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Making a success of successions

By Michael Stern 26th March 2008


In business and in politics, leadership means everything. No wonder, then, that one of the most troublesome processes in business is transition.

CEOs, U.S. presidents and Canadian prime ministers enjoy tremendous decision-making powers while in office. But they find they have little say in the most important decision of all: who will succeed them. In politics this is known as democracy. In business we call it good governance. But the fact remains that leadership transitions remain disruptive processes that are fraught with peril and, almost by definition, unmanageable.

Jean Chretien couldn't prevent arch-rival Paul Martin from succeeding him. Bill Clinton's populist coat-tails didn't stretch far enough to get Al Gore elected president, and it looks like they might not even get Hilary the nomination.

In business, boards of directors commonly define themselves through their paramount role: the ability to hire and fire the chief executive. Only in family-owned and closely held businesses are CEOs generally able to pick their own successors, but even that raises problems. (How's your retirement coming, Mr. Stronach? Mr. Rogers?)

Maybe the Russians have succession right: term limits, with benefits. A national election early this month saw bureaucrat Dmitry Medvedev, Russia's first deputy prime minister, succeed hard-line president Vladimir Putin, who had completed his maximum two terms in office. Although Medvedev, a lawyer, was Putin's handpicked successor, he has talked openly of rebuilding relations with the West and extending the rule of law - policies that could take him in a different direction than his mentor.

But Putin isn't worrying. In return for his support, Medvedev agreed to appoint Putin prime minister - a powerful post that will keep him in charge of the government and just steps from the Kremlin. Apparently he's a strong believer in the old Russian proverb, "Trust - but verify."

For those who lack Putin's backroom clout, how do you ensure that a leadership transition runs as smoothly as possible? If you're a part of the selection team, make sure you have clear, measurable objectives - and stick to them. And if you're the incumbent leader trying to manage the process, stay out of it.

Chief executives play a crucial role in identifying and developing executive talent. But there are several reasons to keep current leaders out of the loop when picking their successors.

• New leaders need a clean break. If they owe their position to their predecessor's influence, it could constrain them from making changes the organization needs.



• Old leaders tire. The old fire in their belly for improvement and innovation cools naturally over time. Sometimes they become more focused on preserving what they've accomplished than positioning the organization for the future. Either way, once-radical leaders can become foot-dragging agents of the status quo - and questionable assets when selecting people to lead the next growth phase.



• Times change, opportunities change, and organizations need new perspectives. If the same personality, sensibility and approach that made the organization what it is today gets to decide who will lead it tomorrow, then where will the new ideas come from?



• Finally, a CEO selection committee needs to think and speak freely. Members have to be able to analyze the organization's needs and openly discuss its challenges. Having the incumbent CEO in the room tends to discourage candid comments and truncate the "weaknesses" debate. I've seen executives kicked off selection committees because they just couldn't put the company's needs ahead of their ego. But who could? Save both sides the embarrassment and keep the CEO focused on doing their job.

Chief executives can and must play a role in the process, but early on, in the background. The selection committee must meet with the CEO to get all the information it can about where he or she sees the company, its market and its competitors going. The chief executive can tell them about the biggest opportunities and challenges facing the company, and offer suggestions for how the leadership role itself should change. But committee members must also seek out other views, and then decide for themselves how much weight to put on the CEO's testimony.

Once they understand the company's needs and the requirements of the CEO role, committee members must set achievable objectives: what type of person are they looking for, what experience or qualifications are must-haves, and what qualifications are nice-to-haves? Those objectives must remain as touchstones throughout the process to remind the committee members where they started out, and what they were trying to achieve.

The selection committee also need to find one key person to lead the process, keep it moving forward and ensure that the job gets done: an experienced business leader who has been there before and knows where to look for candidates, what questions to ask, and how to "sell" top prospects on the company (every interview is a two-way evaluation, after all). It could be an executive search consultant (yes, my bias is showing), or a lawyer, a senior HR person, an executive coach or a former CEO who has seen this show before.

Any committee process involving foibled human beings (i.e. all of them) is imperfect. But with a little focus and forethought, even this imperfect process can bring about an inspiring result.