In the last few months there have been a number of changes (or impending changes) at the helm of large global companies. Some of these organizations have demonstrated great preparedness and others…well…not so much.
Textron’s CEO, Lewis Campbell, announced his departure in September. Not a moment was lost before the company was able to confidently announce his successor. At Intel, the pending departure of CEO Paul Otellini has set motions in place that included the departure of two key senior executives, while at the same time starting a race between three others vying for the top position. Intel is known for putting succession plans in place years in advance of a departure allowing the company adequate time to groom executives.
Bank of America’s CEO, Ken Lewis, abruptly announced in October his earlier-than-planned departure at the end of the year. They did not have a succession plan in place. One Bank of America director shared that if they had more time they could have started to work on it. This has forced the company and its Board of Directors scrambling to find a successor.
One of the key messages that I send every time I talk about succession management is that a company has to assume that their CEO could walk out the door tomorrow or get hit by the proverbial bus. A company cannot expect that they are going to have fair warning. It has to have at least one or two successors lined up for every key role, especially the CEO, and they must be placed on formal and prescriptive development plans.
There are many organizations, like BofA, without strong succession and development plans for their executives. In our recent Leadership Development Factbook study of over 350 companies, we found:
Only 37% of companies rated their executives’ capabilities as “excellent.”
Twenty percent of companies offer no development to executives.
Less than half of executives have development plans.
There are many reasons for this lack of attention on executive development. Simply, business comes first. Executives are busy running the company and not focused on development. Also, there is no accountability for executive development in many organizations. Without boards of directors engaged in the identification and development of successors to key executive roles, development is an afterthought. By ensuring succession management is a priority within the organization, the board impacts the overall effectiveness of the process.
The world is changing, primarily as a direct result of the economy and shifting workforce demographics. How many more management shuffles will take place? I suspect quite a few. You may be working for one of those organizations. Does your company have a solid and transparent succession management process in place? How quickly would your organization be able to respond to the departure of your company’s CEO or other key executive?
Our first ever Leadership Development Factbook will be published at the end of the month. Stay tuned.
For more information about High Impact Succession Management, members can access the industry study on our website. The report can be purchased at http://www.bersin.com/Store/.