C-Suite Shake-Ups: The Unpredictable Reality of Succession Planning

[00:00:00] Debbie Goodman: Hello everyone. Welcome back to On Work and Revolution, where we talk about what’s shaking up in the world of work. I’m your host, Debbie Goodman. I’m CEO of Jack Hammer Global, a global group of executive search and leadership coaching companies. We help find great leaders and we help develop them into even better ones.

My main mission with all of my work is to help companies and leaders to create amazing workplaces where people and ideas flourish. And today, today we’re diving into the murky waters of succession planning and why succession plans fail. From a kind of different perspective that of an executive search firm, CEO, namely me, Mo.

Okay. Let me tell you, the view from here is interesting, to say the least. We’re often caught in the middle of very high stakes corporate dramas. We’re privy to some information, but not all. And then we’re tasked with navigating the complex, often quite opaque world of C-suite appointments and transitions.

So, a little bit of a disclaimer here. I can’t claim to be a fly on the wall in every boardroom discussion, but after years and years in this business you develop a kind of like a sixth sense for the undercurrents and the boardroom politics that shape these decisions. And I wanna share a recent example that illustrates just how absolutely unpredictable this process of leadership succession can be.

Okay, so we were mandated, so Jack Hammer Global, we were mandated to source a new CEO for a listed company in South Africa, we did this really exhaustive search, exhaustive and exhausting. We presented an amazing shortlist. The board was really super happy. They decided on a fantastic candidate, excellent decision.

Offers were made, offers were accepted. The candidate resigned from their current position. We were almost ready to pop the champagne, and then the board pulled a complete 180. Suddenly we were informed that the existing CEO would be staying on a little longer, and the role of the new guy was gonna be something else for the next year at least.

I mean, can you imagine the whiplash? So this kind of last minute change isn’t just a minor inconvenience. I mean, it can be completely career altering for the candidates involved and a lot of cleaning up needed to do in this kind of situation. So you might be wondering, how on earth does that, does this even happen?

And that’s where the motivations behind boardroom walls come into play. Decisions around new C-level appointments aren’t always made based on who’s best for the job or even what is stated in the objectives of the mandate. I’ve seen brilliant candidates being passed over because they didn’t align with maybe one single board member’s vision for the company’s future.

I’ve absolutely seen personal biases and agendas that ultimately shaped outcomes in ways that are sometimes pretty surprising. And our role as Executive search partners is to manage these dynamics and somehow ensure successful outcomes for both the board, the current incumbents and new appointments, which is not simple.

I guess that’s why I still do and love the work I do. And then here’s the thing. It’s not always the board that causes the drama. Here’s another scenario that keeps boards up at night. So just picture this. A CEO is instructed by his board to start looking for an external successor. Sounds straightforward.

This happens every day. CEOs are eventually gonna retire or move on, or whatever it is. They’re gonna make some kind of transition, and so this is kind of deger, it’s gonna happen periodically. Should be simple. Isn’t always. So in this situation, the CEO is finding himself in a bit of a bind because all the seats on the executive team are currently filled by very competent people.

He doesn’t want to lay anybody off, he doesn’t wanna retrench anybody. He doesn’t need to fire anybody. He also doesn’t wanna create a made up role for the potential successor, somebody coming in during a transition period because that could be just demoralizing for everyone involved and kind of disruptive to the company’s operations.

So he has this dilemma. And what does he do? He does nothing. Now without a clear path for bringing in new talent, the board is left without a solid succession plan. And it’s this kind of catch 22 that I see play out over and over and I get it. It’s sometimes very complex. but what this particular situation highlights is a really

 complex talent development dilemma. Many companies are actually not that great at developing internal talent for their C-level leadership roles. They might have like a high potential program or some kind of other leadership development offering, but often these are more about talent retention than genuine specific C-level development.

And over the last, I’d say two decades or so, I have consulted with top companies all over the world that were a little shocked to find they had no actual viable internal candidates for key leadership roles. And this is despite lots of internal development programs. I mean, in some respects it’s great for business, I mean my business,

 but I often ask the question, how did this happen? So the reality is, is that even when an organization has done some excellent leadership succession planning, even the best laid plans can go a little awry. So let’s talk about a recent high profile case in South Africa that sent, I’d say many shockwaves through the financial services industry.

So this is the appointment of Kenny Fihla to Absa. Now Fihla was deputy CEO at Standard Bank Group, and to all intents and purposes, a very likely successor to take over from Sim Tshabalala in the role of group CEO. And then, there was this move that caught quite a lot of people off guard. He resigned from Standard Bank to take on the role of group CEO at Absa Bank.

And this kind of unexpected move can throw a very carefully crafted succession plan on behalf of Standard Bank into kind of disarray. And it’s a very stark reminder that even when you think you have all your ducks in a row, the human elements can always throw a curve ball. So let’s talk about solutions.

What could the solutions be to handle these kinds of challenges? And the reality is, is there’s no one size fits all answer. But I have seen a few strategies that work and it’s not one you need to deploy sort of multiple of these. So first of all, let’s talk about transparency. Well, transparency to a point.

