Succession Planning for the Silver Tsunami
Succession Planning is one of the new business topics “du jour” in boardrooms and C-suites across America. The second decade of this century ushered in the silver tsunami of Baby Boomers who will be entering retirement in record numbers. Like in the 60s, the Baby Boomers will continue to put their own spin on this next chapter of life.
The challenge for business going forward is a massive brain drain of leaders at all levels of for-profit and non-profit companies. Leadership transitions will be occurring on an unprecedented scale. The need for succession planning and smooth leadership transition will be paramount for every company.
Much lip service is paid to the importance and need for succession planning but rarely is succession planning done well across business sectors. Boards usually depend on the CEO to bring the topic up. CEOs are inclined to put the topic off.
CEOs as a species tend to be an interesting mix of ADHD and ego along with the other talents required to secure the top spot in their companies. Healthy ego is an essential trait for any CEO. One must have an ego that drives the internal confidence to take on the job in the first place. The rapid fire thinking of CEOs is also a helpful trait given that the average CEO must deal with a different issue and set of data every seven minutes.
Unfortunately, rapid fire thinking and a belief in self synergistically interact as internal obstacles causing many CEOs to gloss over the topic of succession planning. The lack of focus and the subconscious belief in leadership immortality in the current job create a level of denial –“The timing isn’t right”; “We will get to succession planning next year because we have too many other pressing priorities to attend to this year;” or, “I’ll think about succession planning as I get closer to exiting the company.” These beliefs work against a thoughtful succession plan for the company, leaving the company vulnerable to dangerous uncertainty.
A great analogy is a relay race. Individual runners may be excellent but the most tenuous time of a relay races is the passing of the baton. Lack of planning and practice causes batons to be dropped or racers to stumble. The best relay races exist with teams that have a clear plan and practice the passing of the baton to assure a smooth transition between runners.
Like the relay race analogy, leadership transition, especially of the CEO, can be a hazardous time for any company. An environment of uncertainty exists for internal and external stakeholders that can have a negative effect on short term and long term results. Uncertainty cascades internally through all levels of the company causing good performers to evaluate whether they will stay and take their chances with the new leader or jump ship to another company.
At best, the leadership transition is a distraction that can decrease productivity and results. Uncertainty also exists with the company’s key customers and can affect customer loyalty and top line revenue. The longer the transition takes the more uncertainty reigns. Therefore, solid succession planning is good business and will be even more important as the silver tsunami takes its toll of retiring leaders.
Succession planning requires thoughtful governance policies and planning, an internal assessment of potential candidates, identification of potential successors for each of the key positions within a company, and under what conditions an external search should be initiated. Additional factors to consider include internal and external communication plans that are timed to allow for respectful appreciation of the leaving leader and maximum positioning of the successor. When succession planning is done right, the passing of the baton is a smooth, “non-event.” C-Suite executives feel secure in their positions, staff focus on taking care of business, and external customers and stakeholders feel secure that the company continues to be in good hands.