One of the key challenges confronting organizations globally is succession planning, or creating a second line of management.
A great idea, vision or belief can spark off a successful business. But what empowers it to create lasting value for its stakeholders and society, is fostering capable and committed leaders for the future. Leaders who can take the organization to the next level and establish an enduring legacy.
More so, in the light of globalization, increasing workforce flux, shifting talent needs, increasing cross-border operations, evasive consumer and employee loyalty; the need to create committed, capable leaders is more vital then ever before.
Plus with global integration of markets, corporate governance has become a common theme in the global investment community and no organization can now remain immune to the pressures of global standards and compliance.
Hence increasingly around the globe, CEO succession planning is an important function of the board of members. Also with average CEO tenures continuing to shrink, not only is succession a priority, but it is also a recurring one.
Contrary to popular opinion, I believe, succession planning should not be limited to the top end of the organization. If the organization has to thrive in a global marketplace, then it is essential to create a pipeline of leaders throughout the company. Each employee has to feel empowered and accountable for his contribution to create an inclusive culture of ownership and inspired performance.
But in spite of its pervasive essentiality, succession planning still continues to remain a sore point for most organizations. More so, for family owned enterprises, since there are intrinsic conflicts between retaining and relinquishing management control.
Research indicates that almost 70% of family-owned businesses fail or are sold before the second generation, while only 10% remain active privately held companies, for the third generation to lead.
Hence the key objectives in succession planning are centered on
- Institutionalizing and preserving the business model
- Provide a stable yet scalable policy structure to achieve the desired organizational goals
- Creating sustainable value for all stakeholders
- Enhancing organizational potential for attracting talent, financing, customers and resources.
- Facilitating globalization and meeting future challenges
(Part 1/2. Next time we explore the challenges faced during succession planning)