30 SECOND GUIDE TO ... SUCCESSION
That’s the idea. All companies are supposed to devote attention to succession planning – thinking ahead as to who may take key roles when directors move to pastures new and drawing up lists as to who from within the company and outside could fill the gaps.
Very few firms have proper plans in place. The resignation of executives normally leaves the rest of the board scrabbling around for ideas and spending a fortune on headhunters. Internal contenders often have to wait months to find out whether they’ll get the promotion, while recruitment firms interview a raft of candidates in an attempt to show they are earning their fees.
Mucking it up
Pitting internal candidates against each other is often the worst of both worlds, leading to infighting and resentment. GlaxoSmithKline’s X-factor style contest led to two of the three contenders walking out in a huff after Andrew Witty was anointed to succeed JP Garnier. At Marks & Spencer, Sir Stuart Rose got the hopes up of several of his juniors, only to bring in Marc Bolland and see finance director Ian Dyson hotfoot it out of the door.
The right way
Tesco lined up a successor to Sir Terry Leahy ahead of announcing his departure to the stock markets, minimising investor uncertainty and internal disruption. A few noses may be put out of joint, but better to know now rather than later.