Inadequate Succession Planning

Inadequate succession planning, ie not ensuring the next generation of management reflects the new approach. Need to reshape the basis for promotion to fit the changed context; this is most important for Board and senior management to understand and act on. Unfortunately, as Jeffrey Cohn et al (2009) found, most organisations usually promote staff to replicate rather than innovate. This means that to be promoted staff need to mirror the incumbent senior manager's behaviour, etc. This is called "clone syndrome", ie select staff to fit a mould and conform. Furthermore, executives tend to mould their approach on behaviours of their previous bosses and predecessors. This means that leadership traits tend to be reborn in each generation. Executives should have the confidence to be themselves and select others to fill any gaps in their expertise.

.Not realising that succession planning is a process, not an event. It is a process that continues over the years in planning and implementing, ie identifying potential candidates, their strengths and weaknesses and developing appropriate career paths, including job rotations so that they gain the relevant experience
It is more than just an issue for the senior management team; it should be about succession of critical jobs in the corporation
Be careful of similarity bias, ie promoting people who are like us
Some staff feel threatened by succession planning as it suggests they are replaceable. When people feel that they are replaceable, they are more resistant to developing succession plans
Decision to promote from within, or bring in somebody from outside, depends upon
 - skills required and skills available within, and outside, the organisation
- how well the organisation is doing
- if a change agent is needed
- the future direction of the organisation
In general, unless the organisation is in trouble and/or needs to change, it is better to promote someone internally

Need to be careful of employing star performers from outside. These star performers, especially if male, are generally dependent upon a network of people around them in the business culture and the organisation's processes. In a new organisation, the star performers do not have the network available that made them successful elsewhere and/or processes they are familiar with
The importance of diversity - it gives a great return on investment. It is important for innovation as diversity brings "out-of-the-box" perspectives and better access to markets/customers, etc

Much innovation comes from gut feeling, ie it is hard to prove something that hasn't happened already

Diversity is a key driver of innovation

Innovation does lead to better performance. On the other hand, there is very little radical innovation, ie creating products and services that go beyond what is expected by the existing customer.

Incremental improvement is not innovation. For example, in banking the use of contactless payment, ie improving customer interaction, is not innovation but an incremental improvement.  We should be aiming for life-changing, societal-changing, transformative developments in technology that may have ancillary benefits

(sources: Patrick Durkin, 2016c; Nora Scheinkestel, 2016)

. Not including succession planning in the senior executives' performance criteria and remuneration packages. This means selecting and/or promoting, people need to keep in mind attitude, aptitude and fit to organisation's 'new' culture. To encourage executives to do this, some organisations have introduced "good leavers treatment", ie to ensure that the executives are focussed on long-term outlook (including succession planning) by linking and locking in some of their incentives to future fortunes of the organisation. This will ensure that whatever strategic direction they set, they will share in the accountability. One example of this is

"...Senior executive's unvested equity incentives to stay in force after they have retired, rather than being fully forfeited or fully paid out when they go. (Unvested means awards that are not currently able to be exercised and thus cashed in). The executive can only cash in the awards if the company hits its performance hurdles at a later date..."

Annabel Hepworth, 2008

Furthermore, this is designed to stop the senior executives getting the organisations to peak when they are departing and leaving a lot of challenges and problems for the next generation of executives. In other words,

"...you want the chief executive to develop and manage your business's interests having regard to a period beyond their stewardship and to hold a significant portion of their reward for their period of leadership at risk, beyond the period of leadership..."

Annabel Hepworth, 2008

 

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