How to plan an executive succession
The hard truth about working life is that at some stage, every employee will exit the organisation. The exit can be voluntary or forced. With this truth so clear, why do organisations fail to put together succession plans to ensure a smooth transition in senior roles? Those properly managed have succession plans to ensure a smooth transition and reduce the organisation's risk of failing to meet its vision and mission. The board has to take the lead when it comes to executive succession planning.
A study in Zimbabwe a few years ago showed that only 10% of Zimbabwean organisations had a formal succession plan for the CEO role and other executive positions. According to another global study by Heidrick & Struggles, more than 50% of organisations can not name a CEO successor if asked to do so immediately. In this study, they also found that 39% of the organisations surveyed have no viable internal candidate to take over the role of the CEO if the opportunity arises.
The above statistics point to a problem within corporations. Boards are not doing enough to prepare for business continuity through developing operational successions plans. My view is that the reason could be stemming from general ignorance about the importance of succession planning to self-preservation by playing politics with the appointment of senior staff. One of the possible reasons why organisations do not have succession plans for executives, from my observations, is that in cases where the incumbent CEO is very powerful, it is hard to put a succession plan in place. Such CEOs are often more powerful than the board members hence the constraint.
If you observe in Zimbabwe, we have seen organisations going for long hunting for CEO replacements. That is a sign of an ineffective board that failed to plan ahead of time. The board can develop enough internal capability to enable internal candidates to compete with external candidates properly. Internal candidates will outperform external candidates if you have capable internal candidates. For Boards with longserving CEOs, we have noticed that boards only wake up when the CEO exits unceremoniously. What is disheartening is that even when the board is fully aware of the exit time of the CEO (through retirement or normal end of fixed-term contract) or any executive for that matter, they still do not develop a plan to close the gap. The reason is politics and incompetency on the part of the board.
I am glad the government of Zimbabwe in the Public Entities Corporate Governance Act has term limits for CEOs. That has brought a breath of fresh air to succession in-state entities, even in cases where it's clear, as, in the act, most state entities boards are still caught without a plan prolonging the search to fill key executive positions. State entities need to go on deliberate initiatives to develop internal senior managers to take over executive roles. It is only the board that can initiate such an intervention. If this is left to the CEO, it will fail as most of them would want to cling to power or bring their close associates to take over. These associates could be within the organisation or outside.
Have you noted that external candidates often fill most senior roles in Zimbabwe, including the CEO? While this is good as it may bring new ideas, it indicates that the board has not developed enough capacity internally. Whether the board should look internally or outside is an irrelevant debate if the board is focused. The focus should be on the quality of the candidates that can drive business performance, whether they are internal or external. If an internal candidate can outcompete external candidates, that is a vote of confidence in the board's capacity to groom successors.
The challenge is that internal candidates face many hurdles as they prepare to ascend to senior roles within the organisation. If the organisation is being run by a power-hungry and selfish CEO, they can never develop for such a role. They are not even allowed to act in the role. Such kinds of CEOs make everyone in the organisation labelled incompetency except themselves. They concentrate power on themselves and do not share the running of the organisation with other senior executives. In such a case, the board needs to step in and put order to the succession issues. Unfortunately, too many boards do not prioritise executive succession as a key mandate for the board.
Given all the challenges outlined above, how should organisations proceed with succession planning? The first stage is to identify the key positions that the board would like to focus on. In most cases, the board would focus on executive roles and other hard to fill roles. After identifying the functions that need this attention, the board can identify target candidates for each position. Once candidates have been identified, the essential part is to carry out a succession readiness assessment or what is often referred to as capacity assessment of each candidate. When assessing candidates readiness for succession planning, you must assess the candidates on cognitive capacity, competencies required in that role (only use a validated competency model for such an assessment). Over and above that, you assess whether they have the required qualification and experience for that role. More importantly, assess if they have no personality defects. As people ascend into leadership roles, their personalities can make them fail even if they are geniuses. Personality helps the leader to interact with critical stakeholders productively.
Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. Visit ipcconsultants.com.