WHO can forget the surprise mingled with pleasure when, instead of a veteran Olympian setting the Olympic cauldron ablaze, it was the next generation of athletes who stoked the fire of ambition and imagination?
Passing the torch on is a lesson many businesses should pay heed to, particularly when it comes to succession planning. A survey by PricewaterhouseCoopers revealed that while many companies think they have an effective programme in place to identify the leaders of tomorrow, in reality they’re focusing on a handful of high-potential executives considered to be next in line for the big corner office.
The lack of a succession strategy is as common in the board rooms of large global companies as it is in smaller businesses, if not more so. In the United States, 60 per cent of HR directors working for large companies admitted that their firms had no chief executive succession plans in place. Governance is one of a board’s most crucial responsibilities, particularly as low levels of management skills can have a major impact on a company’s profits.
When looking to the future, directors need to ask themselves not “what do we need?” but “what will we need?” in a chief executive. The board should set clear long-terms goals and a strategy as to how it is going to meet them.
Succession planning should take into account the external market and the calibre of candidates available to allow internal succession plans to be as robust as possible. The appointment of a high-profile external candidate as chief executive can grab headlines and have a positive impact on the share price. But an internal successor groomed for the role, and who knows the business inside out, can often be as valuable an appointment.
A well-crafted, smoothly executed plan is essential to ensure the transition process is seamless to ensure the company’s flame continues to burn brightly. After all, while we are still basking in the reflected glory of the London 2012 Olympics, Team GB is already in training for Rio 2016.
l Sean Buchan is vice-president Europe Middle East and Africa at global executive search consultancy Maxwell Drummond International.
