Succession Planning with Marshall Goldsmith
It’s time. You put in 25, 30, 50 years in the same company, and now you're ready to retire. But who will be able to take over your executive-level position? And how will your company prepare for this leadership succession? Fear not, executive coach Marshall Goldsmith is here to help. Goldsmith, author of Succession: Are you Ready? (Harvard Business Press, 2009), explains how to prepare for a transition in CEO leadership through succession planning.
What is the job of an executive coach? When and why should executive coaches be hired?
As an executive coach, I am asked to work with extremely successful leaders who want to get even better. I work with these leaders to achieve positive, measurable, long-term change in behavior. The challenge, and the reason executive coaches are often hired, is that the leadership behavior that was associated with yesterday's results may not be the behavior that is needed to achieve tomorrow's innovation. In almost all cases, even the most successful leaders can increase their effectiveness by changing certain elements of their behavior through executive coaching. And, while we can easily see the need to change the behavior of others, we often have great difficulty in changing ourselves! Executive coaches have the challenge of helping leaders help themselves and of helping them make the changes that will take their teams to the "next level."
How do you prepare leaders and CEOs for a leadership transition?
While preparing for the leadership transition, leaders must have their eyes on many often-conflicting agendas, such as producing short-term, quarterly results, and making decisions that are best for the long-term future of the organization. These are very important aspects of the transition. However, I am not a strategy, execution or "business" expert and so do not focus on these areas. My expertise resides in the behavioral aspects of leadership. I coach leaders to get through the leadership transition as positively as possible by focusing on two important behavioral issues: preparing their successor for the position that he or she will assume and preparing themselves to "let go" and move on.
What leadership skills should executives look for in a successor?
Developing a great successor is one of the most important accomplishments of any CEO. In selecting a successor, CEOs will most likely want to bring in someone who will carry on their vision for the organization, which has often been years in the making. Of course, executives will want someone with a fresh perspective, but not someone who will negate all that they have done thus far. A critical determining factor in selecting a successor is the relationship he or she has with key stakeholders. Will he or she be given a fair chance by the key stakeholders? Is he or she willing to make an authentic effort to change if necessary? These are important questions to ask and answers to have in determining the best choice for a successor.
Is it necessary to personally like the person you are appointing, or is it more important to hire on business reputation? How much politics are involved in succession planning, and how can they be avoided?
This is a great question. I learned an important lesson about CEO succession coaching many years ago. A successful CEO asked me to coach his potential successor, the current CFO. Right away I had the feeling that the CEO just didn’t like the CFO. I felt that he didn’t really want the CFO to have his job. I brought this up to the CEO, and he agreed that he didn’t really like the CFO, but that the CFO was highly qualified for the job and was the best candidate. The only problem was that he needed to improve his interpersonal skills and that was why I had been asked to coach him. I worked with the CFO for more than a year. He made great improvements. Fifteen out of 16 raters saw improvement in all of his targeted areas for interpersonal change. The only person who saw no change was, yes, that’s right, the CEO. So after a year of coaching, the CEO still did not recommend the CFO for the job. The CFO put his foot down and said, basically, "Either make me the new CEO—or write me an extremely large check." The board wrote the check, and the fiasco ended up costing the company a large sum of money.
We are all human. If you really don’t like your potential successor, there is probably a reason why. If this person can’t even win you over, how do you think he or she will treat everyone else? From my experience, any CEO who has a deep personal dislike of a potential successor will probably not give that successor a fair chance at promotion.
Even if you do like your possible leadership successor, how can you be sure he or she will fit in well with the company?
There are several key stakeholder groups who will help determine whether your successor will–or will not–be a fit in well with the company. These include: 1) peers–who will become the successor’s direct reports and the executive team for the company; 2) direct reports–who can give you an indication of how well he or she leads people; 3) customers–in some companies key relationship customers are critical to the future of the business; 4) analysts and shareholders–these people are going to help determine the worth of your firm; and 5) the Board–not only will they make the final decision, they will need to provide "after the decision" support. I would suggest that confidential feedback from all of these stakeholders be used in determining who the successor might be–or how the potential successor may need to change.
When executives come to you for coaching, what is the main thing they worry about in leadership succession? How can they allay these concerns?
One their main concerns in leadership succession is "leaving a legacy" that will continue after they have left the organization. I suggest that they make the investment to get to know their potential successors, coach their successors and make sure that their successor's behavior will be consistent with the legacy that they–as departing CEOs–want to leave.
Why do some executives have so much trouble letting go and moving on? How can they come to terms with leaving?
CEOs have incredible amounts of money, power, status and perks. While, to outsiders, they may seem to have more of this than they could ever need–it can still be hard to "let it go." Have you ever read a history book? Based on previous history, why should we believe that it will be easy for old men to give up status, money, power and perks? I have never read this book!
At a deeper level, CEOs often find significant meaning in what they are doing. They are making an important contribution to the world. It is hard to replicate this level of meaning and contribution. CEOs also tend to love their work and have positive relationships with their fellow employees.
Giving up all of these wonderful benefits to play mediocre golf with a bunch of old men at the country club, eating the same chicken salad sandwiches and talking about gall bladder surgeries can be a bad trade.
Do you recommend hiring internal or external successors for executive positions, and what is your reasoning?
If possible I recommend internal hires for leadership succession. Why? Everyone else is supposed to be developing the next level of leadership, why not the CEO? What message does it send to the leaders in the company–about commitment to leadership development–when the CEO cannot even develop one internal job candidate? On the other hand, there are examples when unique environmental factors make the selection of an outsider a great idea. Ford and IBM–two companies that needed to radically change their business models–immediately come to mind.
When and how should a successor be told he or she has been chosen for the executive role? Should he or she be notified before or after the stakeholders, and why?
I believe that the key stakeholders should be consulted before the decision is made but told after the successor knows the decision has been made. This way they can provide the needed input (described above) and the successor can prepare for his or her initial dialogue (before the announcement is made).
What are some of your upcoming projects?
After Succession: Are You Ready?, my next book will be called MOJO. This book will be for professionals at all levels–not just leaders–and will talk about how employees can develop "that positive spirit" toward what they are doing now–which starts on the inside–and radiates to the outside.
What is the one thing you hope readers will take away about leadership succession from this book?
I hope readers will take away from my book the ability to more effectively manage the succession process in terms of "letting go," choosing a successor and coaching that successor.
Interview by Jessica Livingston, managing editor