Drive Roddick
Drive Roddick
Successful Succession
Succession issues are currently at the top of many organisations’ agendas – and if they’re not, they should be. It is difficult to effect a smooth and successful handover and forward planning and careful consideration are essential.
The Football Association will be praying that Fabio Capello will prove considerably more successful as England manager than his predecessor Steve McLaren, whose bungled appointment in May 2006 was considered ill-advised from the start.
Knee-jerk succession is a bad thing, but having a ‘crown prince’ waiting in the wings for years is not an easy situation to manage, as Prince Charles and Gordon Brown will no doubt testify.
But what will happen to the Virgin ‘empire’ once Richard Branson goes up in his proverbial balloon is anyone’s guess, as there is no indication of a number two being ready to step up to the plate.
Most succession plans amount to crisis management. The culture of short termism in which bosses are booted out for not delivering instant results is partly to blame. The average tenure of a chief executive in the private sector is less than four years, and falling, and those hired from outside the company move on faster than those who rise through the ranks.
Chief executive churn is unsettling, destabilising and demoralising and can lead to a spiral of decline. It is also costly: the number of headline-grabbing ‘rewards for failure’ is mounting. So it’s not surprising that shareholders are starting to question companies more closely about their succession plans, which are increasingly being seen as part of good corporate governance.
There are some who ask why we needed to hire an Italian to manage the England football team. Others question the rising number of foreigners running British companies – at the last count 28 FTSE-100 companies had a non-UK national as chief executive. While this may reflect the increasing globalization of business, it owes at least something to companies’ neglect of their talent pipeline over the past 15 years.
Not only do many businesses not plan for succession, they also have scant idea of the talent they have and need within the organisation. So they resort to the ‘easy’ option of drafting in business ‘saviours’, and if they are foreign saviours, then all the better.
The problem with this approach is highlighted by Jim Collins in his book Good to Great, in which over 90% of the ‘great’ companies he identifies are run by chief executives who grew up in the business. There are very good reasons for this, claims Collins. “You need executives who have ambitions for the company rather than themselves, and those people tend to be insiders rather than outsiders who can be ‘bought’.
What’s more, you need to determine who should be in the business and in what seats before you decide where to drive, and the insider has a head start there.” What’s more, this approach has a pernicious effect on the morale of other senior executives, who believe that if they want to get on they have to get out.
Nigel Nicholson, professor of organisational behaviour at London Business School, conducted a survey that found that individuals who change companies every three or four years advance faster than those who remain loyal to their organisation. “There is a horrible tendency in this country not to value insiders,” he says. “Individuals are rewarded for disloyalty, and people often find the only way to progress within their organisation is to wave a job offer under their boss’s nose. Invariably it is only when you get a market value on you that your worth is recognised internally.”
But there are times, of course, when a new broom is just what’s required to sweep away old cultures or signal a change of direction. Chris Brewster, professor of international Human Resource management at Henley Management College and at the University of Reading Business School, concedes: “Most organisations need a leavening of new blood at all levels in the hierarchy. You can have too little executive turnover.”
But he believes the least risky way to do this is to bring in outsiders at more junior executive levels and grow them in the organisation to see if they cut the mustard, rather than just dumping an outsider straight into the top job.
It’s a contention supported by HR guru Dave Ulrich in his new book Leadership Brand (see The Business Review, issue 19), where he asserts that leadership is not as easily transferable as many people would like to believe. “What worked in one setting might not work in another,” he points out.
But as one headhunter says: “You can’t grow talent for every conceivable contingency. There’s nothing wrong with bringing in an outsider provided you can prove that they are demonstrably better than any internal candidates.”
To this end, it is always helpful to benchmark internal talent against what’s available in the marketplace, he continues. “Armed with objective evidence companies are then in a position to justify any top appointment they make – whether it is internal or external – to both internal and external audiences.”
If press ads for heads of ‘talent management’ are anything to go by, at least some companies are starting to take talent management seriously again. Growing numbers of firms are assessing their executive talent and using coaching companies to help them develop it.
But smooth and planned succession of chief executives is the most important aspect of this talent management process, and the hardest to get right.
While long tenure is preferable to rapid turnover, it makes leaving that much more difficult. Recent corporate history is littered with examples of bosses who stayed on too long, including the late Anita Roddick at Body Shop and Sir Richard Greenbury at Marks & Spencer. The answer is to resist the temptation to see the firm as an extension of themselves and view their role instead as custodian of the corporate assets on behalf of the stakeholders.
Previously published in the Business Review, Impact Executives and http://www.onrec.com/newsstories/22545.asp
About the Author
I am currently a Director of Impact Executives which is a Global Interim Management provider (part of the Harvey Nash Group) and in this role I am at the frontline of dealing with senior clients and candidates across a wide range of change, HR and resourcing issues. I have extensive commercial experience gained through general management and board roles within both Plc’s and also through running my own businesses. I have over 18 years international experience of providing cross-functional resourcing solutions to both global businesses and start-ups. I specialise in the following sectors: Technology, Media, Telecommunications, Pharmaceutical & Biotechnology, and Local Authorities. Visit my blog at http://www.impactexecutives.com/journal/clivesexton or the Impact Executives website at www.impactexecutives.com.
How to Develop an Effective Strategy To Reach Your Goals
You can have all the drive and energy, but without the right strategy, you will never get what you want. By the same token, every outcome is possible, given an effective strategy.
For example, imagine yourself as the small business owner of a fruit shop that makes $10,000 in profits a month. Let’s say that you decided to set a goal of increasing profits to $15,000 a month.
Would that be possible? Probably. You could work a lot harder, raise prices, increase trading hours, sell on-line or create a loyalty program.
What if you set a goal of making $3 million a month from your fruit business? Would it be achievable? Most people would say, ‘of course not, there is no way you can make that kind of money from a fruit business like that!’
True enough. Making $3m a month from that fruit business is impossible, if the owner continues to use the same business strategy.
Yet, if he were to completely change the way he now does his small localized fruit business, would it be possible?
For instance, the strategy he could use would start by his studying how to greatly expand his market: he would write a dynamic business plan, raise capital through investments, invest in R & D to develop a superior brand of fruit (for eg. Organic certified food products
are seeing phenomenal growth everywhere as people become health conscious) and widen his range of fruit (eg: offer sun dried fruit without sulfur, candied fruit using organic sugar, pureed fruit rolls for kids), support reliable new suppliers, build a franchise system and then license thousands of business owners around the world to sell his fruit.
Would it then be possible for him to earn $3 million a month? Of course it would! With enough flexibility in our strategy, we can achieve just about anything.
You still wonder how a local fruit shop can possibly expand and go global? Impossible?
Well, how did a British housewife create some skin and hair care products in her kitchen using fruits and vegetables and then pit herself against billion-dollar, heavily advertised international cosmetic brands succeed nationally and then globally?
She developed the right strategy, which included the right unique products. This person I am referring to is Anita Roddick who founded the multi-million dollar chain of Body Shops.
What I have found time and again is that people who are able to produce exceptional results use different strategies from the majority.
When I had the opportunity to work with the top 1% of insurance agents (average yearly income of over $500,000), I found that they did not just work harder than the 97% who earned less than $50,000 a year.
They used a completely different approach in managing their time, generating leads, converting sales and creating repeat businesses.
So, taking your cue from the winners, study their strategies. If you want to be a millionaire, study the strategies of millionaires.
If you want to be a great leader, model the patterns of great leaders.
About the Author
Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his supercharged success secrets and claim your FREE bonus report ‘Supercharge Your Success!’ at Success With NLP.