Leadership at Work

Here is a commentary from D. Quinn Mills, professor emeritus, Harvard Business School, on the question of leadership succession:

How can an organization prepare for leadership succession?

There are two ways: one is immediate, the other longer term.

For immediate action to fill a executive vacancy in a firm, or a division, or a department, management should have a succession plan. It is best if the plan is formal (that is, a written plan that covers many key positions in the firm) but the plan can be informal (known by a few top executives.)

The plan should identify who in the organization should take over in a leadership position (like CEO, or CFO, or VP, or Department head) if there is a sudden vacancy. A vacancy might occur because the incumbent gets promoted, or is fired, or leaves for another company, or gets ill or even dies in an accident or of natural causes. Whatever the reason, a key job is suddenly vacant. With a succession plan, a replacement has already been identified and steps right into the job.

Because there is a plan that has identified a replacement, that person should have been being prepared for possibly holding the higher position. A succession plan is of less value when the identified successor hasn’t been prepared through training and education for the job.

Unfortunately, lack of preparation happens often, and in major situations. For example, in the American government, few vice presidents have been prepared to take over the presidency in the event that the President is unable to continue. Vice Presidents Harry Truman and Lyndon Johnson both made foreign policy mistakes when they assumed the presidency suddenly, largely because they lacked training or related experience.

So a succession plan is of limited value unless it is used to identify people who are to be trained and informed so that they are prepared to step into vacancies when the vacancies arise.

The long-term way that a company prepares for succession is to develop people for leadership within the firm. A firm knows that over time it is going to need to fill in positions which are vacated for any number of reasons. So it should be training a group of managers for promotions or transfers. Probably General Electric has done this most effectively over many decades.

The keys to General Electric’s success in training managers to become successful executives are two: first, continual attention from executives to the development of managerial talent within the organization; and, second, assignments of managers to positions of profit-loss responsibility as early in their careers as possible. The decentralized management structure and many subsidiary businesses of General Electric make assignments of this nature more readily available than in many other, more centralized, firms.

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Copyright © 2008 MindEdge

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