Recent research from Stanford University into Senior Executive Succession Planning highlights that organizations are aware of the need for robust Talent Management and Succession Planning but are not doing enough to prepare for changes in leadership at the CEO and C-suite levels. In addition, most corporate leaders who were interviewed did not feel that they had the right practices in place in order to identify and select the best leaders for the future.
“Most company directors greatly underestimate the difficulty, time, and cost associated with CEO and C-suite succession planning,” states Scott Saslow, founder and CEO of The Institute of Executive Development, which helped conduct the research. “They fail to recognize the need for a strategy for this critical business process.”
The report identified the following key issues:
1. Most Organizations are unaware who will fill the Senior Executive Positions
This is a major concern when the average length of time a CEO stays in post nowadays is just three years. Having strong, competent leadership is critically important to any organization. Incredibly many companies still do not have a system in place to identify, manage, or assess key talent against the key leadership competencies, behaviours and values.
2. Most Companies do not have a rigorous Selection and Succession Process to fill key Leadership Positions
This issue appears to be a cultural issue where open, honest debate around executive performance does not take place often due to a perceived lack of time or trust. This is where external Consultancy support can be highly valuable.
3. Companies plan for Succession to ‘reduce risk’ rather than to ‘find the best Successors’
Succession Planning is viewed more in terms of a risk management exercise as opposed to important actions needed to source the most effective strong candidate who will produce shareholder value.
4. Roles are not defined and often they are not followed
Succession Planning should involve the board of directors, the senior management team, and human resources. However most organizations do not invest in an objective, structured evaluation process, including a 360 Feedback Review, to engage the key stakeholders. In addition as Saslow comments: ‘The key performance indicators of an executive’s performance often do not measure his or her effectiveness in mentoring direct reports. There are few organizational metrics in place to determine how well the company is managing succession overall.’
5. Succession Plans are not connected with Coaching and internal Talent Development Programmes
Succession Planning and Talent Development should be viewed as part of the overall Leadership Development Programme. With a structured plan in place, involving regular input and feedback from the Board as well as direct reports and peers, managed by HR and an external Consultancy, it becomes easier to identify who are the key candidates for the C-suite roles.
‘The overall impression was that the Leadership Development Feedback process was over-delivering against my objectives (10/10). Senior VP, Norway