Financial Poise
Leadership succession planning

It’s Never Too Early to Start Leadership Succession Planning

Creating Continuity by Developing Leadership Culture

Imagine being the general manager of a professional baseball team. Would you start someone in center field in Game 7 of the World Series who has never played in the big leagues? Or, what if you are the chief of surgery at a prestigious hospital. How likely are you to ask a first-year medical school student, with zero experience, to perform complex brain surgery on a patient?

How often have you put a great technical person—a bench chemist, for example—into a leadership role for which they were neither prepared nor interested in filling, only to be shocked a few months later when you’ve lost a great chemist and gained a lousy leader?

That leads to the questions below, which can help you start thinking about leadership succession planning. How committed are you to:

  • The continuity of your leadership team?
  • Retaining quality talent?
  • Investing in the development of managers?
  • Elevating the essential skills of people to meet your future needs?

What is a Culture of Leadership?

Not sure about where you stand in relation to these ever-important factors?

Then it’s time to investigate how a “Culture of Leadership” can help your continuity at the top and with up-and-coming managers.

Imagine being limited to the “best available” person for a critical role. Or, developing them for the role with just the resources that exist inside your organization and then discovering afterwards how you’ve made a terrible mistake.

How could this happen? Frankly, it happens all the time when companies don’t have a current, clear, and candid view of what skills they need and an equally fuzzy read on how well certain people fit within their culture and model the organization’s core values.

A Culture of Leadership is not purely focused on developing technical skills, but also has a keen focus on building the essential skills needed to be an effective leader. The latter are usually not taught in school and include:

  • Relationship building
  • Delegation
  • Active listening
  • Building a high-performing team
  • Emotional intelligence
  • Self-awareness.

After all, these are the areas many potential and existing leaders tend to be weak, leading to problems later on when they’re promoted and lack the necessary leadership or management skills to do the job. Then, the person leaves of their own accord or is pushed out. Sometimes you might be much better off in the long run, but the transition is often painful and expensive. Fortunately, there is one aspect of a Culture of Leadership that helps you avoid these landmines:

Never Compromise Core Values

If a person in your organization, including a rainmaker, doesn’t align with your core values, take a pass on hiring them or remove them quickly. Yes, you can upgrade their technical skills, but it’s far harder to fix their baked-in values that don’t mesh with yours. When they have them, it’s easier to develop and broaden the skills they do have while making them feel safe outside of their comfort zones.

“What Do You Think? What Could I Do Better?”

Lifelong learners always want to improve upon their skills. Among those skills is minimizing their deficit of self-awareness. It’s this deficit that accounts for many of the challenges facing organizations and their leaders today. Lack of self-awareness is so easy to fix, but doing so requires the courage to ask questions like the two above. You must be open to new ideas and different ways of doing things. You must be able to admit that you may be wrong—that your way isn’t the only way, even if it has worked so well for you up to this moment. In other words, you need to be vulnerable and not play the victim.

Few, if any, people can say, “I’m completely self-aware.” If they do, others are probably saying they aren’t very humble. And, how can they be so sure that they know everything about their impact on others?

You can never be totally self-aware. Even when you think you are, as soon as something in the world changes, it creates a gap of unawareness. And changes happen every day. They always have and always will. Take the COVID-19 pandemic; it’s an extreme example, because it has affected everyone, everywhere, at the same time. It has changed how we relate to each other, how we work, how we conduct business, how we relax, and sometimes even who we trust. It’s led to fewer people saying, “We can’t change that,” to more people asking “What can’t we change?”

Invest in Leadership Succession Planning in Both Good Times and Bad

When it comes to investing in the development of leaders and managers, we have found that when times are good and companies are flush with money, they don’t want to spend it. Their leaders tend to say, Not now. We’re too busy, and we’re doing fine.” But when times get tough and they need the leadership skills more than ever, these same leaders tell us: “Well, we need it, but we can’t afford it.”

The real question at any time is: How can you not afford to make this investment? It’s like deciding to buy insurance while the flood waters are lapping at your front door, or you’ve just been in a car accident. You should have been investing in leadership succession planning when times were good to be better prepared for these crises (or opportunities). But if you don’t invest when don’t you need it and can afford it, when are you ever going to learn to invest?

At the same time, there are blind spots we have to the talent in our organizations. People who have specific skill sets who are on the end of the bench that we don’t recognize. They may just need to be cultivated a little bit more. The more you do that, the more you realize that you have some considerable raw talent, who share your core values, who can be developed into so much more. This is the hidden benefit of succession planning; by assessing the strengths and limitations of your team, you can build an even greater, more diverse, pool of talent.

Graph It: Two Ways To Identify Your High Potentials and Blockers

Here are two exercises in leadership succession planning that we regularly take our clients through:

  1. Plot your people based on their productivity (on the X-axis) and how well they use your core values when making decisions (on the Y-axis). Those in the upper right of the chart, high on both productivity and values, are people you want to keep at all costs. Those falling into the lower left area, who score low on both measures, should be moving along the path of being counseled out of the organization.
  2. Answer these four questions every three to six months about each person on your team:
    • I would award this person the highest increase and bonus possible (on a scale from 1 to 10).
    • I would always want this person on my team (also on a scale from 1 to 10).
    • This person is at risk for low performance (yes or no).
    • This person is ready for a promotion today (yes or no).

Then, plot your results on a chart where the X-axis is “Always On My Team” and the Y-Axis is “Give The Highest Increase.” For all those who are at risk for low performance, make their dot Red. For all those who are ready for a promotion, color their dot Green.

Those in the upper right, and in particular those whose dots are Green, should be retained and developed. Those in the lower right, and especially those whose dots are Red, should be put on a performance improvement plan immediately.

Look Back, Look Forward

What you needed 3-4 months ago is different than what you need today. What you need 3-4 months from today could be even more different. When you look back over the past 6-8 months, you realize there were foreseeable seismic changes coming in your business. Changes for which you could have developed some preventative actions to address or at least reduce the issues you’re facing. But, without a leadership succession plan in place, you will be in a very difficult and different situation.

As we think about a Culture of Leadership and its place in helping cement a lasting legacy, remember a piece of advice that we frequently give organizations:You don’t have to do succession planning for every position. Start by doing it for your most critical roles.” Tackle those today and you’ll be ahead of the organizations that have no succession plan and will be in panic mode when they can least afford to be there.

We think you’ll also like:

  1. Shut Up and Listen: How to Practice Effective Listening for Leaders
  2. Employee Development: How to Invest in People and Boost Your ROI
  3. Snooze, Panic, or Eject? A Simple February Tune-up for Achieving Your Annual Goals
[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can watch at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

  1. What’s it Worth? Valuing a Business for Sale
  2. Board of Directors Boot Camp
  3. Help, My Business is In Trouble!

This is an updated version of an article originally published on August 12, 2020.]

©2023. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.

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About Lee Eisenstaedt

Lee Eisenstaedt brings more than 35 years of diverse leadership, finance and operations experience to the clients of the Leading With Courage® Academy. The CFO of SC Johnson has described Lee as a well-rounded businessman because he’s “…worked for more than two companies, in more than two functions, in more than two countries.” Lee focuses…

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