Many leaders overlook their responsibility to build a succession plan.
One of the responsibilities that can be difficult, even for great CEOs, is to make time for the succession planning process. While it’s human nature not to think too far into the future, you owe it to your organization to groom prime talent to replace you, regardless of how invincible you still feel. Think of it as a contingency plan.
Great organizations build successor plans deep into their organization as well. The idea is that if a lower-level manager wants a promotion, they’d better have someone ready to take over for them.
But, for this article, let’s focus on what it means to put a successor plan in place for the top job: the CEO.
1. Identify Future Leaders
In every organization, you have high-potential A-caliber players who are eminently promotable. These are people who check many boxes when it comes to attributes like intellectual capability, expertise, and ambition. These are the kinds of people you want to consider taking part in your successor plan. Nothing against solid B-players, but you’re looking for your superstars when it comes to identifying the next potential CEO.
As you do your assessments, don’t overlook how important it is that someone truly has the ambition to grab the top job someday. For instance, I remember early in my career, when I thought all my colleagues wanted to run the business, as I did eventually. But that wasn’t true. Most people want to do their job and get a raise or promotion occasionally. They don’t want the stress or responsibility of running the business. Many people might say they want the top job, but the percentage of people ready to do hard work and make sacrifices to get there is relatively small.
2. Positioning Talent
How you structure the talent in your organization is an essential aspect of building your successor plan. Ideally, it would be best to have your high-potential leaders reporting directly to the CEO–which serves as a development platform for them. As CEO, you might have eight VPs reporting to you, for instance. That means you have eight slots available for future leadership candidates.
The catch is that a CEO can find themselves with direct reports who are fully capable lieutenants but lack one or more of the qualities that would make them a CEO successor candidate. While they might add value to the organization in their role, they also become blockers to the successor candidates beneath them.
This might force you to change your organizational structure, ranging from adding a new position that reports to the CEO or even replacing a B-player with an A-player on your successor list.
3. Developing Your A-Players
I’ve written before about how to develop A-players. It becomes an integral part of the CEO’s job to put potential successors in place and give them the kinds of opportunities they need to grow the skills they’ll need if they become CEO. Here are a few strategies to consider putting in place:
- Education. Many times, the limitation of an A-player is that they’re strong in one area of the business–like finance or engineering–but lack exposure to other functional areas like operations. Look for ways to give your potential successors opportunities to gain a more holistic understanding and exposure to running the overall business.
- Cross-functional teams. Look for opportunities for your high-potential players to lead cross-functional teams involved with challenging projects, like implementing an ERP system or integrating a new acquisition, that present opportunities to learn about aspects of the business they have yet to be exposed to.
- Peer groups. Another excellent growth opportunity for future CEO candidates is to join a peer group specifically focused on successor development. These groups will typically involve CEOs and their successors, which creates excellent learning opportunities for your successor to learn from other CEOs as they seek to develop well-rounded and robust leadership skills. (Full disclosure: We run peer groups focused on this topic at the Inc. CEO Project.)
4. Time to Exit
At some point in your successor development plan journey, you need to make perhaps your most difficult decision: to step down. Otherwise, you risk becoming the blocker yourself to the high-potential leaders you have developed. But even then, there is a risk to the organization when you choose the person to succeed you. We need only to look at one of the most high-profile successor plans of all time, when Jack Welch stepped aside at GE, to see what might unfold. It was long known that Welch had three candidates on his successor list. And when he finally decided to name his replacement, the other two immediately left the company to take CEO jobs elsewhere.
As you go about constructing your successor plans, consider both the upside that comes with developing future leaders as well as the potential costs if you find long-term growth opportunities for all your A-players.