The training and development community cares deeply about building new leadership talent. Nothing is more important to an organization’s future than ensuring that it will be well led into the future. But what happens if the organization has no plan for leadership succession?

The Monday Surprise

Daryl thought it would be a typical Monday. He depended on it. On Mondays, he arrived at the door of the marketing company he founded, ready to plunge into another week of chasing leads, setting strategy and making sure the company put customer happiness first. As president, he was accustomed to the intense pace. Recently, however, the pace was taking its toll, sapping his energy and enthusiasm.

When he felt this way, he turned his mind to another part of a typical Monday. That part was remembering his assumption that when he wanted to move on, Mack, his chief lieutenant, would step into his shoes. While he had never shared that assumption with Mack, Mack’s great gusto and drive made his ascension to the presidency obvious.

Except to Mack. On this particular Monday, as Daryl settled into his desk chair, Mack strolled into his office to announce he had accepted the presidency of another company.

Daryl stared at Mack in shock. Never had he imagined him leaving. When he found his voice, he asked Mack why he would do such a thing. If he was unhappy, why didn’t he come talk to him? Mack merely replied that whenever he had asked about his future, Daryl would wave him away, saying not to worry.

The State of Succession Planning

The scene above describes a fictional company, but the situation is all too common in real life: A leader’s stubborn resistance to formalizing a succession plan resulted in losing his or her best candidate. There are many companies like Daryl’s. A recent survey of over 500 companies revealed that over 34 percent lacked succession plans. Absence of a plan has many ripple effects, including a loss of talent, the disengagement of top performers and a decrease in stock price when underperforming executives remain.

In view of the significant negative consequences, why do so many companies avoid succession planning? Here are some possible explanations.

  1. Companies may lack a plan because they allow client and employee demands to consume their day. After all, they argue, clients generate the revenue, and employees do the work.
  2. If the senior executive does not want new leadership, then no succession plan will work. Many reasons, conscious or unconscious, might influence his or her resistance:
    • Leadership demands virtually all of one’s time, energy and passion. It can easily control leaders’ lives, resulting in the merging of their identity with the leadership role. Giving it up is tough. As one executive said, “Who am I, strolling down the street of a beach town where nobody knows me as anything but another gray-haired retiree?”
    • Many leaders resist moving on based on the belief that they have not yet achieved everything they want for the company – reaching a certain size, reputation or industry position, for example. Whether their goals are realistic is another matter, but unchecked, they become an argument for staying in their role.
    • Chief executives may have established a legacy and fear a successor will change it. Companies must evolve as industries evolve, and new leaders must adjust company goals to reflect that reality. Nevertheless, former executives often cannot stop feeling that their work, and they, have been repudiated.
    • The chief executive role carries deep authority. While the board of directors exercises institutional oversight, the chief executive’s authority to make most decisions can become habit-forming. Once the office is taken away, with it goes the power. While many executives welcome the opportunity to give up the headache of responsibility, some find it disorienting and frightening.
  3. Like Mack, high-performing employees do what they do best: perform. It’s easy for senior executives to take their commitment for granted. They also can ignore the messiness of developing a succession plan. Executives rationalize their inaction by touting the importance of serving clients, because they generate the income. Without talent to do the work, however, client service becomes moot. If no succession plan exists to direct careers, the best talent will leave.
  4. Succession planning requires serious time and money. An organization must decide what future it wants and then identify the skills needed to advance it. Those skills could represent a change in direction, such as expertise in emerging technologies, the ability to raise capital, or sophisticated communication skills to align diverse cultures and geographies. Implementing the shift in direction and identifying the right people to lead it requires tenacious and time-consuming negotiations.
  5. Leadership succession means uncomfortable conversations. The process of deciding who will move up and who will move out can feel like judgment day for everyone involved. Many uncomfortable conversations ensue, because difficult decisions have to be made.

Next Steps:

If you find yourself checking one or more of the items above, it’s time to act. Here are four key ingredients for launching succession planning:

  1. Write a proposal. Describe the current state and the consequences of not having a plan, and outline a process.
  2. Seek buy-in. Identify and win buy-in from the key stakeholders who can address and do something about the issue.
  3. Engage appropriate expertise, internally and externally. You will need succession, legal, financial and organizational development expertise. You also may want an advisor to help mediate the transition.
  4. Prepare yourself for a lengthy evolution. Leadership transition is challenging, even when widely supported, because it involves so much change. Nevertheless, the future of your organization depends upon it.