Succession Planning: Keeping Company Culture Strong Through a Transition at the Top

By Ann Gallagher, president of Gallagher Consulting Group

Your organization's revered leader has just announced intent to retire. What do you do? If you've been continually developing talent, the answer is, "Execute our succession plan."

If your organization doesn't have a succession plan, the time to strategically address that issue is now. Since peaking in 2013, CEO turnover remains extraordinarily high due do an aging demographic as well as increased pressure and demands. Recent market recovery has prompted many leaders to feel that they can retire now while their investments are healthy.

If you're beginning a succession plan for the first time, what should it include? I recommend the following elements: objectives, search committee guidelines, roles and responsibilities, desired competencies and profile of a new leader, communications rollout, and transition and onboarding.

Before putting the elements into writing, identify key stakeholders and meet with them formally and informally to conduct personal interviews. In addition to your board, stakeholders should include members; customers; clients; vendors; and community, business and civic leaders.

Acknowledge that stakeholders are nervous and excited at the same time, because the organization is moving into uncharted territory. Each of them will be concerned primarily with how the change at the helm will affect them. This is true whether you're speaking with board members, employees, customers, clients, or vendors.

Manage the clock
Behind-the-scenes planning for the succession of an iconic leader ideally should start 18 months in advance of the transition. These activities include approving the succession plan document, finalizing the search committee, determining desired competencies, and getting the right external partners on board (e.g., legal assistance, search firm).

Likewise, the process for leadership transition should be long enough do to the internal work – but not too long – or you will create a public "lame duck" period. The average timeframe from the public announcement of a CEO's departure to getting the replacement on board is six to eight months.

Especially when an iconic leader is leaving, it is important to acknowledge that the legend can never be replaced with a clone-and that's just fine. Remember that CEOs who became legendary did not start out that way. They developed their stellar reputation over many years of learning and solving challenges. Be willing to give a chance to an up-and-coming, less-experienced leader who can evolve as the organization does.

Culture starts at the top

One of the biggest mistakes a board can make is to hire a cultural misfit. To preserve cultural integrity, a new leader's values must align with the organization. Boards and search committees feel a great burden and responsibility to select the best new leader, and this pressure can lead to default by focusing solely on a candidate's credentials, such as a Harvard law degree or the Six Sigma certification.

Strive to hire for culture and brand fit-not just functional expertise. Much of an organization's brand is interdependent with the individual reputation of its top leader. Similarly, the CEO sets the tone for the culture in the organization. Leaders with the right cultural fit contribute faster, perform better, and stay longer with the organization.

The value proposition

When the search has been narrowed to two candidates, make sure you create social opportunities to spend time with each prospect. You can learn a lot about a person during casual conversation and how they behave when interacting with people who are not part of the search committee, such as a server at a restaurant or a staff member. As Plato said, "You can learn more about a person in one hour of play than in a year of conversation."

Who a person is at work should be the same person they are when not at work. Their behavior should be appropriate to the situation, but their values and personality should be consistent. If you observe that someone is completely different in one setting from other, alarms should be ringing in your head. That red flag may signal a variety of issues such as a lack of confidence, wavering ideals, or even inconsistent values.

Communicate and celebrate

Plan and conduct a proper communications rollout for the new leader. Often, the most valuable currency the outgoing leader will take with them is relationships. The Board and others must participate in opening doors and making connections for the new CEO. Plan at least a 90-day period to meet stakeholders and cultivate relationships as you help the new leader prepare for success.

Last but certainly not least, be sure the outgoing leader is properly honored and celebrated. Host celebratory activities while the outgoing CEO is still in office and do not use the same event to both send off the iconic leader and welcome the incoming CEO. Let your outgoing leader bask in the limelight one more time, but be sure to do it in a way that does not steal the spotlight from the new leader.

Ann Gallagher is president of Gallagher Consulting Group, and leads a team of strategic planners and facilitators who help Fortune 500 companies, trade associations, and non-profits fulfill their mission, advance their goals, and achieve their potential. Ann can be reached at 614-854-9658 or ann@gallagherinc.com.