But the traditional approach to succession planning is no longer fit for purpose. In an era of rapid and unpredictable change, you cannot just select an heir apparent, review every couple of years and wait.
Adaptability and agility are paramount. The needs of your business are ever evolving, which means the brief for succession will keep changing too, and you need to keep ahead of that change.
Let’s say you thought your business was on a relatively stable trajectory. An operational leader, with COO experience for example, might seem a sensible choice to maximise shareholder returns. But a new threat or opportunity from disruption could mean a more radical leader is required, perhaps with a disruptive tech or business development focus.
Maybe your business model pivots from B2C to B2B2C. Having a brand-focused leader may suddenly seem less suitable than someone who excels at relationship-driven sales or margin control. It could be that you need M&A or international experience to keep growing, or someone with a turnaround toolkit.
The point is, you can’t know. That’s why I believe the most important way to prepare for succession today is to build and maintain “bench strength” in your senior team.
Build your A-team
I’m not much of a football person, but we can learn something from Sir Alex Ferguson and the way he built Manchester United into a phenomenon in the 1990s and 2000s.
As a Harvard Business School case study put it, he was a great “portfolio manager of talent”, identifying great people at every level and in every role, always with an eye on what the club needed two or three years down the line.
Having that breadth of talent — in marketing, finance, operations, sales, IT and data, HR, supply chain, facilities management, you name it — strengthens the business before the CEO leaves and makes it less dependent on them. But it also crucially gives you options for when the handover does happen.
That means that when constructing your A-team, which will need to be a team rather than just a constellation of stars, you need to consider leadership potential as well as functional excellence.
It may not be possible to build a team of 11 future CEOs – we can’t all be David Beckham or Ryan Giggs – but there should certainly be more than one.
Importantly, while it’s good to be transparent about the process of succession planning, don’t tell any individual team member that you’re grooming them for succession. All that will happen then is that their focus will be on their future rather than doing their job today.
It can stoke jealousy too. If two people think they’re in line for an internal promotion, particularly to CEO, then whoever doesn’t get it is likely to leave, compounding the succession challenge.
Strength in depth
Succession planning isn’t just limited to the C-suite. The organisations that get succession planning right are the ones that look beyond the executive level, considering the depth and quality of talent across the organisation.
This includes identifying progression opportunities for existing employees, providing them with ongoing training and development, and creating a culture that encourages internal mobility and growth. Nurturing the potential already in your business is good sense and crucial in boosting retention.
This approach not only prepares an organisation for the unexpected but also fosters a culture of continuous development and adaptability, aligning seamlessly with the demands of the modern business landscape.
Succession plans should be evergreen and need constant maintenance. By being systematic in your approach, you can turn a problem into an opportunity, and give your business a better chance of truly sustainable success, no matter what happens.
Are you concerned about what will happen when you step down, or about your company’s talent pipeline? Give me a call and see how we can help.
