A Story of Two Succession Plans

The first story is about Bill, the CEO of a financial services firm.  Bill joined the firm after a successful twenty-year career with another financial institution. During Bill’s fifteen years as CEO, he managed to turn it around from a struggling firm bleeding money to a multi-billion-dollar firm known for attracting some of the smartest and brightest in the industry.  He had also managed to build a high-performing, cohesive senior leadership team that worked exceptionally well together.  The leadership team had been together for over ten years, and it took Bill his first five years as CEO to instill a deep sense of trust and collaboration within the executive team. He was now looking at how to begin his exit strategy from the team and organization he helped become so successful.  While proud of his accomplishments and confident he would leave the organization in a good place, he still struggled to create a succession plan for his CEO role and other potential C-suite openings in the near future.  For the next six months, Bill evaluated each executive team member's strengths, opportunities, and readiness, and eventually identified his A, B, and C successors.  With this complete, he began one-on-one succession conversations with his identified executives. Bill tasked each potential successor with identifying at least three employees or direct reports who could be ready to step into their role within the next 18 to 24 months, along with a specific development plan to ensure their retention and readiness.

The following year, at the strategic off-site meeting, each executive presented their succession plan for review, and Bill was more than delighted to approve the recommendations.  The leadership team would begin next-level conversations and readiness planning during annual performance reviews.  Over the next twelve months, employees identified as part of the succession plan would begin attending quarterly executive meetings to develop their leadership presence and visibility with the board.  It took two years, but Bill finally felt the organization had a strong CEO replacement and leadership pipeline. They were in a good place to manage any unexpected transitions. Now he could finally begin his exit strategy and transition plan.

The second story is about Carter and Roman, best friends who started a company thirty years ago.  They built the organization from scratch and now had over 200 employees in six states and were still growing. Carter and Roman had been approached several times by other businesses to merge or sell their company and declined.  For Carter and Roman, their work was their passion and an extension of who they were – CR Investment Associates was like their child, and neither could imagine doing anything else.  As time went by, their corporate attorney strongly advised the owners to develop a succession plan to protect the company’s future and their eventual professional sunset.  Carter felt they had a good team, but no one knew the company like he and Roman, and neither believed anyone on the executive team was ready to be a partner.  As the thirty-fifth anniversary of CR Investment Associates approached, Roman felt ready to play a different role. He wanted to step back, travel less, and enjoy more time with his family.  He had watched his children grow up while he spent the majority of his time at work, and now, with two grandchildren, was enjoying his role as grandad. Roman wanted his experience with his grandchildren to be different.  He wanted to spend vacations with his family and watch his grandchildren grow up.  Carter and Roman started having conversations about how Roman imagined this next season in his life and agreed that stepping into a chairman role would provide the balance he wanted with family and running the business.  Both agreed that for this transition to occur, they would need to find a replacement for Roman, someone who could play a strategic role in running the day-to-day business operations.  This also meant Carter would take on Roman’s responsibilities, which involved traveling to meet with clients.  Jeni was the operations manager, extremely talented with strong people skills, and a logical choice to step into a more strategic role.  Carter and Roman decided to meet with Jeni to discuss her interest in stepping into a higher-level role and taking on more responsibilities. Jeni was thrilled but also candid about her skill set and what she felt she needed to be successful in the role - to hire and develop her replacement. 

Carter, Roman, and Jeni spent the next six months developing a recruitment strategy and interviewing candidates for the Operations Manager role.  Jeni spent another two years developing the new Operations Manager while she shadowed Roman and learned how to run the company.  Roman agreed to remain in his role until the knowledge transfer with Jeni was successful.  It was longer than Roman planned, but the delay allowed a smooth transition for Jeni’s successor and the time needed for Jeni to feel comfortable in her new role. 

Equipped with this knowledge and experience, Carter decided not to delay developing a succession plan for his position, as well as other key positions within the firm.  The next two years involved developing a succession plan for CR Investment Associates three levels down and a list of identified external talent for any unexpected transitions as successors were being developed at the next levels.

While both stories have a positive ending, the path and time to achieve the desired results are different.  The first story describes a company that was proactive and implemented a succession plan within 18-24 months.  The second story describes a company’s reaction to change with one of its founders, and 36 months to begin a succession plan.  One company created a culture of knowledge sharing and developing talent at all levels; the other resisted sharing institutional knowledge, growing their people and preparing for the unexpected.  Succession planning is about people and organizational development.  It is taking the time to be intentional about a future for the organization and identifying the talent needed to position the organization for a successful future.  It is investing time in the development of people.  The return on investment is often talent retention, transparency, a learning culture, organizational readiness, and a company with future leaders.  Now, that sounds like a good investment!