Getting a grip on succession (CEOs Talk)

5 CEOs offer tips and insights around successful succession planning
|Canadian HR Reporter|Last Updated: 05/15/2015

Spencer Enright president & CEO, Brookfield Real Estate Services Ltd., chairman, Brookfield Real Estate Services Inc.

The Toronto-based company has 250 employees and oversees a network of more than 16,000 sales professionals

For Spencer Enright, succession planning is part of the fabric of his day-to-day routine. 

“It’s understanding the talent, evaluating the people in the organization, knowing when people are promotable and what development they need,” says the president and CEO of 250-employee Brookfield Real Estate Services in Toronto. “Clearly when we’ve got critical positions... you can’t risk having vacancies for any extended period of time. Without a process in place, I think you’re just completely flying blind.”

Changes can happen suddenly, whether because of illness, serious performance issues or demands from stakeholders or social media, he says.

“Organizations can’t always choose the timing of when a change will happen. For these reasons, always knowing who is ready to take on a key role is critical.”

Mergers and acquisitions also make a difference, with a new set of talent coming onboard, says Enright.

“Not really knowing the breadth of your own organization before you get involved in a brand new company that you’ve just acquired really slows down the process. But then when you have the process in place, I’ve been able to move swiftly through those assessment processes with the newly acquired teams. And giving them some certainty and clarity about the process and how we evaluate talent gives them the confidence that they’ve got an opportunity with the company.”

Getting started
A good succession plan starts with a real commitment from the board of directors or owners and top leaders of the organization to finding and developing great leaders throughout the entire organization. Together with the HR team, there are several processes that can be very effective when they are in place simultaneously, he says.

“First, we need to identify and accurately profile each critical leadership role. Knowing what each position uniquely brings to the combined leadership team is the first step to knowing when you have the right candidates for each one. This should be kept updated as business changes, especially if and when the company chooses to move in a new strategic direction in order to stay competitive.”

Next, it’s about knowing your people, says Enright.

“Honest evaluations of key strengths and development needs in future leaders seems obvious, but with succession planning, I focus on the capabilities required of the next level role, not just for the role they are currently in.”

Creating a depth chart for each key leadership role is helpful in seeing instantly where there might be gaps in the number or quality of succession candidates. Enright says he likes having a group of cross-functional leaders complete a depth chart of people they consider candidates for their own roles, and their development needs. 

“By having a group discussion about each functional area, you learn more about people you may not have been aware of, the biases individuals might have about who they think are successors, et cetera,” he says. “Once you build those routines in and people understand that they will be part of that process, and ultimately they see the value not only for their team members but for themselves, then I think you eventually get buy-in. But it does take a bit of time to rally the whole group around that, especially if they’re not familiar with those types of processes.”

Internal v. external
It’s great to have internal leaders who understand the industry, have strong customer relationships and are already trusted by the staff in the organization. And it takes time to build those attributes when starting from scratch in a new organization, says Enright.
“However, being completely insular will limit exposure to new ideas and can compromise the leadership’s awareness of paradigm shifts in the industry which might threaten the organization’s future.”

External hires are a great way to infuse new thinking into the leadership group, and can help maintain a diverse set of unique strengths within the team, he says.

“However, it can also disillusion existing staff, result in frequent shifts in strategic direction for the company and, ultimately, result in the loss of great internal talent who don’t see a path to those senior roles.”

But if an employer is only promoting from within, it runs the risk of having individuals who feel a sense of entitlement, says Enright.
“The industry, dynamics, competitive set changes so rapidly that the strategic thinking that existed last year may not be relevant for the next three, four years and so bringing outside thinking into the mix can really help challenge status quo beliefs within the organization.”

Transparency is important when having discussions with staff about their future potential. 

“While it can be difficult to let someone know they aren’t in line for a particular position, these conversations are the best method to together finding the best role for each individual,” he says.

