Being described as having a ‘revolving door’ when it comes to senior management is not a label any sensible company would aspire to. But this is the label Premier Foods has earned from an analyst who downgraded advice on stock from ‘buy’ to ‘hold’ with the news that the chief operating officer (COO) had left the company with immediate effect.
When steering a company through choppy waters, it can be tempting to focus on the immediate problems at the expense of long-term strategy, but when it comes to senior management positions, short-term fixes do not exist. So how should a company approach its succession planning strategy and build a more secure supply of the leaders it will need in the future? And what are some of the common mistakes made in succession planning in multi-national corporations?
First, it is important to understand what it is going to take for a person to be successful in a senior role. There are several components that help define success, including knowledge needed, experience, what the person is capable of doing, and who they are as a person. Quite a complex mix but the components can be assessed separately and necessary gaps filled. For instance, increasingly many organisations see overseas experience as critical and future leaders can be offered the chance to acquire that experience. Similarly finance knowledge is also often viewed as essential and can be gained through education or job assignment. Companies need to identify what skills different people need to succeed in a role and create a development plan that will advance these skills. Remember, senior leaders don't appear out of thin air, it takes the investment of time and effort early on in their careers.
Businesses often fall into the trap of believing that they have a succession plan when in fact they have a replacement plan for if a senior leader leaves - a box-ticking exercise focused on projecting the image that all is well in the company. Creating succession through accelerated development is a much more robust way to create sustainable leadership but who to focus on? Companies frequently pick the best and brightest performers without realising that performance is not the same as potential, and potential is not the same as readiness for a role. All three need to be looked, assessed and considered separately.
When assessing someone's readiness for a role the 'what have they done?' and 'what can they do?' questions are relatively straightforward. It's when it comes to assessing what they will do when in the role that is both challenging and the critical question. This is where a full executive-type assessment is often used to provide the deepest insight about what the person WILL actually do. Having confidence of what the person is likely to do in a role, taking into account critical leadership skills, personality and reactions to actual business simulations gives a robust view into likelihood of success.
More and more organisations are using simulation-based assessments to obtain a more rounded picture of a candidate's leadership capability. Participants in this type of assessment experience a day in the life of a senior leader over several hours where they must respond to various problems and scenarios such as company communications, meetings and conference calls. An analysis of a participant's readiness for leadership, as well as in-depth evaluation of areas for development, is then illuminated
Once someone has been placed in a role it's easy to think that the mission has been accomplished, but businesses need to take a long-term approach if they are to continue to develop a pipeline of future leaders. Companies can use the experience of replacing someone to refine and improve their processes and talent management programme.
There is no magic bullet for succession planning. It takes time and resource to ensure that a business has a pool of talent to draw on to lead it into the future. What we can see from the Premier Foods example is that analysts are now at least looking at key talent in the business and how this aligns with the business objectives.
With analysts now paying more attention to the wider leadership team, it is time for businesses to become more proactive about planning their succession strategy.
Simon Mitchell, UK general manager at talent management firm, DDI
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