The Importance of Succession Planning
Although this may be a bit of a morbid question, it’s one all leaders must consider. If you were hit by a bus, who could step into your role?
This is the question posed by Jim Collins in his book “Built to Last: Successful Habits of Visionary Companies.” According to Collins, the world’s most successful companies make succession planning a top priority — consistently identifying, training and growing leaders from within the company to take over leadership positions that inevitably will open up.
In other words, visionary companies believe in “home-grown management,” and hire from within.
In fact, across 1,700 years of combined history in the visionary companies identified and evaluated in “Built to Last,” Collins and his team “found only four individual cases of an outsider coming directly into the role of chief executive.”
Why do these companies invest so much in home-grown management? It actually makes a lot of sense, when you consider the major void that can be left when a brand loses a CEO, president or other key leader. Companies that aren’t prepared for these occurrences can be thrown into chaos during the search for a replacement. Companies that have invested in succession planning, on the other hand, can be rest assured of a smooth transition.
“Visionary companies develop, promote and carefully select managerial talent grown from inside the company to a greater degree than the comparison companies,” writes Collins. “They do this as a key step to preserving their core.”
As the New Year looms and you begin planning for the year ahead, consider the question, “If you were hit by a bus, who could step into your role?” If you don’t have a clear answer, make succession planning a top priority.
Following are a few more tidbits on home-grown management from Collins’ book to mull over:
- “Simply put, our research leads us to conclude that it is extraordinarily difficult to become and remain a highly visionary company by hiring top management from outside the organization.”
- “If you’re a manager, the essence of this chapter also applies to you. If you’re building a visionary department, division or group within a larger company, you can also be thinking about management development and success planning, albeit on a smaller scale.”
- “All individual leaders eventually die. But a visionary company can tick along for centuries, pursuing its purpose and expressing its core values long beyond the tenure of any individual leader.”
Rachel Zabonick is editor-in-chief of Club Solutions Magazine. She can be reached at email@example.com.