New fad: CEO incentives for succession planning

A hot corporate fad, the Wall Street Journal reports, is paying CEOs incentives to do succession planning.  The reason is that new CEOs fail at a fairly high rate.  I find this interesting in several ways:

  • First, CEOs are notoriously bad at picking their own successors.  Yes, there are exceptions, one of the best was the Reg Jones selection of Jack Welch to succeed him at GE.  But there are many more failures than successes.
  • Second, it shows just how weak succession planning is at these companies.  Too often it’s an administrative exercise conducted by HR that generates a lot of paper and opinions, but doesn’t truly generate penetrating discussion of key people, and more importantly, result in meaningful development of candidates.  That the Jones to Welch transition was successful wasn’t a fluke–read about how that succession was conducted, and how succession is practiced at GE, and you’ll understand that it is a rigorous process.
  • Third, it points out the need for leaders to lead, not just in getting results, but in building internal capability for the future.  Peter Drucker, Tom Peters, and other notable management writers have always emphasized that a fundamental task of a manager/leader is to develop their direct reports–to make them more and more valuable.

Every company needs leaders who develop people and who drive a cogent succession process.  Is yours as rigorous and effective as it should be?

More on this topic:  For 10 Ways to Strengthen Your Leadership Pipeline, click here.

© Bob Legge 2014  All rights reserved

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