Effective succession planning pays off in many ways, and is critical in recruiting and retaining top talent, ensuring stability, and improving share prices. Research continually confirms that succession management has a positive correlation with employee retention, and that companies with succession plans have lower costs per new hire. But how are leading companies in today's global market tackling the difficult task of filling corner offices?
Professor Patrick Wright is Thomas C. Vandiver Bicentennial Chair, founder, and faculty director of the Center for Executive Succession in the Darla Moore School of Business at the University of South Carolina. Professor Wright is also a member of i4cp's Thought Leader Consortium and is scheduled to present at the i4cp 2015 Conference, on the future of executive succession.
In a recent interview with i4cp, Professor Wright shared his views on executive succession planning--the same topic he will address during his keynote presentation in March.
What are the elements necessary for ensuring success with executive succession planning?
The first key is that the board begins with an idea of the five-year strategy. It may not be the formal strategy--since the new executive (especially a new CEO) will have to develop his or her own strategy--but the key is to identify what things the company will face in its competitive environment over the next five years. Market changes have implications for the skill sets and experiences that will be needed, and provide a foundation for developing the ideal leadership profile.
Second, the board needs to have adequate information on all of the candidates to determine how well they fit the profile. No one will likely be a perfect fit, but the board needs reliable information on the candidates to determine specific areas of opportunity and be able to make evaluations as to how important the gaps are and how they might be filled.
Third, the board needs a good process that allows it to make decisions absent any biases. There are subjective aspects of the process that should be accounted for, such as feeling like "someone in the role is better than no one in the role," or "we've gone this far with this person, so we can't stop now."
These elements will not eliminate mistakes, but they should heighten the probability of success.
Why do you think companies struggle with succession planning?
First, the promotion to a C-suite role means a whole different set of requirements than were present in previous roles. Thus, it's hard to assess and predict who will be able to make that transition successfully.
Second, there are very subjective aspects to the succession planning process that can allow wily candidates to fool the decision makers or enable decision makers to ignore information that does not fit with their preconceived notions. No one is perfect... Not the candidates and not those making the decisions.
Where do you see the field of executive succession planning heading in the next 10 years?
Boards are paying increasing attention. Over the past five years, many boards have accentuated their role in CEO succession because of the recognition that this may be one of their central governance roles. In addition, they are involving themselves more in other C-suite succession decisions--which may or may not be helpful.
Also, people are questioning many of the old assumptions about succession. For instance, based on research done in the late 1990s, many believe that when firms struggle, outsiders will bring better performance, but when firms are doing well, insiders will make better CEOs. However, in today's fast changing competitive environment, it may just be that outsiders have the skills necessary to meet the needs of high-performance companies that are entering a changed competitive landscape. We may see that for all C-suite jobs the old "insider is better" assumption may not always be true.
What are you most looking forward to at the i4cp 2015 Conference?
I always enjoy hearing what thought leaders have to say about their fields, and the conference always brings a great slate of speakers. Also, I always get a lot out of hearing what i4cp's research has revealed. Finally, the chance to network with senior HR executives should prove to be the highlight of my conference experience.Dr. Wright is just one of the many impressive presenters that will speak at the i4cp 2015 Conference, March 16-19, in Scottsdale, Arizona. Registration is now open and the early-bird pricing special ends on December 19. Sign up now to save your seat at the most important HR event of the year.