Boards need to be as open as possible about their succession plans. Whilst, I mean, they obviously need to maintain confidentiality in some respects, but so they don’t need to broadcast every single detail to the entire company. But it does mean keeping key stakeholders, particularly internal candidates who apply for a C level role or any role actually keeping them informed and aligned.

Because when people understand the process and the reasoning behind decisions, they are so much more likely to support the outcomes. Number two. Flexibility in roles. So despite earlier I spoke about the example of the CEO who was struggling to figure out what kind of role does he put somebody in as a transition plan.

Creating these transitional positions or co-leadership roles is absolutely necessary. They’re the ones that provide a pathway for new talent. Without immediately displacing current executives, so maybe an acting CEO, CEO in waiting or some other kind of co-leadership role, splitting responsibilities between current and incoming leaders for a certain period is really necessary.

It’s not smooth sailing. I’m not saying this is simple, but it can provide a really valuable transition period, and in instances like the one I described, have absolutely critical. You can’t just do nothing. Then there’s ongoing talent development. So rather than waiting for a crisis, companies should continually identify and nurture potential future leaders internally and externally.

So this means investing in leadership development programs and also providing like actual practical stretch assignments, opportunities for people that are earmarked for succession to actually see what they’re capable of doing and leveraging all of the learning and development and training in actual practice so that you kind of build a bench of talent and not just one person.

 Because here’s the thing, succession plans, and this is number four, need regular review and I think adjustment all the time to reflect the changing business needs, the changing talent landscapes. I think personally that companies should be reviewing their key leadership succession plans annually.

Who do they have internally? What does the external talent market look like? And honestly, if the shit hits the fan, what’s the plan? Excuse my language. Alright. Scenario planning. Given how quickly things can change, it is crucial to have multiple succession scenarios mapped out. What if your chosen successor leaves unexpectedly?

We’ve just seen that happen. What if market conditions dramatically shift the skills needed in your next leader? So having a thought through scenario situation in advance can sometimes help organizations respond more quickly and effectively when something unexpected occurs. And then, dear boards, we love you.

But we’d love it even more. If you were to openly communicate with your search partners, please. The more we know about the real dynamics at play, the better we can navigate all the pitfalls. There’re going to be pitfalls. We know that, and we can help find solutions that then work for all parties. So be upfront about the challenges, the concerns, the expectations.And also, I mean, I would love it if it could be true partnering and we can share feedback on what we are hearing in the market. I would so love to be working in tandem with all of the boards that we partner with. All right, so here are some closing comments. In the end, successful succession planning is as much

of an art as it is a science, it really requires deep understanding, not just of business needs, but of the human dynamics at play. And as we’ve seen with cases like high profile move from one bank to another, even the best laid plans can be upended by unexpected opportunities or changes of heart. The key is to remain, you gotta remain adaptable.

Keep lines of communication open and then have plan B and C and D if possible. It’s also worth noting that the landscape of succession planning itself is evolving because we have the rise of remote work, the increasing importance of digital skills and ai, the multi-generational workplace. I mean, these are just three of a very few factors which are shaping what companies look for in their next generation of leaders, which is gonna look very different from the landscape even two years ago.

For sure the traditional model of grooming a single successor over many years may no longer be sufficient. Companies are going to need to move and pivot quickly, and so having a diverse pool of leadership talent ready to step up, or at least ready to be tested, is really what every company and board should be striving for.

Okay. So for those of you who are in the various roles as they navigate succession planning, what does this all mean for you? So whether you’re a current leader, an aspiring executive, or someone involved in the HR and talent management space, First, if you are in a leadership position, then take succession planning seriously.

It’s not just a planning for your own successor. It’s about building a culture of leadership development throughout your organization and having succession planning is a key part of both sustainability and growth is a critical agenda item. I think it has to be constantly on the agenda. Then if you’re an aspiring leader, you need to be focusing on broadening your skills and experience all the time.

Seek out opportunities to work in different parts of the business. Lead cross-functional teams, develop your strategic thinking skills if that’s not a natural aptitude for you. You’re gonna need mentors and sponsors internally. So start working on that. And then if you are involved in the talent management or a HR space,

pushing for a more dynamic, ongoing approach to succession planning is really critical. It needs to be a consistent agenda item, not just a response to an emergency, which is what I unfortunately do see a lot. I. Mostly just the crisis issue. Oh, now we need to think about succession planning. Okay. So there’s been a lot here, a lot to think about.

 I get it. Balancing all the variables in succession decisions is, I dunno, it’s, it’s a bit like juggling flaming torches while walking on a tightrope, but somebody’s gotta do it when you get it right. I mean, that’s the magic of the work we do. I guess it’s one of the reasons why I still really love my job.

 But it’s not straightforward. It’s never straightforward. Regardless of which role you find yourself in and which table you’re sitting at, do expect it to be a slightly bumpy, rollercoaster ish ride. Okay, that’s all for today’s episode of On Work and Revolution. I’d love to hear your thoughts.

So, have you been involved in a succession planning process that went off the rails? How did you handle it? Or maybe you’ve been part of a succession plan that was just worked brilliantly and I’d love to hear what made it successful. So until next time, this is me signing off. Keep revolutionizing the world of work.

I’ll catch you on the next episode. Bye now.