Succession is an issue commonly associated with the people in an organization who have reserved parking spots and an office with an actual door. It is a small wonder, given the drama that often ensues with even a murmur about a shift in C-Suite power.
The assumption that succession is exclusively an issue for “big dogs” could not be more mistaken—or dangerous.
For any business leader intent on successfully managing long-term risk and sustaining competitive advantage, an enterprise-wide succession plan must be prioritized. Without deliberate focus on the development of a holistic strategy to attract, retain, and advance the best available talent, companies are vulnerable on many fronts.
Another reason why succession deserves C-suite mindshare is the importance of continuity. At a time when businesses are experiencing rapid and profound changes, internal and external stakeholders prize stability more than ever. A clear and proactive plan for orderly succession is one thing that can contribute to certainty—especially under the intense scrutiny of capital markets.
I’ve found that succession is holistic and multifaceted from working with and building many companies. My formula is as follows: Succession = Empowerment + Communication + Culture.
Find a champion & take stock
Too often, succession planning gets overwhelmed by the myriad distractions of short-term crises and concerns. Furthermore, it tends to be narrowly classified as a human resources matter rather than a broader strategic issue. This is especially true in lean operations, with limited bandwidth for anything deemed discretionary.
For these reasons, it is ideal to identify and empower a succession champion from the senior leadership team, someone with high-level insight to oversee a plan that reflects changes in strategy or markets. That helps to ensure that any shifts in how talent is developed and deployed are smoothly accommodated.
Once you’ve identified a trusted senior leader, their first critical job is to take stock. Whether you’re a centralized or decentralized organization, taking stock of your organization is key. This isn’t just listing names in an excel document. Instead, it’s an in-depth analysis of individual employees’ strengths, skillsets, weaknesses, interests, and potential trajectories. Included in this exercise is identifying positions within the company that are integral to the functionality and continuity of the business.
Over 43 years of building businesses, I have learned that one of the most effective and durable ways to bind decentralized operations is to develop a strong internal culture. It must be sufficiently flexible to allow for regional or local nuance while aligning with overarching principles.
The challenge of establishing and maintaining an enterprise-wide talent inventory and a consistent culture has been exacerbated by the recent boom in growth through mergers and acquisitions. Global deals hit a new record in 2021, pushing together far-flung companies that often have disparate cultures, workplace structures, markets, technology systems, and leadership practices. Each factor presents a daunting challenge when planning and executing succession strategies.
Simple and consistently articulated values can create a unifying touchpoint that builds a common purpose and reinforces long-term priorities—like succession. Across the network, it requires engagement and indicates that it will be used to measure their overall success. You build a sense of continuity with a strong culture that can withstand change.
Backed by consistent communication from the top, the goal is to develop and maintain a robust internal culture to garner the same attention as financial reviews and reports.
The winning formula
An internal culture that elevates succession, communication, and transparency is both a means and an end: Employees who clearly understand their role and the opportunities in an organization’s long-term goals are much more likely to engage and stay.
Keeping employees fully engaged with and connected to the company at every level has several benefits. For one, it saves on the steep cost of searching for and onboarding talent. For those focused on cultivating a diverse team, a company with a reputation for advancing talent helps to attract the best in the business. If employees can see future opportunities and how they could grow at the organization, they will be nimbler if roles shift.
That said, one size does not fit all. Developing a resonant culture and a firmwide succession strategy depends on several things: the size, the sector, whether a company is public or private, the influence of outside directors and advisors, the structure of teams, the industry, and how new business is generated.
The ultimate determinant of the desired outcome, however, is authenticity. As it is with people, if any initiative is not aligned with how a business conducts itself every day, it will not work. It is often said that nothing succeeds like success. In my view, nothing succeeds like succession—at least when it’s done right.
Miles S. Nadal is the founder of Peerage Capital Group. Over his 40-year career as a respected entrepreneur, philanthropist, and thought-leader, he has refined his partnership principles for business building. Miles and his family support several local, national, and international organizations. He is also a founder of the Milken Centre for Advancing the American Dream and has been a contributor to many news organizations including CNBC, MSNBC, Fox News, and Bloomberg News.