The Board's role in succession planning

John is a veteran of the aerospace industry and a head of department at Fly Corp. Since joining the company 20 years ago, he has rotated through multiple departments and roles, including spending time in the firm’s overseas operations. He knows the business well and is trusted by his peers and teams.

Fly Corp CEO Jenny and her Board of Directors think that John is potential CEO material. However, they feel he is “not strategic enough” and “lacking executive presence.” As part of their annual CEO succession review, they tag John as “ready in three years.”

The thing is, John has been tagged “ready in three years” for five years now. During this time, nobody has spoken with John about what he needs to do to be “ready.”

An unhappy picture

John, Jenny and Fly Corp are fictitious, of course.  But what they illustrate would be familiar to many who have Board or HR leadership experience.

Often, when it comes to succession planning, Board directors rarely venture beyond what is described in the Fly Corp example. This practice is unsatisfactory for at least two reasons:

• It fails to discharge the directors’ duty in succession planning.

• It short-changes the career development of candidates.

The Board’s strategic role in succession planning

Effective succession planning is how a Board can protect an organisation against leadership gaps or abrupt changes that could harm the business. Good succession planning also aligns leadership development with business objectives. This fosters a positive culture that sees leaders’ personal growth as part of business growth.

Are the candidates ready?

As in other areas of Board operations, good succession planning must go beyond box-ticking. In my experience, Boards and HR leaders should beware the following pitfalls:

• Mistaking emergency cover planning for real succession planning

Every key role in an organisation should have at least one leader identified as the emergency cover. This is for temporary exigencies during unforeseen disruptions, e.g., incumbent illness, accidents, etc.

However, this is not real succession planning. The company’s succession matrix should clearly distinguish between emergency covers and real succession potentials.

• Not being forthright about each incumbent’s remaining tenure

Succession means handing over a role to a new person. Serious succession planning therefore cannot be done without honest discussions about the remaining tenure of each incumbent in a relevant role (including the CEO’s role).

Admittedly, these are not easy conversations to have. They involve getting experienced leaders to make way for new blood. If the business is going well, there will be a strong urge to be perfunctory and not rock the boat.

Be that as it may, unless an incumbent’s tenure is addressed, getting a candidate “ready in X years” is meaningless. It may even frustrate candidates because the end goal would be unknown.

Finally, it may well be that no succession plan is needed for the foreseeable future as all incumbents are fine where they are. The Board should then agree this as its decision.

• Not holding leadership accountable for succession planning

The best handover plans are those where incumbents and successors work together to make things happen. This ensures continuity and minimises disruption.

Yet, many Boards do not make the execution of succession steps an important KPI for their leadership teams.

As a corollary, it is also unusual to find Boards holding succession candidates accountable to follow through on personal development that is directed to achieve the desired succession outcomes (see next point below).

• Staying removed from successors’ development plans

Boards should have oversight of the individual development plans of potential successors.

The Board (or the HR-related committee thereof) could agree on a list of succession candidates whose respective development plans would be subject to Board supervision.

Directors should then meet periodically with these candidates to track progress, but without necessarily communicating or promising a particular succession outcome.

Some may consider this Board overreach. I tend to disagree. There is nothing more strategic than caring for, and getting to know, the future leaders of the company.

Board oversight in this area also adds objectivity to a process that affects the personal interests of senior management (i.e., they are being replaced!). A small dose of tension is always good for proper governance.

• Resting in the false comfort of data

Data is everything, except when it isn’t.

Many succession reviews are based on quantitative indicators that give the impression of robust planning where there is none. Examples of such indicators include the number of successors in the talent pipeline, the number of positions covered, and my perennial favourite: the “Successor Coverage Ratio.”

These indicators are fig leaves, particularly if the same candidate names are repeated concurrently as successors for multiple roles and within different time frames. How real can those succession plans be?

Building future leaders as a strategic priority

Good succession planning is about investing in people and leading them to greater heights. Boards play an important role in this.

Who are the candidates? Do I know them well enough?

Policies, processes and systems provide structure for effective succession planning. Knowing a company’s leaders helps bring that to life.

As a director, my guiding questions in succession planning are always these: “Who are the candidates?” and “Do I know them well enough?”

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I am a Board Director and Leadership Advisor. I help CEOs and teams use good leadership practices to succeed. Because good leadership matters.