Start early to find the right successor

While the UAE has put part pay to Benjamin Franklin's adage that the only certainties in life are death and taxes, the remaining irrefutable end stands. However, for businesses even demise is preventable, and one key aspect of ensuring its continuity is in planning ahead for the departure of its CEO.

The process of choosing a CEO needs to be a holistic yet intensive procedure ensuring that the end result is not just a case of satisfying audit requirements or having a walk on CEO in place should the current one pass away suddenly.

When is the best time in a CEO's tenure to be thinking about succession? At the very beginning. There are two critical reasons.

- Given the length of time required to implement strategy, an organisation needs to ensure that the correct people with the required blend of experience and leadership are getting sufficient business exposure while being intensely tested so the chosen candidate can be in a position to take over the reins when the time comes.

- Where the process does not begin at start of a CEO's tenure, there is a temptation to delay or reduce the effectiveness of the process as it might be seen as preparation for a Boardroom coup.

Here is a step suggestion for a succession plan.

- The CEO must lead each stage of this process. Family or CEO-owned businesses find this exceedingly difficult and with the high likelihood of a board of directors made up of family and friends, there is likely to be a broad unspoken consensus for the status quo. A solution is to move the CEO to chairman, defining the chairman's role clearly, which by default clarifies the requirement for the incoming CEO.

In larger organisations, the operationalising of this process falls to the HR director, a unique and challenging task that requires a strategic approach, which would in every other case be tactical or operational.

- Define the skills required to deliver the business strategy.

- Identify internally and/or externally employees who can meet this requirement with the correct business exposure and training, and finally have innate leadership skills.

- Put in place a plan that will result in the selected candidates being ready for a final process prior to one being (potentially) elevated to the CEO position.

- Formulate a strategic plan that marries the business vision to succession. Analogously, the planning of a new factory to exploit a product must be such that it maximises its potential in line with long-term business goals. In choosing the next leader, the mix required is a blend of requisite skills and raw talent. In both cases, careful planning through asizing of the competency gap is necessary to achieving an optimum result.

- Clearly define the core skill set required. In these tumultuous times what was valid two or three years ago has likely violently shifted. Contingency plans will go some way to assuage the situation, but there is no doubt that many of the competing individuals will have seen their potential rise pass them by, in many cases through no fault of their own.

This definition is multi-faceted. Industry experience must be balanced alongside softer skills such as implementation, change management and critically, leadership.

Industry experience may require a blend of proven positive customer experience and contribution to the debate about global trends. Granulating the type of leadership required might include strategic foresight, integrity and identification and training of star personnel. Weighting can be applied to each and tests formulated to ensure candidates reach a minimum standard.

 

A fair examination

While executives can communicate the subjective, their preference is for the tangible. The succession measuring methodology must be a fair but testing examination of the individual that is ultimately chosen.

- Assess the business's internal talent pool identifying those who meet minimum criteria for potential candidates. Place these select persons on a fast track programme using the previous point's criteria as an ongoing scorecard.

There are highly developed programmes to monitor the performance of key individuals. Combinations of interviews, psychometric testing, peer review and referencing paint a comprehensive picture of a person's character.

Certain characteristics under review may be challenged. There are those who believe that softer skills are inherent; leaders are natural born not developed. This is partially true and is generally considered to be the hardest to acquire. The ability to implement successfully is a similar proposition, albeit a less difficult exercise to enhance through training, thus, the choice of a candidate biased towards industry background may lead to a sub-optimum result as time required to bridge the skills gap will not be available once the appointee has commenced in the role.

Independent involvement in this process is crucial or the temptation to laboratory develop a CEO clone may be unconsciously overwhelming. This might take the form of a non-executive director or a specialist recruitment consultant.

- At this stage, the process has brought together the position of the CEO, the strategic goals of the business, identified the key skill set necessary to achieve these goals and identified a number of candidates who are suitable.

External candidates can be healthy as it brings an infusion of non-partisan ideas to the business. This is a rational hedging.

Exposure to different parts of the business should be given to each candidate, who optimally should function, in large businesses, a couple of tiers below the CEO. Not only does this enhance each person's macro understanding of the business, but it should mean that they are in a position to learn to ask the right questions to the right persons.

Couple business experience with executive training or better, coaching. These have three components, product/service, management skills and leadership. The market has many excellent programmes available beyond the MBA.

As a leader of this process, the CEO must monitor the progress of these individuals. Organisation charts should reflect the current and planned positional postings with accompanying documentation that lays out the goals for each person. A file detailing the achievements and failings of each candidate, their training and a total score should be maintained.

Each person should present to the board of director's at least once annually. This is educational, professionally and socially, to both sides ensuring a workable fit.

Many organisations have outreach into community programmes and involvement in these is a good indicator of the non-business skills a CEO requires. This has the added benefit of exposure to public figures while building up goodwill and respect within the wider community.

 

- The writer is a senior financial consultant based in Dubai. The views expressed are his own