A cup of coffee. No impending obligations. Kids that are fed and playing on their own. And a Sunday paper. Those environmental factors rarely come into sync at our home, but the stars must have been aligned this weekend. I was struck by Sunday’s Chicago Tribune Business Section: “Search Outside for a CEO can Mean Trouble on the Inside.” My first reaction was, “yep, gotta get your succession plan in order, dummies.” The article proposed the same. Jim Skinner, former McDonald’s CEO, is quoted as saying, “If we can’t develop an internal candidate, with all the experience we have, then we’re failing.” Most Human Resources pros would line up after hearing this – “uh huh, Mr. Skinner, that’s what I’m talkin’ bout right there.” But I wondered…
According to Spencer Stuart’s most recent S&P 500 CEO Transitions Study, 28 CEOs have departed their posts (ousted or otherwise) in the first half of 2012. Of those 28, 22 (78%) have been replaced by internal candidates. That’s pretty good, right? Keep it in the family. But of those 22 internal candidates, only 8 (36%) had actually been identified as a planned successor. So this means that either these companies didn’t have a succession plan or they identified the wrong person under it. Hmmm…
Since 2009, regulatory bodies for public companies have issued stronger guidance around succession planning and the crucial responsibility the Board of Directors carries in overseeing this – particularly at the Chief Executive level. They haven’t gone as far as to require it, but they have given shareholders more leeway in requesting more transparency around Succession Plans. Yet, according to the Conference-Board, of the 25 proposals for more transparency filed by shareholder groups since 2011, all have either failed or been withdrawn. Hmmm…
So what’s the rub? We say it’s important. It’s fundamental, right? Then why the fluck isn’t it taken more seriously?
Because it’s generally an exercise in futility.
It’s admirable that organizations want to prepare their next great leaders. And succession plan or not – this should continue to happen. But getting the right CEO’s butt in the chair has a lot to do with timing. It has a lot to do with the company’s condition, the external market and competitive landscape, team dynamics, and myriad factors that define the business requirements when that time comes. And as much as we’d like to prepare our future leaders to respond to these contingencies…any contingency…it’s unrealistic to try and do so.
What do we gain by putting that (wo)man’s name in a box on some plan? A bit more commitment to that leader’s development? Maybe. A risky bet? Certainly. A bet that the named successor(s) will still be here, interested, willing, and prepared when the time comes; a bet that someone better won’t present themselves or become available along the way…or the day of. Risky that you might end up dashing the hopes of some aspiring leader when they become one of the 64% who don’t ultimately get the job. Risky that you’ll end up ‘settling’ for what you have. Risky that you’ll be too narrow in your search for what might be the most important role in your organization.
My recommendation: build great leaders…lots of them. Comfort them at the outset that any one has the potential to sit in that corner office. But then remind them that the best one will be chosen only when it’s time to move in. To do otherwise may go awry.
“But little Mouse, you are not alone,
In proving foresight may be vain:
The best laid schemes of mice and men
Go often awry,
And leave us nothing but grief and pain,
For promised joy!” ~ Robert Burns, To a Mouse