“For internal leaders, it’s critical that they understand the company is actively working to enable them to become the next leaders of the organization. Without that career pathing in place, great talent will ultimately find other organizations where they feel more confident of succeeding in their career. 

“That’s probably the worst mistake I could make, is having an opportunity and then losing the candidate because they don’t believe it exists.”

Coming onboard
Succession isn’t just about bringing someone onboard, it’s about building and developing them as an integral part of the team, says Enright. But organizations don’t always have the luxury of a transition period, so it makes sense to plan without it, he says.

“For CEO roles, I don’t believe in an overlap, mainly due to the fact that both internal and external stakeholders want to know immediately who is truly the captain of the ship.”

When Enright assumed his first C-level role, there was a three-month overlap with the departing CFO and he found it a frustrating experience. 

“It was helpful to understand how they managed the position in the past, but it stunted my opportunity to make changes in the areas where the rest of the organization needed to see improvements,” he says.

“In theory, promoting from within shouldn’t need a lengthy transition period since the candidate already has a good understanding of the business. Also, often we’re bringing in an external candidate specifically because we want to see change occur, so delaying the break from the old to the new will only slow that change down.”

HR’s role
Enright says he values the opportunity to have a continuous dialogue with the HR team about talent both inside and outside the organization. In addition, the business needs a strong discipline to creating and following the succession planning processes and HR can assist in creating that culture.

The HR team should be equipped to enable and challenge the leaders of the organization to really know their staff, to understand the talent needs of the business and objectively assess the gaps in the succession plan, he says.

“It‘s an expectation on my part that we get that feedback coming through so that they know I want them to be connected with the leaders in the organization, understanding what’s working and what’s not working well, and providing that feedback and making improvements along the way.”

But when it comes to leaders meeting to discuss the depth chart, the functional leaders have ownership.

“It’s important that we look at the HR function not as the owners of these processes but as the facilitators for really getting value out of the process.”

Tara Kelly CEO of SPLICE Software 
The Calgary-based telecommunications software company has 26 employees

Unless you’re planning on living forever, it just doesn’t work if you don’t have a succession plan in place.
That’s the philosophy of Tara Kelly,  CEO of SPLICE Software. 

“It’s about risk mitigation — you never want to have an organization that collapses if one person disappears. And, ultimately, we should all be growing to somewhere. Often, you’re growing your company and you’re growing at the same time,” she says. 
For a good succession plan, an important first step is establishing really strong role clarity. 

“The first thing that you really need to be clear on, especially at the senior level, is not just what’s in your job description that you do, but what do you really do? The fundamental first step if you’re trying to plan for someone to take over that role is really ensuring it’s documented — not just sort of known to you, but really a clear, documented path and what you actually do,” says Kelly. 

“That includes regular auditing. So what you did two years ago when you had a perfect succession plan kickoff meeting might be different than what you’re doing today. And are you really adjusting and keeping it in line with your day-to-day activities?”

The second step is assessing your team, and understanding whether you’re going to have an internal or external hire, she says. 

“In a lot of roles, it can go one of two ways. Sometimes the thought leadership and the level that you’re looking for, you may not have that in your company.” 

You may have someone who’s highly technically skilled, but she doesn’t necessarily have the right set of leadership skills for a C-level role. 

“Taking someone, for example, who’s a really strong technical architect and making them a team lead might actually hurt your company even more at a time when you need them to really go broad,” says Kelly. “(It’s about) understanding who you have on your team and whether or not you’re grooming a person for your job, or you really are needing to look towards an external hire.”

If you do begin grooming an internal candidate, Kelly is a strong believer that the person should be told he’s being considered. 

“You should be shopping your job,” she says. “These are discussions that should happen — you should be talking to them and saying, ‘Listen, does this meet your career goals and objectives?’… You should have career planning within your organization and your staff, and what you want to do is establish a fundamental base of trust and transparency so that they would honestly be comfortable telling you that. You can lose a really great person because they wanted to grow, but they didn’t realize you were grooming them for that very senior position and already considering it.

