Putting C-Suite Succession Planning in Corporate Strategy
Transitions in the C-suite are critical moments in an organization's trajectory.
The AMA Quarterly article, "Putting C-Suite Succession Planning in Corporate Strategy," was written by Russell Reynolds Associates Consultant Anthony Abbatiello on the key steps for a successful C-suite transition. The article is excerpted below.
The disproportionate power C-suite executives have over the direction and operations of a business often means that succession and disruption go hand in hand. A smooth transition has the potential to sustain the confidence of investors, ecosystem partners, customers, and employees, while a rocky one can derail momentum for years to come.
Unlike CEO succession, which is managed by the board of directors, C-suite succession is led internally and typically lacks consistent methods and data to predict the next leader, making the transition even more risky for the organization. The best asset to increase the probability of a smooth transition is advanced planning. Successful transitions are grounded in a comprehensive succession plan, which integrates the organizational strategy, growth objectives, and transformation goals of the business with the desired profile of a new leader. The caveat is that developing such a plan and securing the buy-in of key stakeholders is a three- to five year process, longer than many companies plan for, despite the obvious benefits.
While an unexpected succession event with a shortened time frame will still result in the hiring of a new leader on paper, the risk of misalignment between the new leader and the organization poses significant risk to the operations and the bottom line. The goal of succession planning is to mitigate that risk.
And yet, many organizations do not have a comprehensive succession plan readily available. In “The holy grail of effective leadership succession planning: How to overcome the succession planning paradox,” a September 2018 Deloitte study, 86% of leaders expressed their belief that leadership succession planning is an “urgent” or “important” priority, but only 14% of them believe they do succession planning well. This shift toward prioritizing resources and investments toward greater succession management maturity can have a profound impact on organizations’ health: It can reduce the risk of vacancies in the C-suite, accelerate the development of high-potential executives, and ultimately position organizations for uninterrupted, long-term performance.
Milestones for a Succession Strategy
While developing a comprehensive succession strategy for the C-suite can be a complex process, it is generally composed of four discrete milestones: (1) determining the organizational context, (2) identifying and assessing talent pools, (3) determining the roles and responsibilities of key stakeholder groups, and (4) providing transition support to a newly appointed leader.
Determining the organizational context. Succession planning ultimately seeks to answer one fundamental question: What leadership does the organization need to ensure its future success? The journey begins with the organization itself. A comprehensive succession strategy is one that projects where the organization is headed in the next five to 10 years and then uses that data to determine what type of leadership is needed to execute against that vision. To that end, strategic goals, market trends, blind spots of previous or current leadership, and other variables impacting performance must be acknowledged and considered.
However, a senior team that is fundamentally aligned on an organization’s five-year strategic plan is the exception rather than the rule. As such, addressing these differing perspectives and bringing the senior team into alignment is a necessary precursor for accelerating the development of a success profile that outlines the key leadership requirements of the potential successor.
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