Succession planning is critical

Filling positions from internal sources improves morale as well as eliminates the cultural learning curve.

COMMENT

Last week, I read in the local dailies that Maybank was working to find a suitable replacement for its president and CEO Abdul Wahid Omar following his appointment to the federal cabinet by the prime minister.

Upon reading the title itself, I knew that Maybank was actually struggling to find a replacement.

I was suspicious that it didn’t really have a succession plan in place, although Wahid himself bragged that the bank had a good succession plan in place.

These are points in the media reports that fed my doubts.

If Maybank has such a succession plan in place, the Board would be aware of the potential candidates. However that articles suggested the Board had no clue who the candidates were and that only the Nomination Committee had the list.

Chairman Megat Zaharuddin said that an interim CEO would be appointed on the day Wahid left and thereafter a permanent CEO would be appointed when ready.

Wahid leaves on June 4. This alludes to the high possibility that they are still some distance away from appointing someone.

The media reports stated that among those in the banking industry, four names popped up as potential successors. Two were internal and the other two external.

This already means you don’t have a succession plan, let alone a good succession plan.

A good succession plan will be one that has identified potential candidates from your internal pool and that puts them through plans to develop their skills in areas they need to improve.

It will also periodically review their skill sets and determine further development programmes.

Something as essential as this should be known to the Board, early in the process, i.e., the day the candidates are shortlisted and set through development process and not kept a secret even after the CEO has been announced as leaving.

A good succession plan

A succession plan is much more than a list of people to tick off one as the replacement. This is where I gather Maybank is at currently.

Moreover having external candidates in the list also points out that the succession plan is not that good, since you’re eyeing someone from outside.

This shows that the succession plan is unable to develop a successor and has to go outside to appoint one. So it can’t be as good as Wahid claims.

A good succession plan would be to select the replacement the moment the current CEO retires, resigns or dies.

Of the three scenarios, only retirement can be planned out and so a company must always be prepared to pick the right guy or gal upon death or resignation and not keep the Board wondering who is on the list.

The Board itself should be playing a role in developing the candidates. Board members have a wealth of experience and should be mentors to the candidates in the list.

Wahid was appointed the CEO in 2008. So in six years, they’ve not been able to narrow down the potential candidates until now.

Succession planning is not just meant for the big boys. Every company needs to have a succession plan in place, even mom and pop shops, if they want their business to continue after their departure.

Succession planning sounds like a monumental task that seems to overwhelm many corporate people. As anything else in life, you can make it simple or complicate things to look pompous.

Succession planning should not just be confined to the CEO or C-suite employees but should include every manager, both staff and line managers.

Whatever size company you are heading, you can implement a succession planning programe in a few simple steps.

The guides to follow

Step 1 – Take out that JD & Job Specs

If you already have a JD and Job Specs for the job function you want to implement a succession plan for, take it out of the drawer.

You may laugh at this suggestion but there are many companies that forget that this is what JD and specs are for. This will help you select the potential candidates that you want to develop as replacements.

The criteria for the right candidate are all there, provided your JD and specs are up to date.

If you don’t have JDs and specs for each managerial position, now is a good time to create them.

Step 2 – Selection process

Decide how you want to conduct this process. You can ask your current staff to submit applications and conduct interviews and profiling tests.

I find that this works best as it’s transparent and avoids accusations of cronyism (a buzzword in Malaysia) and discrimination.

You could also just select a few people who fit the criteria, but you may be picking people who may not really want the position.

Don’t select just one candidate but a few. You never know who will leave you, when.

When should you start? Five years ago would have been ideal, but today is better than never.

Step 3 – Development programme

Your selection process would have highlighted the areas that each candidate would have to be developed in. There could be common areas as well as totally disparate categories.

Whatever the case, you’ll have to provide the development plan for each person’s development needs.

Sometimes these development plans could merely be classroom based. Ideally, experiential learning is superior and if an opportunity arises the candidates should be placed in a job rotation system to give them the ability to practice the skill they need to pick up.

If this is not possible, then assign them to assist the function they need practice in. For example, a CEO is the de facto head of marketing in any organization, although there may be a Chief Marketing Officer.

But if the Chief Financial Officer has been selected as a candidate for CEO’s post and needs marketing skills but can’t be placed in the CMO role, then giving the CFO certain marketing tasks would help her to develop those skills.

Step 4 – Development review

Just like any job you need to evaluate the performance of an individual, you will need to determine the effectiveness of your development plan. Are the candidates developing in the areas they are supposed to be developing.

Based on this review you will need to repeat Step 3 for another area or even reinforce the development if the skills haven’t been developed.

Naturally, at this step too, you may have to make a decision to remove someone from the succession plan programme because they aren’t showing the right attitude or aptitude.

Look at these steps as a funnel that you have to keep filled at all times. When someone from the funnel is promoted, get a new replacement.

If this is implemented effectively, at any one time, you’ll know how many candidates you have for each position and how ready each person is for that position.

Also, if you implement this effectively, you may never have to fill your senior positions from outside the organization.

Filling positions from internal sources improves morale as well as eliminates the cultural learning curve. The successor will be able to hit the ground running.

James Pereira is a Reputation Marketing and Organisational Development Coach Consultant. He has spent more than 20 years in multinational companies in the areas of marketing, sales and organisational development. He was also the Deputy Dean of the Post Graduate School at a local university.