Succession planning can be one of the most important ways to protect the longevity of your business. Unfortunately, far too many leaders overlook its importance. The result is never good—and can end up as a publicity nightmare.
Take the recent case of what happened at Disney. For 15 years, Bob Iger led Disney as the powerhouse brand’s CEO. When he was ready to step aside in 2020, Bob Chapek took his place. The only issue? Iger apparently wasn’t really ready to step aside at all. Instead, he installed himself as the executive chairman directing the company’s creative endeavors and chairman of the board. Within two short years, Chapek was ousted, and Iger returned.
Though there were numerous reasons for Chapek’s departure, a lack of proper succession planning probably tops the list. Reportedly, Iger had great mentorship. He was supported and groomed for his eventual promotion to CEO. In contrast, Chapek never received that kind of trust-building mentoring from Iger or many of his C-suite peers. Is it any wonder that his tenure soured quickly and led to major headlines that now serve as cautionary tales for other businesses?
If even the House of Mouse can be brought down by poorly handled succession planning, it’s possible for any company to stumble when trying to replace one leader with another. To avoid becoming better known for your succession plan mishaps than your operational wins, you’ll want to know the most common mistakes to avoid. Below are three big stumbling blocks and how to bypass them:
1. Waiting until you need a leader to plan.
We often talk about the truism of “death and taxes” being the only things you can count on. But you can count on the fact that your leaders will churn one day. Whether this is because they resign, retire, or sadly pass away, they won’t be at the helm forever.
The last thing you want is to have to make a knee-jerk decision on how to replace a CEO, CFO, or other leader. That’s why you need a well-considered succession plan. The plan will serve as a map that you can follow. You’ll be glad you have this framework laid out in advance because succession isn’t as simple as just posting a job listing and interviewing candidates. The process can cause ripple effects, such as waning stock (if you’re a publicly traded company) or fearful or skeptical employees who tender their resignations.
According to research from Gallup, around one in two people have quit their jobs due to conflicts with leadership. Therefore, be sure your succession plan includes how and when you’ll communicate decisions to workers. You have to walk a fine line between confidentiality and transparency so your high-performing team members are less inclined to say goodbye and leave your new leader with a sinking ship.
2. Neglecting the importance of cultural alignment.
Every business has a culture. This means that the CEO who might be perfect for one company might be absolutely wrong for another. It’s not a reflection on that person but an illustration of how important cultural alignment is to your succession planning. You never want to make someone in charge if that person is doomed to feel and appear out of place from day one.
Sarah Woods, head of office of BTS Boston, an advisory firm that partners with executives and their teams to shape how leaders engage and align the organization to drive results, stresses the importance of evaluating possible replacement leaders according to how they’ll be received culturally. She cautions against assuming anything in this area of succession planning. “While you may feel you ‘know it when you see it,’ that approach is a high-risk gamble for guiding all the stakeholders to find the right culture fit,” writes Woods. “Clarifying and documenting your unique leadership culture—the best and worst of—and what it looks like in action are important parts of the selection process.”
Admittedly, searching for someone who will slip into place effortlessly from a cultural perspective will take time. Meanwhile, you might have to make do with interim leadership, such as keeping on an ongoing leader, allowing your board to make decisions temporarily, or enabling a team of C-suite executives to steer for a while. Your patience will pay off in the long run because you won’t find yourself with someone whose views and objectives run in stark contrast to everyone else’s in your company.
3. Forgetting to fold inclusivity into your succession plans.
If your company is like 83% of others, you have some kind of DEI initiative in place. That’s terrific and can help your business remain competitive in an atmosphere where both employees and consumers are eager to work with inclusive organizations. However, you shouldn’t overlook DEI when creating your succession plans. Otherwise, you may wind up reverting to biased ways of naming a successor.
Traditionally, many succession attempts include placing only the “heir apparent” into the open role. As you might suspect, that individual is often part of a rather insulated, homogenous network. The person might not even be as qualified as other applicants. Nevertheless, they earned the promotion because of old-fashioned (and frequently biased) “rules.”
To make your succession plans inclusive, you need to go beyond the “there’s only one obvious person to fill this leadership position” mentality. For instance, seek applications from people both inside and outside your organization. And take time to update what your incoming leader actually needs to possess in terms of skill sets, experience, and education. Your old executive job descriptions probably haven’t been given facelifts in years. Now’s the time to freshen them up. Then, you can start rethinking your interviewing and onboarding procedures so you don’t miss the opportunity to be inclusive and line up your hiring with your DEI goals.
Succession planning isn’t an exact science and takes some work to get right. Nonetheless, it’s essential if you want your business to avoid problems when leadership changes occur.