“You hear those kinds of horror stories — you are quietly grooming them for this job you didn’t tell them about, and they leave for that exact same job somewhere else.”

It’s also wise to have multiple candidates in mind, says Kelly. 

“There’s nothing wrong with still having a preferred choice,” she says. “To do a great job of succession planning, you do have to have an ideal candidate in mind. But that doesn’t mean that you close your blinders to all your other options.

“Life is full of surprises and it’s your ability to take in new information at the last minute that often separates the winners from the losers, just because life’s constantly throwing new things at you, and it’s often (about) how fast you can respond.”

It’s also important to have a transition period with some overlap between the incoming and outgoing CEO — but again, role clarity is crucial. 

“When you have an overlap period, then more than ever is it critical that you understand the exact role of what each person will be doing,” says Kelly. 

“Sometimes people create an overlap period, and it actually serves to do nothing because there is not role clarity, so the old CEO is still doing their job 100 per cent and the other person’s just watching.”

Another important piece is being able to remove ego from the equation, she says. 

“We all love to think that we’re 100 per cent unique… and, in some ways, we are. But the things that we do, others can do better or the same or different, so making sure that you sort of check your ego at the door is a really critical piece.”

Patrick Sullivan CEO, Nova Scotia Tourism Agency 
The Windsor, N.S.-based organization has about 100 employees

Whether you’re a large or small organization, or even a sole proprietorship, it’s very difficult to think about and plan for the future when you’re busy running your business on a day-to-day basis, according to Patrick Sullivan, CEO of the Nova Scotia Tourism Agency in Windsor, N.S.

“It’s important for organizations to plan for the future to ensure that there is capability inside the organization, to kind of move forward and to have the right leaders in place. I think it’s also important for the organization, regularly… to understand where they’re going and what skills will be required within the organization as they move forward,” he says. “All of those kinds of things lead to a solid succession planning process that will enable the organization to be successful in the future.”

And it’s key for the board to be involved, to suggest and monitor the process.

“Obviously, you never know what’s going to happen to the individual that’s currently leading the organization and, as the board, they have perhaps a greater responsibility to look to the future than the operating group may have on a day-to-day basis. So I would look to the board to ensure that they’re leading that process and then looking to the current leaders of the organization to set up a process and monitor that process to ensure they have that successful planning program,” says Sullivan.

The board needs to think about the senior team and whether the skills for the future are available internally.

“They need to know those senior leaders and there needs to be a conversation, certainly at a minimum on an annual basis, with the board about who the potential successors are, about what training is being offered to those successors, at least internally, and… should there be a board committee struck to search for a person that could come in at an appropriate level that could be groomed to be the successor?” he says.

HR also plays an important role and is a key partner, says Sullivan.

“HR needs to work with the CEO, with the board, with the senior team to ensure that succession planning is on the radar, that a program is in place, that it’s measured, that it’s presented, essentially, to the board or whoever the senior leadership is to ensure that there’s continuity in the business.”

And the focus should go beyond the CEO to reach other levels, from supervisors to the shop floor, he says.

“We’re so busy that I don’t know that organizations are taking the time to train their people. In many cases, they’re going out to find people, to kind of bring them in at a (higher) level, rather than training their people. But succession is all about training and ensuring that people have the skills to move forward.”

When looking for successors, the pros to internal candidates are their awareness of the organization and its social networks, and the unwritten rules of how things get done. But external candidates also have their merits, says Sullivan.

“You may want to have a significant change, you may want to have a shift in strategy... you may want to change the way the organization is going or shift its focus and sometimes bringing someone in from outside is the best way to do that.”

And an organization should let people know they’re considered high performers.

“You don’t want them to have any doubt about their value and their perceived value to the organization because high performers have lots of opportunities in lots of different areas and may consider leaving if you’re not providing them with the feedback and providing an indication that they’re well thought of,” he says.

