Leadership Transition Series Part 3: The 5 Critical Roles in an Effective Succession Plan
Part 3 of ETG’s Leadership Transition Series
Succession planning is about people. Your people are what make your business—its identity, its reputation, and all of its assets.
At the heart of an effective succession plan, there is an undercurrent of appreciation for the team you have. The way I see it, everyone on my team plays a valuable role in making our organization what it is. To plan for their eventual departure not only ensures that I’m keeping a realistic view of the future, but also acknowledges the contributions of each key team member.
Let’s be honest; the faces you see around you this year won’t all be the same in five years—or even two years from now. By focusing succession planning on the roles of your key people, your plan will provide clarity on how to move forward while staying true to the values of the business.
These are the five role categories you must consider as you work through your plan.
Role 1: CEO
Succession planning is indisputably important for multiple roles in an organization, but preparing a successor for the CEO is essential.
As a figurehead for the organization, it is mission-critical for each organization to have a plan for who will replace the CEO in the long term, and who should step in should the CEO get “hit by the proverbial bus.”
Every stakeholder in the organization has a vested interest in the success of this candidate. Installing a successor in a state of panic can have disastrous consequences—particularly for publicly-traded companies.
Between the board, the current CEO, and the rest of the C-suite, it’s imperative to prioritize these conversations. The right candidates take time to select, develop, and transition. The best case scenario is planning years ahead of the current CEO’s expected departure from the role.
While it’s nice to be optimistic, it’s safer to anticipate all scenarios when succession planning—including the worst ones. Asking difficult questions today can save precious time and reign in damage when it’s time to act.
The most common reason organizations fail to plan for the CEO’s departure is the false perception that there’s plenty of time. Leaders must act on these conversations with the same urgency they’d have for any other high-stakes threat to the business.
Role 2: The C-Suite
It should come as no surprise that anyone who occupies a corner office should also have a successor waiting in the wings.
Direct reports to the executive team are the obvious talent pool for filling these roles. The sooner the CFO, CTO, CHRO, and other high-level executives are able to nominate a successor, the sooner they can begin long-term preparations for future transitions.
Once candidates for C-suite positions are chosen and vetted by the CEO and board (if there is one), the CEO should engage HR to enroll them in leadership development programs along with additional technical knowledge to own their roles.
When it comes to developing a timeline for transition, succession planning for executive roles should look similar to that of the CEO. Each executive should use a dual-lensed approach by considering a long-term, best-case transition scenario as well as a plan of action for emergencies.
Are your future leaders ready to assume these roles? Contact us about our Leadership Transition program. We’ll help your team prepare top talent for the next stage of their careers.
Role 3: C-Suite Successors
As we prepare successors to reach the top of the corporate ladder, we must also consider who will follow behind them up the rungs.
As the talent pool grows more diffuse, the importance of maintaining a culture of leadership development grows clearer. Consistent effort to develop high-potential talent at every level of the organization helps to build bench strength as leaders move on.
While on the surface it may seem unnecessary to develop many candidates for one role, we can never predict how long any individual will stay with the organization. A larger pool of qualified candidates safeguards our ability to hire from within. The optics of external hiring at higher levels of management can be very demoralizing down the pipeline.
Role 4: Business-Critical Talent
In a sense, larger organizations are like vehicles. Each component plays a role in ensuring the driver’s commute is safe, smooth, and predictable. While a business needs leadership like a car needs a steering wheel and tires, both cannot proceed on these core components alone.
In every department of your organization, there is almost certainly someone whose knowledge and skill set is critical to maintaining smooth day-to-day operations. These people may not be line managers, but they’re just as important.
The danger in excluding these people from succession planning is not as much about transitioning leadership as it is about securing productivity. You can safely assume people like this—passionate, committed teammates—exist in your organization. Making leadership development a part of the corporate culture helps to ensure these people are identified, developed, and retained.
The other side of this is ensuring process development is a core attribute of your business. If key processes only exist in the brains of certain high-value individuals, their departure can have hazardous consequences. Ensuring the business has a defined methodology for documenting and archiving critical processes contributes to a well-rounded succession plan.
Role 5: X-Factor Talent
Let’s revisit the analogy of the car. Toyota and General Motors cars are alike in utility, functionality, and general design. Despite their similarities, the Toyota has a much higher perceived value.
‘X-factor’ talent are individuals who define the identity of an organization. Perhaps it’s a designer in marketing whose concepts have effectively changed the face of the business. Or, perhaps it’s a product developer whose innovations have been instrumental to the past year’s growth.
Consider how your business will manage to retain that competitive edge if these ‘x-factor’ individuals were to leave. You might start by asking these valuable people to become mentors for rising talent.
I also advise building strategies for recruiting top talent that can meet or exceed the performance of your star players.
By imagining a future without the people you count on today, you have a golden opportunity to intimately understand what makes your organization ‘tick’. Honor these unique contributions by identifying how you can maintain or build on them as your business evolves.
If you need help with identifying and preparing successors for these key roles, I encourage you to contact my team and I at East Tenth Group today.