"CEOs can't wait to read Sunny Bindra's articles every week."

Are you making a mess of succession planning?

Aug 10, 2009 Business Daily, Leadership

“Despite everyone knowing that nothing stays still, there are countless examples of no natural successor being in place for when the time comes, especially when the leader has an air of invincibility. Most potential successors will not hang around long if they do not feel there is any chance of the boss moving on. Consequently, when the incident comes that finishes off the once great leader (and it will come) panic sets in and the resulting outcome almost appears to be pot luck based on the prevailing mood or having to “make do” with what is available.
…In the army, leaders are always groomed and ready to step up to the plate if the leadership falls. So why can’t businesses and governments be the same?”

René CARAYOL, ‘The Heir Unapparent’ (April 2009)

Many, many companies make a complete hash of their succession planning, and this undoes many a good business. We have all observed great leaders propel companies into stardom, and sustain an excellent run of results and glory. But when it’s transition time, things often go horribly wrong.

René Carayol is an emerging UK management guru who in an April piece shed some light on the vexed issue of succession planning. He focused on three interesting elements of the problem.

One, if a ‘great’ leader is allowed to stay on too long, his tenure will eventually turn sour. He will become stale and set in his ways, unable to deal with changing realities and shifting landscapes. And because rock-star leaders often surround themselves with yes-men and cheerleaders, no one will be able to point out that it’s time to go.

Carayol suggests that the days of the twenty-year (or even ten-year) boss are gone. According to him, today’s business environment is too fast-changing, too unforgiving. He suggests that businesses model their leadership terms on the US presidency: two stints and you’re out, with no say on who replaces you. Note that the average tenures of CEOs in the West are now down to 4 years or less.

The second interesting conundrum: who chooses the leader’s successor? In too many cases, it is the outgoing leader himself. Carayol thinks this is a mistake. The incumbent should, of course, have some say in the process: it is important to ensure some continuity in strategy and style. But leaving the succession decision entirely in the hands of the incumbent can be disastrous.

Carayol identifies two things that are likely to happen: one, that the incumbent chooses a non-threatening loyalist who allows his former boss to keep holding the reins from afar (witness Putin and Medvedev in Russia); or second, that the boss chooses a successor entirely in his own image (when the time for that is gone). Neither is a desirable state of affairs, when freshness and reinvigoration is what is needed.

The final problem: should you instigate an open succession competition? Absolutely not, says Carayol: you will create bitter turf wars and bad blood. And the final winner will quickly destroy all his rivals when he takes power, if they haven’t left already. The result will be a team devoid of talent – witness Gordon Brown’s UK cabinet.

Succession sits squarely in the lap of an independent board, which must devote much time and thought to this very sensitive issue. Boards have to consider this matter with great regularity, and they must keep their eyes fixed on the pool of talent, internal and external. Most importantly, the successful leader himself must keep asking every so often: “Am I still the right person to lead this enterprise, or could someone else do it better? Will I ruin all my good work by hanging on too long?” That way, a great leader can leave on a high, legacy intact. Nelson Mandela, anyone?

Buy Sunny Bindra's book
here »

Share or comment on this article