The Four Conditions for Successful Leadership Succession

Leadership succession does not happen on its own, nor does it happen overnight. Succession planning requires sustained and intentional effort over time; it is never too early to start. The CEO must own the process, led in partnership with the Chief Human Resources Officer, and engage leaders from the Board on down.

In over 30 years of working with CEOs and large organizations, I’ve found that succession is most successful when these four conditions are met:

It is viewed as a strategic priority
Planning is integrated into and across the organization’s talent and performance development processes
It is used as a lever to change, build, and reinforce culture
The CEO and the leadership team hold it as a core responsibility

Often, however, these conditions are missing. Why? One reason is that CEOs feel short-term pressure to focus on hard goals and undervalue longer-term, softer goals in the area of talent development. Another reason is that Boards can fail to take CEO succession seriously.

What can be done? The Board and organization need to shift to a mindset that prioritizes succession planning and creates an environment that fosters the four conditions. Further, the CEO must cement this mindset shift by taking the following actions including:

identifying the top ten to twenty key roles in the company and ensuring an uninterrupted flow of talent to these positions with as much rigor and diligence as you would apply to managing cash flow
reviewing the pipeline of talent to these positions on an annual basis to ensure an uninterrupted flow
understanding the competencies necessary to successfully perform in these positions and making the investments required to develop them in the people who are candidates for these positions
holding people accountable for their developmental outcomes as well as their business results.

Each executive team member ought to hold this mindset. If they don’t, ask them to commit to adopting it and extract a promise (with a clear deadline) to do the work required to internalize it. Anything less will fail. What the CEO makes important, the executive team will make important. The CEO’s job is to test for a developmental mindset through regular conversations with the team.

A question to carry into strategy, key operational, and talent reviews is, “Who are the people in this company who can step into my role in the next three to five years, and are we doing enough to prepare them?” A corollary question is, “What are we doing to cultivate executive leadership to sustain our strategy for the long term?“ Failing to engage and respond to these questions is gambling that ad hoc development will produce a capable successor when the time arrives. Good risk management requires more.

The CEO’s task is not only to prepare his successor but also to ensure that there is a pipeline of talent capable of filling all key roles in the enterprise, including CEO. This requires the active participation and engagement of people managers throughout the system. It takes a people development ethos to animate this system. It takes monitoring people’s readiness for advancement and being vigilant about removing blockers.

A few years ago, I worked with a new, first-time public company CEO who had inherited a human resources department short on human development experience and orientation. The organization’s executives expected little from HR and got what they expected. The CEO went out and found an experienced professional to be Chief Human Resource Officer (CHRO.) Together, they began to define the parameters for a new leadership and talent development system. I recommended that the CEO keep a co-designer’s hat on through this process and demand a very high standard. The standard would include high expectations for other executive team members, not only for their own learning and growth but also for being stewards of talent development within the enterprise. This would prove to be a significant shift for some team members.

What can you do? In my work with clients, I coach and advise CEOs to work with their Board Chair and appropriate committee chairs (governance and talent, for example) to allocate board time to succession planning. I also work with my clients to create and hold the structure and space for succession planning. This includes coaching and advising the CEO on evaluating how the company develops talent, promotes people, defines roles, and tracks performance. Here, it is important for the CEO to:

identify gaps that are critical to fill in the short, medium, and longer-run
assign a small cross-functional team to work on creating the leadership pipeline (this should not be delegated to HR alone)
schedule a presentation to the appropriate board subcommittees to outline your early lessons and plans.

As CEO, you need to determine which key roles you personally own – the strategic roles that require your direct attention to be filled properly. Evaluate these roles in terms of their current performance and the risk to the business in the event of failure (incumbent leaving or failing to perform.) Also important is working with incumbents, HR, and other outside resources to develop plans for bridging any gaps.

Challenge your team to answer these questions.