Seamless leadership transitions are necessary for organizations to sustain themselves and thrive. Only 61 companies on the Fortune 500 list when it started in 1955 were still on the list in 2015. Certainly one factor that led to the demise of those companies who fell off the list was poor succession planning and bad leadership transitions.
Robust succession planning is critical to the sustainability of a high performance organization. Professor Noel Tichy wrote an outstanding book called ‘Succession’ about this topic. I believe that the robust succession planning system implemented at The Procter & Gamble Company has been critical to its long term success. The Company has been around since it was established in 1837, 182 years ago; has been on the Fortune 500 since its establishment; and is one of the world’s most admired companies.
One of the core principles of succession planning is to ensure each employee is given experiences to prepare them for greater authority. I recall when I was asked by the management of P&G to move to Toronto, Canada in 1988; I asked, “What did I do wrong?” In those days only about 35% of the company’s revenue came from international operations. By the time I retired in 2013, the situation was reversed and 65% of the company revenue came from outside the U.S. The point is that P&G leadership was prescient. They knew we needed to globalize in order to grow, and that required a cadre of senior leaders with experience outside of the U.S. My family and I moved in 1989 to Toronto, Canada; in 1991 to Manila, Philippines; in 1995 to Kobe, Japan; and in 2005 to Brussels, Belgium. It was only in 2004 that we moved back to the U.S. to live for the first time since 1989.
This is why I would often warn P&G managers to be careful what assignment they asked for (which was possible in our system) because they may get it, and, it may not be the assignment of their choice. Employees should be careful to assume that they are smarter and more prescient than management. But that is why a robust succession planning process, which engages employees, is important.
Each year we would periodically review our succession plans, reviewing each position, identifying the near term (emergency) candidate, the longer term candidate, and a diversity candidate. Forcing a diversity candidate ensures the company continues to build its diversity over time. It also ensures there is a discussion of diversity (since diversity correlates with innovation) with each assignment. For our top development managers, we want to talk about two projected assignments out, not just the next assignment. This involves a discussion of potential of the manager, perhaps their terminal assignment, and what experiences we need to give them in order to get them ready.
Once the replacement candidate is identified, the transition must be planned with intentionality. How do we intentionally set the next manager up for success? One way is to make sure the previous manager and succeeding manager are seen together, leading from the same set of values, and following similar strategies. A mistake many immature leaders make is to disparage the manager they are replacing. They forget that their employees are following that manager, and by disparaging them they are breaking trust with the employees they need to lead.
The Partnership for Public Service led by Max Stier has been working hard to put in place robust transition policies for the Federal government. When I was leaving the role of the Secretary of Veterans Affairs, President Obama and his Chief of Staff Denis McDonough were very strong about making the best transition possible to the Trump Administration and we followed the playbook of The Partnership for Public Service.
We hosted a transition team led by Brigadier General (Retired) Mike Meese, which did an outstanding job learning about VA, our strategies and actions, and preparing the incoming team to continue the progress. I was so impressed with PPS’ work that I joined the non-profit’s Board after leaving office to try to give back as they had helped VA so much.
The point is that we as leaders need to be deliberate in leading our organizations, identifying next generation leaders, developing future leaders, and helping them transition to their new roles. This is why as CEO of P&G or Secretary of the VA, I spent about 35% of my time on human resource issues. There is no substitute for that type of involvement. The leader must do it if they expect to sustain the excellence of their organization by adapting it to future needs.
Remember, Darwin did not say it was survival of the fittest. He said it was survival of the most adaptable. Organizations must adapt as circumstances change because context is always changing.
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