“I don’t know that you need to necessarily go so far as to say, ‘You’re the next in line’ but I think you clearly need to let people know where they are and what the opportunities are for them in the future, and part of that is to say, ‘This is a potential route for you.’”

As for the transition period of succession, that can be difficult if the current leader is still there, says Sullivan.

“I’m more a fan of someone coming in, certainly being able to (get) support and assistance from the departing person, but I think often people like to put their own stamp on things and if there is change required, it is an opportunity for change in a reasonable period of time, a shorter period of time, rather than waiting six months or a year and then transitioning into a role,” he says.

“I’ve certainly gone into organizations where I’ve received zero assistance as a new leader and it allows you to discover many of the things that are going on in the organization, but it can also be a challenge to learn about the organization as you’re going.”

John Yates president, publisher and CEO, University of Toronto Press
The organization has about 270 employees

When it comes to the importance of succession planning for the C-suite, it’s all about having a smooth transition that protects the reputation of the company, according to John Yates, president, publisher and CEO of University of Toronto Press, which has about 270 employees.

“And, clearly, scale makes a difference. A multinational is totally different from a private company so, to some extent, some things may matter more in a larger organization and, in that context — especially for a public company protecting the share value — would of course be a huge deal.”

Good succession planning all flows from the board, says Yates.

“The board has to push to ensure that there’s a plan in place and that it’s been discussed and agreed by the board well in advance of any CEO’s departure. Because one never knows when a change might happen, whether it’s an emergency type of situation or otherwise. I mean, it’s almost too late if you wait until the CEO announces they’re going to either leave or retire, that’s way too late because then it becomes a reactive kind of process rather than proactive.”

In lots of ways, it almost is a continuous process, he says.

“As soon as one comes on, the board should be saying, ‘Right, well, we’re still in the early days but we need to be thinking about the long-term future and this process that we just went through worked, how do we have to refine it for the next one?’ That’s the ideal scenario.”

Organizations will always struggle with succession planning because they’re dealing with much more pressing matters and may not see the CEO’s departure as a priority, says Yates.

“It just gets continually pushed (off) and that’s where the board has to basically push back and instruct the CEO that this is not a question about their value or the contribution that they’re making, this isn’t undermining the CEO, this is saying, ‘Look, for the long term, we need this in place in the best interest of the company. It’s important, find a way to make it happen.’”

The incumbent CEO should be a big part of that process in developing a plan for the board to approve, he says.

“CEOs who make sure they do those sorts of things, in a way, are also demonstrating that they are an outstanding CEO because they are taking the company’s interests ahead of their own personal interest. And they are thinking long term as opposed to short term.”

And when it comes to candidates, there are many advantages to internal ones.

“They know the culture of the organization, which is an important part of being that CEO. They’re a known entity to all the stakeholders,” says Yates. “They typically weigh lower risk because of all that knowledge that they have acquired over their working years with the company, so it’s a much smoother transition. But they are, in my opinion, much less likely to be the change agent.”

External successors bring with them a fresh set of eyes and ideas, he says.

“There’s no sacred cows for them because they are not associated with all the decision-making that has been taking place in the past. So they’re often the type of person that is brought in when you need that change agent, when significant change in an organization is required.”

Ideally, the board uses both prongs, external and internal, which includes developing several candidates who might be qualified to eventually become CEO, says Yates.

“The key thing there is to make sure that they’re given the opportunities so that they can be assessed, so whether (that’s through) very difficult assignments, the sort of thing that is a way of testing whether they’ve got the skills and abilities to do the job. And clearly there has to be all the performance reviews, things of that nature, at the high level to make sure that their skills are there for a longer period of time — not just the technical skills but the soft skills, leadership skills, people skills, things of that nature.”

As for HR, it should be acting as an advisor to the board, identifying potential successors and ensuring a smooth transition, he says.

