How to navigate the perfect storm of succession planning

THIS time last year the world was eagerly waiting to find out who would become Waystar Royco CEO ahead of the final season of Succession – the TV show that thrust succession planning into the minds of millions of viewers who’d probably never even thought about it before. 

While the dilemma faced by Brian Cox’s iconic Logan Roy character certainly made for superb drama, it also reflects the challenge facing many organisations as they struggle to identify the right talent with the capability to take on the top job. 

We regularly speak to CEOs of companies across Scotland, and the majority of them tell us they don’t believe the talent to succeed them exists within their current senior leadership teams. 

Census data also indicates there is also a contracting pool of traditional talent to choose from in Scotland, with an ageing population and fewer people in the 40-50 age category – where the majority of C-suite professionals are typically drawn from. 

Organisations tell us of a dearth of emerging leaders in Scotland, and it’s a problem that’s been brewing for some time. 

The causes are partly due to circumstances, with major PLC roles, particularly in financial services, migrating south and taking talent with them. 

We also used to see young Scots graduates leave for London, cut their teeth and develop their potential, before returning in their 30s to put down roots. With fewer opportunities north of the border now, it’s a route less often travelled. 

There has also been a generational shift, where fewer people are willing or motivated to do what’s traditionally required to land and be successful in senior roles. 

Where once people would look aspirationally to those in the professional services – lawyers or accountants – and the benefits those jobs would bring, now more young people have a more idealistic outlook, spurred on by what they can do to contribute to the world rather than develop personal wealth. Presenteeism is no longer part of the DNA of younger generations. 

That’s not necessarily a bad thing, but it all contributes to the perfect storm companies face in identifying the next generation of leaders.  

It’s a challenge not unique to Scotland either, with employers in cities in other UK regions including Manchester, Birmingham, Cardiff, and Belfast battling London’s pull as a global talent magnet. 

It places a premium on those with the right talent, but even more so on effective succession planning  to ensure companies are not caught short when the time comes to replace those at the top of the company. 

Continuity of leadership is important. 

Without it you risk several aspects of business performance including staff and customer retention. So what can organisations do? 

Future gazing 
First, they must start with plenty of time. Identify early what the challenges and requirements will be at the time you anticipate needing a replacement CEO, and align your criteria accordingly. 

Too often, CEOs think they need to find somebody like them, but the market is likely to look quite different when their successor steps into the new role. Organisations should future gaze and anticipate where you will be as an organisation and where the market is likely to be. 

For example, if you’re in the middle of a significant growth plan, you’ll probably have someone in charge who’s got you halfway up the curve. If next you need somebody who can double the size of the business, then you’re looking for a very different set of skills. 

Training, development and exposure
Strategically, look at least two to three years from any potential changes, then identify who within the organisation might be a contender.  

Then it’s about developing their skills to make sure they’re ready for that stage for the business. US businesses are much better at this than UK organisations – they move people around a business to give candidates experience in roles they’ll need. 

If you have somebody who’s great at marketing, they’ll give them a stint in the operational side of business to make them more rounded. They also use training – such as MBAs – to help candidates transition effectively across silos. 

All too often in the UK we need senior people to stay in that function because they’re good at it, especially if there’s no number two that can step up, and then wonder why we’re struggling when we look for succession. It highlights how important succession planning can 
be at a departmental level too.
 
Looking to the market and benchmarking
You’re not always going to have an ideal internal candidate, and in those circumstances looking externally provides an opportunity to bring in fresh thinking and new frames of reference that can improve a business.

The key is to ensure an organisation has the right criteria in mind for where their business is to bring in the right person at the right time. 

Where organisations have good succession and low staff turnover, they can occasionally lose touch with the market: salaries, benefits packages etc. If you’re never recruiting externally, you don’t know if your packages are competitive.

You need to benchmark. You need to ensure your knowledge of the talent pool, and be in a position to explain to C-Suite, to shareholders, and even to the internal candidate that they are the best person for the job. 
 
Jamie Livingston is founder and trustee at Scottish executive search specialist Livingston James Group, which became the first business of its kind in Scotland to enter employee ownership last year.