Succession leadership – How will you know when your successor is ready to Take Charge?
Even if you remove the two falling unicorns (WeWork and Juul), there has been an unexpected number of turnovers at the CEO level this year. Recruitment firm Challenger, Gray, & Christmas reports that 1,160 CEOs in the United States alone left their jobs in the first three quarters. It's a 13 percent increase over the same period from the previous year, and the highest level of CEO turnover the firm has reported since they began tracking it in 2002.
The increase in departures could be the result of deeper scrutiny by stockholders and the public. It also may be the result of a growing number of company leaders reaching retirement age. Crist|Kolder Associates used data from Fortune 500 and S&P 500 companies to establish that the average age of a male C-suite executive in the United States is 58, and it's 56 for female company leaders.
Succession planning takes time — especially when it's time to replace a longstanding leader. It's a process that should happen over years. When it's rushed, the new leader may not be ready. A recent study from PricewaterhouseCoopers found that successors to long-serving CEOs often have short tenures and worse performance than the leader they replaced.
The consequences of improper succession
PricewaterhouseCoopers studied CEO succession at the world's largest public companies and found that successor CEOs are likely to be removed because of performance, often associated with ethical lapses. Turnover rates at these companies increase significantly.
At the end of 2016, an article in the Harvard Business Review reported that 40 percent of new CEOs were failing to meet expectations during the first 18 months of their careers. The observation shines an even stronger light on the need to be sure that your successor is capable and ready to take over.
Moving towards a decision
It's not uncommon for a CEO appointee to be new to serving in a chief executive role. This possibility increases if a company is family-owned and leadership is passed to another family member. A retiring CEO must be confident that his or her successor is ready for the role. The company's future may be at stake.
It's a forward-thinking process that should revolve around the company's strategic vision for the future. Yes, next year's revenue goals are important, but a successor has to be prepared to guide the business where it needs to be decades from now. You, as the current leader, may not possess those skills.
In selecting and preparing your successor, you'll have to move beyond your own competencies and help the next leader develop additional competencies that will ensure their success. Often this is where the help of a business coach comes into play. You may not be able to objectively identify external threats and opportunities and the traits necessary to face them.
Involve organization stakeholders in judging competency
Your successor will replace you when you depart, but the rest of the company may remain. The rest of your management team should have the opportunity to provide feedback about what it's like to engage with your appointed successor. Multiple points of view offer you an opportunity to have others assist in determining strengths and areas that need development. Feedback on the strengths and weaknesses of the successor from those who will be working with or alongside them can provide insights into creating a leadership development plan for the successor. External board members can be helpful with this process. So can a business coach help you with psychometric assessments and conducting a 360 leadership assessment. Ultimately the goal is to gain a complete picture of the work personality of the new leader and their potential to make the business more successful.
Make it personal
The most effective way to determine if your choice of a successor is the right one — and that they're ready to take the reigns — is to have confidence that their personality traits are in alignment with their professional behavior. There's only one way to do this: You've got to develop a significant personal relationship that allows you to examine what drives their decisions.
As a leader, you should possess the ability to make these determinations, but it's often beneficial to consult professional assessments such as those provided by a business coach. As partners, you can look at how an appointed successor displays personality traits associated with leadership, such as humility and integrity. A coach can also help point out areas that need development or improvement and develop a personal development plan to close the gap between current behaviors and desired behaviors.
Make the time
You didn't become the company's leader overnight. It's unrealistic to appoint a successor and expect them to know how to take over for you just because their resume shows they're qualified. You are their bridge to success. The longer you're able to participate in their preparation and observe them for readiness, the better the likelihood is that your successor will lead the organization in the direction of future success.
A business/executive leadership coaching program is designed to increase personal effectiveness and focuses on the skills required to effectively lead individuals and teams. Our program is designed to identify development needs and goals and enables the professional to increase competence in one or two areas each month. It begins with a 360 assessment of strengths and weaknesses and a psychometric assessment, and then it shifts to coaching in one or more of the below areas.
Selling, marketing, developing new business, cultivating referral relationships, etc.
Improving communications with direct reports, peers and superiors
Developing people and coaching employees
Setting goals and fostering accountability with self and staff
Delegating tasks and responsibilities while managing risk
Time management, priority management and organization skills
Strategic thinking, visioning and execution planning skills
Work/life balance issues