“It’s not just a matter of identifying the person and getting them in the position, but it’s what happens afterwards. You also want to make sure that the person is getting feedback quite early and frequently about how they’re doing in that new role,” he says. 

“HR no doubt will have a different perspective on that than the board might, so they should be having some involvement in that.”
HR should also be conscious of what is happening with the other top candidates who didn’t get the role and may want to leave, says Yates.

“They have a role to play in making sure that there’s good communication with the candidates that didn’t make it and that, as far as possible, they’re still feeling valued and that they have a big contribution to make.”

Kari Yuers CEO of Kryton International  
The Vancouver-based concrete waterproofing company has 85 employees

As CEO of a family owned and operated business, Kari Yuers has a unique perspective on succession planning. 

Her father founded Vancouver-based Kryton International, a concrete waterproofing company, before Yuers took over as CEO in 2001, and her brother took on the role of operations manager.

“It has its own challenges, given the perceptions of people that you want to draw into your business and, ultimately, everybody’s goal is the same: Let’s get the highest talent and keep them and help them grow in the business. And, sometimes, family businesses can really screw that up,” she says. 

That’s just one reason why a solid succession planning process is critical for any organization.

“You learn that people leave for a variety of reasons,” says Yuers. “It’s important to have a plan in place or you could end up with a big hole, and that could set your company or plan back quite a bit.”

The CEO in particular is the barometer to the organization, she says. 

“When you have senior leaders like the CEO or the other key executives, they create that direction and engagement, and if you lose them and you don’t have any plans in place to fill it or it becomes ad-hoc, you could lose a lot of momentum,” says Yuers. “It’s kind of like a boat without a rudder.”

In any organization, people expect some degree of change, and the leadership has a responsibility to ensure there is still continuity, she says. 

“When something unexpected happens, people lose productivity and lose confidence, and I think that’s the other psychological part that leaders have to consider is that it’s not about just finding somebody else who has the skills and plugging them in, it’s about people having the perceived feeling that there is a worked-out plan and their world won’t get rocked over these changes.” 
The key to succession planning is the word “plan,” says Yuers — having an organized approach to having the components put in place. 

“I’m in the concrete business so we often are looking at constructing buildings… we talk about how important the foundation is because if you don’t have a good foundation, the rest of the building is going to be (vulnerable) to problems.”

Similarly, C-level roles need to have a solid foundation as well. It’s important to make sure you are clear not just about what the job descriptions are, but about what the functions and impacts of the role are, she says. 

“Having the job evaluations done in such a way where you can not only identify what they’re doing today, but what are the expectations of growth and development of those positions?”

The temptation in many smaller organizations is to try to build around the people, says Yuers. 

“It’s the worst thing you could do because if you start trying to build the components around a person rather than position or function, then you could get into trouble fast.”

Instead, it’s about figuring out the key components of the roles, and having regular performance reviews and meaningful discussions around how the roles could develop in the future. 

It’s also important to try to groom internal candidates for higher-level roles whenever possible, she says. 

“Across the board, any time you can promote from within, that’s good. It has so many nice ripples around it, not only for the person that sees movement in their career, but for other people to feel good that other people in the organization are moving up,” says Yuers. 

“I think why (organizations) tend to go externally is… if you haven’t got the talent or the skill sets being developed from within, you find yourself needing leaders or leadership roles, and you haven’t got that capacity yet.”

It takes a lot of work to groom an internal candidate for an executive-level role on short notice, so sometimes organizations have to go externally to find someone with demonstrated ability who can hit the ground running, she says. 

Bringing in outside perspectives is another benefit to hiring external candidates, says Yuers. 

“The skill sets of people management and engagement and work ethic and attitude and humility, those are all things I want… if you have those skills, and you’re smart and you’re hardworking, you can learn (the industry),” she says. “It’s harder to train leadership and engagement.”

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