The Mechanics of Successful Executive Transitions – Part I of IV

Monday, October 5th, 2015

Are You ReadyExecutive Transitions: Confronting the myths of effective succession planning

Ask any human resources (HR) or Organizational Development (OD) professional about their company’s succession planning process, and you’ll likely hear a dozen different versions of the process. From 9-box grids with quotas, secret and non-secret hi-po lists, slates of candidates attached to the most senior jobs with various readiness-ratings—ready-now, ready in six months, etc.—and computer generated profiles complete with color pictures and career histories compiled in advance of talent calibration sessions. All the accouterment and not much else according to the HR folks we’ve spoken to.

HR: We have a pretty rigorous process in our talent calibration and we’re proud of how many ready-now leaders we have.

Navalent: That’s great—what exactly are you doing to get people “ready” to assume bigger jobs?

HR: Well, that’s where we fall short. We don’t really do great executive development.

Navalent: Then how do you know the candidates are “ready now?”

HR: Well, we know they are more ready than anyone else in the organization.

Or….

HR: It’s frustrating that all the execs show up to the conversation with everyone rated as a 9, and then we spend the entire session downgrading enough people so we only have a few real “hi-pos” left in box 9.

Navalent: What criteria do you use to determine who gets downgraded and who stays a 9?

HR: Basically, it’s whoever fights the loudest for their people.

And our favorite:

HR: We make our best choices when there’s a crisis.

The conversations don’t get much better than that. The fact is, that for all of the activity devoted to future executive leadership, the results are pretty dismal. In our 10-year longitudinal study of executive transitions (Rising to Power: The Journey of Exceptional Executives), which included interviews with 2700 leaders and a survey of more than 100 recently transitioned executives, 76% indicated that the formal development processes of their organization were not, or at best minimally helpful in preparing them for their executive role, 55% indicated that they had minimal, if any, ongoing coaching and feedback to help them refine their ability to perform in an executive role, and 61% said they were unprepared for the roles they assumed. It has been known for decades that somewhere between 50%-60% of executives fail within the first 18 months of their appointment, and somehow we’ve come to accept that failure rate as “normal.”

Want to take a simple test to determine if the approach your organization takes to preparing future leaders has any chance of making a lasting impact or not? Answer two simple questions:

  1. What determines where the process starts?
  2. What determines where the process finishes?

Let’s look at each one separately.

At the outset: Your organizations articulated strategy must underpin all leadership decisions

It’s astonishing how many organizations don’t tie their leadership work to their strategies. They tout great growth aspirations, launching new products, acquisition plans, turn-around investments, refined market segmentation to acquire new customers, and never once identify the leadership requirements to accomplish any of it. The closest we’ve seen is when HR identifies “most critical jobs” as priority for identifying successors, but even then, when you dig deeper to see what criteria gets a job labeled as “most critical,” it’s usually the size of the role, the iconic nature of the incumbent and the cost of the talent acquired underneath them, or an incumbent that is perceived as a “retention risk,”—all of which may, or may not, have anything to do with the organization’s most strategic aspirations.

All too often, the succession process begins with the HR forms to be completed. It begins with whatever mechanics were chosen for the approach, and whatever HR was able to convince the CEO to tolerate. More enlightened CEOs and executive teams whose talent gaps are more glaring are usually more open to having robust talent conversations, but rarely are they able to connect all of the dots between their strategy gaps and their talent gaps. And once the process becomes politicized in any way, hijacked by individual agendas and ambitions, the likelihood of ever connecting those dots is slim.

The first question a succession planning process must answer is “What are the most critical leadership requirements for delivering against this strategy, and in what jobs are those requirements most evident?” Once that is answered, you have the beginning of a succession process with teeth. From there, you can then determine the ideal profile of prospective candidates, development gaps for those candidates, and prioritize preparing those leaders with the greatest promise of meeting those requirements.

Measuring Success: A process that yields truly prepared executives

We had one client who lost their company’s number two leader (ranked simply by the size of his part of the organization, not his effectiveness) in a sudden defection—which of course could have been seen coming had anyone been looking for the right signals. They boasted that their succession planning process had proven effective because they had “a ready-now candidate ready to go, and were able to orchestrate a very smooth transition of leadership as a result.”

Six months after the successor had taken over, the organization had devolved into utter turmoil. Turns out the successor, whose previous role was running about a $1.5B business and the role he assumed totaled about $9B across multiple businesses, had demonstrated some “control issues” in his previous role. Guess what those looked like at 9x the size of the job? He had the organization so hamstrung to act that major bids were lost, product launches botched, and profits in decline. He, of course, had blame to pass around, excuses to make, and justifications for his choices. Hardly evidence of an “effective succession process.”

But it was declared effective because the organization felt they had identified a successor for the role. If you looked deeper, little had actually been done to prepare him to assume a role that much larger and more complex than the one he’d been in. Ironically, not one person was “shocked” at what unfolded. Many who reported to him in the smaller role said things like, “Could’ve seen that coming.”

An effective succession process can be considered complete when tangible investments to actually prepare leaders for future roles have been effectively executed. It’s not enough to simply list leaders you believe could take on bigger jobs as potential successors. Aggressive, robust efforts must then be made in the development and cultivation of that leader’s capability to ensure they have what is required to succeed in that role—and not the role as it is “today,” but the role as it will likely be when they assume it. If the job drives $100M in revenue today, it may well be $200M or more when they get it. If it leads an organization of 1000 employees today, that could be 2000 or more when they eventually assume it. Active and ongoing work must be done to deepen and broaden the leader’s ability, and to surface and address the hidden pathologies that will most assuredly become more pronounced as responsibilities expand, complexity multiplies, and pressure and risk intensify. Short of that, there’s really no point of putting their name on any list unless you are willing to draft their severance agreement at the same time.

In the next post in our series, we’ll take a look at the vast network of relationships that actually determine the success of any successor once chosen. Far more than just that leader and their new boss, the cast of characters actively engaged in enabling, or disabling, the success of newly appointed leaders is far more extensive than most realize.

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CarucciRon Carucci, Managing Partner of Navalent, is a seasoned consultant with more than 25 years of experience working with CEOs and senior executives of organizations ranging from Fortune 50 to start-up in pursuit of transformational change. His consulting has taken him to more than 20 different countries on 4 continents. He has consulted to some of the world’s most influential CEOs and executives on issues ranging from strategy to organization to leadership. You can learn more about Ron and his work at: www.navalent.com/about/team/ron-carucci.

 

EppersonJosh Epperson has spent the last decade at Navalent helping leaders and organizations overcome their most difficult business challenges. He works with a variety of organizations and leaders ranging from community NGOs, privately-owned family businesses, and multi-billion dollar public corporations. Transformation of these leaders and organizations usually includes strategy articulation, organization architecture, leadership capability or a combination therein. You can learn more about Josh and his work at: www.navalent.com/about/team/josh-epperson.

Topic: Change Management, Corp Governance, Human Resources, Leadership, Management, Org Behavior, Strategy
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