5 Tips for Effective Succession Planning and Executive Recruitment
Succession planning is about ensuring the right people are ready at the right time in the right places to effectively lead.
More boards are taking a long-term view of succession planning, especially as we’re seeing a growing trend of internal candidates wanting to be on a CEO development path. Succession planning is about ensuring the right people are ready at the right time in the right places to effectively lead and manage the organization. It isn’t limited to CEOs, either. Strategic thinking and conversations around the roles of the entire C-suite, board of directors and development plans for your mid-level leaders are also important components. And the time to focus on them is now.
1. Start the Process Earlier
Often, succession planning mirrors board governance. With some waiting for the current CEO to announce an official retirement date before evaluating search firms and moving forward, more strategic-minded boards begin the process years in advance.
Currently, half of our CEO succession projects involve assessing the CEO readiness of potential internal CEO candidates. These internal candidates tend to have long tenures, so the sooner you begin focusing on strategic planning and development, the better. Your initial conversations regarding succession and roles should happen five years or more in advance.
2. Look Internally First
There are strategic and cultural advantages to developing internal candidates. Not only do they already know the organization, but they also have the opportunity to work side-by-side with the current CEO for a smoother transition.
For example, in our proprietary model, the board starts with a facilitated articulation of what is needed in their future CEO at least three years before the transition. Then, our team creates a CEO Readiness Plan, which includes a development plan and coaching for potential internal candidates. One year out, the board decides if they also need to include external candidates in the search process.
This extra time can be beneficial to both the credit union and internal candidates, especially for those who have work to do to become “ready-now” CEO candidates. The board is often able to deepen their understanding of internal candidates during this time, learning more about their communication preferences, team dynamics and decision-making skills.
3. Avoid Informal Process Pitfalls
In the absence of strategic succession planning, an informal process could take hold. According to the “Like Me Theory,” incumbents and hiring managers tend to identify and groom successors who are remarkably like them in their appearance, background and values. This could inadvertently exclude some of your best potential candidates – both internally and externally.
Finding a good partner is an important part of the executive search and succession planning processes. We recommend looking for partners who are direct, unbiased, familiar with your organization and industry, have strong succession and search implementation expertise, and a reputation for acting as a strategic partner.
4. Eliminate Entrenched Practices
In addition to starting earlier on CEO succession planning, we also have an opportunity to move away from the unseen, unspoken and unheard biases that result in homogeneity when selecting board members.
Each board member and senior leader should ask: What resources are needed now? How does our board’s governance structure take care of our membership in today’s marketplace? What conversations are needed to understand the board’s obligation to add more strategic value?
Assessing and updating your board recruitment mindset and process to add dynamically engaged and relevant board members who add strategic value to the organization can also aid in your CEO succession planning and future executive recruitment efforts.
Boards can move beyond talking about diversity and on to effective action by making an explicit commitment to search for diverse competencies, perspectives and thought. Common gaps in board skill assessments include strategic insight regarding enterprise risk management (ERM), strategic growth, cybersecurity, entrepreneurialism, human capital, and balance sheet and investment strategies.
By moving from episodic recruiting to ongoing strategic and intentional recruitment, credit unions can embrace constant readiness to recruit and boldly professionalize their search processes to captivate the best candidates. Professional board searches can help your cooperative determine the skill gap, seek multiple perspectives, ask the right questions, and advertise to compel responses from diverse and qualified candidates.
The missing link in a successful board search is eliminating entrenched practices. Be futuristic in your vision of what members need, and commit to diversity, equity and inclusion in your actions. Step up practices to professionalize the search and be surprised and delighted at the quality of choices.
5. Elevate With Strategic Succession Planning
There is succession planning, and then there is strategic succession planning. When we ask organizations to share their approach to ensuring sustainable leadership, some still point to a box on the organization chart and say, “She is next in line” or “He has been here the longest.” Effective succession planning moves beyond an occasional conversation to become a critical and valued factor supporting organizational health and sustainability.
A strategic approach to succession planning begins with having generative conversation to bring out unspoken needs, uncover hidden requirements and ensure that your organization has an actionable plan that supports your strategic plan.
Typically, our team begins by asking questions like:
- How does your strategic succession plan meet the unique needs of the organization?
- Does your plan extend to management and professional levels beyond top positions?
- What systematic process exists for carrying out the plan?
- How does present performance influence the untapped potential of the future?
- Is strategic succession planning part of each executive’s performance goals?
- How does your internal development program support increasing capacity to create knowledge and learning?
- What internal programs accelerate learning in your organization?
Framing succession planning in a strategic context increases the possibility of a smooth transition and delivers on a culture of continuous learning and development at all levels. Strategic succession planning is a critical success factor to fulfill long-term strategy as it integrates employee development in strategic planning – in their everyday work, and in the corporate culture.
Deedee Myers CEO DDJ Myers, an ALM First Company Phoenix, Ariz.