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special section 2012 CORPORATE 100

Leadership Succession for Business Growth and Continuity By Sara LaForest and Tony Kubica

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oes your business have a leadership succession program in place to secure its continuity and growth? Unless no one gets sick, quits, or dies, a plan is in order. Too many small businesses default to the practice of reactionary assignment of a successor amid a now glaringly vacant position, or embark on a rushed external hire that often ends up as a high cost disappointment from a ”hiring misfire.” The consequences are not only expensive but are also a missed opportunity, due to lack of focus and the inability to support fast growth. A succession strategy is about having an identified plan to fill key positions within your organization. A succession program is the implemented process of identifying, developing and transitioning potential successors for the company’s present and future key roles, aligned with the talent and ambition of its current employees.

Reality is Dynamic, Not Static

A common error that we see in succession planning is to target only the key executive roles (CEO, COO, CFO). We see this as a significant risk unless you are a micro business. For example, if you are in the construction or transportation industry, a logistics manager may be critical for the success of your business. Having a vacancy in this position could quickly result in a decrease in service and an increase in customer complaints, and possibly a decrease in customer retention; which is why critical positions across the business need to be identified and replacement processes planned. In our work with companies we hear some common arguments and justifications. We repeatedly see that the president or key executive doesn’t believe there is an immediate need for a succession plan. Their stated arguments are, “we’re too small,” “we’re too new,” “we already have good people in place,” or “I’m not going anywhere soon!” In an unlikely static environment where no one leaves, no one gets ill (in-

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cluding the owner, president or senior managers), growth isn’t that important, and performance is exceptional—these arguments hold true. But, the reality is that we don’t live in a static business environment. People do leave, they do get sick, the executives need to focus on growing the business versus operating it, the employees are not all good performers, and some roles are hard to fill! There is also a tendency to hold on to marginal performers because there is no clear plan on how to replace them. The impact: the business suffers, the executives suffer, employee morale and productivity decreases, the customers become less than satisfied with their service, and new candidates are not attracted to your company. When businesses do not have a succession program in place, consequences include: • Knee jerk replacements—either unsuitable hires or “not ready for prime time” promotions that end poorly due to lack of suitability, development and transition support • Retention challenges—the best talent leaves to pursue growth and other opportunities as they do not sense an opportunity at your company to advance in alignment with their career aspirations • Unnecessary costs in crisis or perpetual recruiting and training • Disruption to the work culture/environment, meaning that a sense of stress, discord, competition and posturing for position will manifest in employees and could embed (negatively) in your culture • No or poor bench strength to deliver (let alone to grow) To help you deduce your business’s succession readiness, we advise you start with these four questions: • Do you have a people-related plan to support the growth initiatives?

• Do you have current and relevant job descriptions to establish expectations, role clarity and accountability of your workforce/talent? • Do you have an identified talent pipeline (candidates by talent areas and for the key positions)? • Do you have a process or structure in place for identifying and developing those high-potential, “promising” employees who fill the talent pipeline? Building a succession program is like any other business initiative; it has two components: strategy and implementation.

First: Building Your Strategy

1. The first step in succession readiness is to recognize and accept that responsibility for it must sit with the top executive, as part of their job description and performance review. Many organizations with effective succession programs include this metric for all their key executives. 2. The executive team or designated committee needs to explicitly identify current and future key roles and core talent areas that are needed to run the company and to support growth initiatives. This includes identifying an interim process if there is an emergency absence of a key position; and anticipating future growth and the required talent needed to support it. This will also help you align your recruiting efforts by focusing on interviewing candidates for growth potential and adaptability to address and support the future growth needs of the organization.

Second: Implementing Your Plan

1. Management needs to gather information and track high potential employees. This includes not only their performance in their current role but also their commitment to the organization and their career growth ambition. There is a risk that high-potential employees will leave, as they are the quickest to explore and pursue something better. They are

www.akbizmag.com • Alaska Business Monthly • April 2012

April - 2012 - Alaska Business Monthly  

Alaska Business Monthly’s 2012 Corporate 100 annual special section begins on page 86. Top citizens of industry are highlighted in this annu...

April - 2012 - Alaska Business Monthly  

Alaska Business Monthly’s 2012 Corporate 100 annual special section begins on page 86. Top citizens of industry are highlighted in this annu...