line is that I recommend this little book, or “memo” as Goldsmith calls it, for anyone facing the challenge of finding a successor.

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