“The best way to have good ideas is to have lots of ideas.” – Linus Pauling
Researching the “sensitive matter” of succession, we were astounded to uncover quite a bit of fluff regarding Board and CEO complacency, as:
Only a minority number of Boards have an “active” board-directed succession plan
While most public companies “invest” in leadership capital, few realize the expected payoff.
In fact, surveys have found that less than 20% hit the mark… below the “Mendoza Line” in baseball terms.
We observed the most successful and have identified four commonalities of Boards and CEOs that are successfully leveraging their investment in leadership.
First, and most importantly, the successful recognize that the quality and depth of executive talent is an insurance policy toward future enhanced performance, and that requires serious ongoing engagement and continual commitment to its development, monitoring, and evaluation, not just an occasional or quarterly/annual “antidotal” session. They are actively and continually engaged, and, in fact, make succession an integral part of their meeting agenda, as well as a critical element of the CEO job description and annual performance evaluation. And, just as important, they do not abdicate this responsibility, nor the necessary judgments, to their senior team, or simply to the CHRO.
Second, given current uncertainties, the successful appreciate the need for a deep talent bench to be “at the ready” to “advantage” strategic opportunities, address a crisis, and to be competitive regardless of asymmetrical and black swan events. They smartly and flexibly invest in leadership capital and recognize that the returns exceed any opportunities lost.
Third, the successful develop and follow a well-oiled process, providing clarity and communication consistently in engaging with their high potentials. Along with the diligence to become very familiar with their future leaders and their strengths, development, and track records, they make it their responsibility to know the depth chart, and provide honest feedback and direction. They smartly allocate the necessary resources to ascertain “who” is best qualified to be entrusted to lead their company’s future…. acknowledging that the decision of “who” and the return on leadership is just as important as any specific capital investment or strategic action.
As a last point, as an integral part of, and, as a supplement to, their talent strategy, many of these Directors and CEOs believe that they must be external talent scouts as well. A best practices trend among these Boards and CEOs, is a recognition that to stay ahead of the proverbial curve, it is their responsibility to act and move beyond insularity, seeking assistance from our Firm to assure that they are aware of the talent that can be made available as required… real time.
The Bottom Line… as Gandhi suggests, “A sign of a good leader is not how many followers you have, but how many leaders you create.” Regarding a return on talent, these Boards and CEOs know that you can’t delegate the future.
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