Succession Planning for Success
Written By: Jamie Ferguson, Vice President of US and Latin America, Maxwell Drummond International
One of the most commonly overlooked responsibilities by Boards of Directors is a strategically planned and executed succession plan. Surprisingly, as governance is one of the board’s most crucial responsibilities, 60 percent of large US companies’ HR Directors said their firms have no CEO succession plans in place. The board has a responsibility to assure stakeholders that a solid strategy is in place to transition the company through changes in corporate leadership. Once both the CEO and board understand the importance of succession planning, the following key practices can be built into a plan.
Understand the Challenge
Directors must look into the future of their company and ask themselves not “What do we need in a CEO”? but, “What will we need in a CEO”? Developing an in-depth forecast of what the future will hold for both the company and the industry over the next three to seven years will allow them to determine what skill sets and experiences the successor must possess to successfully lead the company through the imminent challenges ahead.
Analyze The Organization’s Human Capital
According to a global study, only 15 percent of companies in North America believe they have enough qualified successors for key positions. Due to this number, board members must begin to analyze their potential candidates several years before a likely retirement date for the CEO. This should begin with an in-depth review of the management team that reports directly to the Chief Executive. A thorough review will give insight into the bench strength of an organization as well as identify internal candidates who have the skills and experiences to address the company’s forecasted challenges in the CEO role. These individuals can then be developed over the next several years.
A second step in this exercise is to identify external candidates who can enter the company through alternate positions and be developed in preparation of CEO succession. This allows the Board to bring a new dimension and set of skills and experience to an organization that it may lack, while entering another future executive into the pipeline. These external candidates can be identified with the aid of an executive search firm, as they will likely be in the high priority pool of their current companies. A word to the wise- while this method is favored by HR directors, it is not always the most successful choice. The guidelines the board sets for these individuals is not completely in line with estimating their level of leadership performance. Boards must focus their attention on evaluating these individuals’ leadership capabilities and decision making skills.
Many studies have been conducted to determine if the most successful leaders come from internal or external appointments. Across the spectrum, both insiders and outsiders have performed similarly-both falling into the top and bottom of performance charts. Much of the outcomes depend heavily on the state of the company at the time of the transition. An interesting yet successful trend is Board Members filling the CEO role. They have a blend of insider company knowledge including financials and expectations, and still have an outsider status as they aren’t part of day-to-day operations.
Whoever the candidates may be, the boards still must put an active effort into development. This may include appointing potential leaders at roles with increasing responsibility, giving these individuals the opportunity to manage across many sectors and locations of the business, mentoring them and aiding them in building a track record of delivering while building long term results. This whole process deters companies from the “ready now” mentality that hinders their ability to place the absolute right candidate to transition the company into its future.
Measure Implementation and Outcome
Those organizations that do develop succession plan strategies too often let them slip through the cracks when it comes time to execute. Boards must invest in high quality HR leadership to see that their plans are carried through and goals are being set and met. Executives respond to measured successes. In working with senior management to set goals, the board will gain support for succession planning and establish ownership for leadership development programs. Establishing measurable goals will also allow the board to reward those who execute, keeping the problem of uneven execution in check. A potential measure could include goals such as the ratio of internal hires vs. external hires for executive level roles or the number of promotions from a company’s high potential list. Whatever goals a board sets, it is important to keep it simple. Complex performance criteria could deter those managing the process from executing.
A succession plan must be developed and executed at least six months before the CEO is ready to step down. This will allow a smooth and effective transition of the candidate’s responsibilities. The board and the entrant must agree on the first year plan, including key performance indicators and milestones and communicating these milestones to the entire leadership team. The new CEO must then spend time building effective relationships. Communication is key in building trust in the new team and the team building trust in the Chief Executive’s leadership capabilities.
These practices can be applied to any organization’s succession plan strategy and should give directors the ammo to gain support from within their company’s senior management and HR departments to execute. The handover of one CEO to the next puts the company in a vulnerable state, so a well-crafted and smoothly executed plan is essential to the board delivering on their governance responsibility to stakeholders.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.