When considering the characteristics of an excellent leader, what are the key elements? Is it the ability to develop a clear and inspiring vision? Is it the ability to make a decision even without perfect information? Is it the ability to recognize sources of sustainable competitive advantage? And then, drive execution accordingly? Is it the ability to make tough choices? Does the leader rightfully stand on the moral high ground?
If you answered all of the above and believe that’s not nearly an all-inclusive list, you’d probably be right. However, I firmly believe that, at least as important as what’s on the above (or your) list, is the leader’s diligence in ensuring that he/she can be readily replaced. In other words, having a successor/succession plan.
How many times have we seen this happen recently? The guy at Yahoo gets axed for falsifying his academic records. The guy at Best Buy gets kicked out for misconduct and misuse of his office. The guy at HP is let go because he was a bad fit to begin with and made too many bad choices.
And what ensued after each one of these examples (and I’m sure you can cite others), nothing less than turmoil and its subsequent consequence; i.e., plummeting stock prices. In none of the cases I mentioned, was there a successor or a succession plan. And stuff like this happens all the time! CEO’s don’t only get fired for poor performance, and you can usually see it coming, thus providing ample opportunity to consider succession choices. To be unprepared is inexcusable.
I don’t want to spend too much time on who’s at fault; I would rather provide you with some thoughts on how to avoid such developments. And I will. But, briefly, in every instance, start with the Board of Directors. Failure to have a CEO succession plan is nothing short of dereliction of duty. Then look to the CEO, some of whom, fearing competition, don’t even want to deal with the notion of a succession plan.
From my perspective, succession planning and its sister initiative, talent management, must both be ingrained in a corporate culture. Sure, you need to be concerned about CEO succession, but, it should not be limited to that one role. Rather, succession planning and talent management must pertain to all leadership levels. Without talent management at all leadership levels, it is virtually impossible to have a meaningful succession plan.
So, how is it done? Well, organizations take their cue from the top. It starts with a commitment from the top. It starts with a commitment from the CEO and his or her leadership to create a talent management program that has structure and discipline. And, further, to conduct regular periodic reviews so as to assess progress or lack thereof and make changes, additions or upgrades.
Sounds good, right? Simple, right? It isn’t. Many senior leadership teams like to focus on strategy, financial results, products, customers, and the competition. Going through a talent management review, moving people around? Maybe not so much.
That’s why I observed that leadership development must be ingrained in a corporate culture. Accomplishing leadership development begins with a successful talent management program. Start with identifying which leadership characteristics are most important to your company. “Technical expertise” is a given, but I’m referring to an individual’s makeup or behavioral characteristics. Is the individual a collaborator or a lone wolf? A team builder or a dictator? A risk taker or an ultra-conservative? Willing to take responsibility for results, good or bad? Relocatable? Communicator? Capable of considering broad, cross company implications or only concerned with his or her little patch? A systemic thinker?
Create your own list and once you’ve done so, individually assess people against it, beginning with the CEO’s own direct reports and cascading out to all leadership levels throughout your organization. Keep in mind that all leaders are not alike, typically there are broad differences as to development stage. Assess that as well and you’ll come up with a subset list of people with the most potential, another subset list of those who still have work to do to get there, etc.
It is absolutely worth it to take that high potential list and to customize a development plan for each person. Furthermore, it is extremely useful to have an open and honest conversation about what openings or opportunities may be upcoming and to slot people in accordingly. A leadership team that can accomplish this truly demonstrates commitment to leadership development. A team that squabbles, with team members unwilling to “give up” their high potential talent, is only paying lip service and eventually will be the poorer for it.
All of this requires time, typically in short supply, and discipline. You can’t build a leadership cadre with outside hires. While external perspective can be useful, it is expensive with a 50/50 success ratio. Are you willing to bet the future on 50/50? If not, put in the effort, I’m confident you’ll be pleased with the results and it has the added benefit of sending a tremendous message of encouragement to all your employees.
Irv Rothman Bio:
Irv Rothman is the President and CEO of HP Financial Services, a wholly own subsidiary of Hewlett-Packard Company. In his latest book Out-Executing the Competition: Building and Growing a Financial Services Company (Wiley; July 31, 2012), Rothman takes you behind the scenes of his remarkable experiences leading some of the most important—and profitable—financial services businesses in recent memory. With over forty years on the front lines, Rothman has seen firsthand what makes a great leader, and in Out-Executing the Competition, he explains how the lessons he's learned—an unwavering commitment to core principles coupled with open-minded adaptability and a passion for innovation—have informed his career.
All royalties from the sales of OUT-EXECUTING THE COMPETITION are being donated to Room to Read, an international charitable organization dedicated to promoting children's literacy with a particular focus on undeveloped and disadvantaged countries.
More information about Irv Rothman and OUT-EXECUTING THE COMPETITION can be found at www.IrvRothman.com. Follow Irv on Twitter: twitter.com/irvrothman.