In order to succeed at succession planning, leaders must start early. It is a process that can only work if it is approached proactively, rather than reactively. This means that leaders at all levels from the C-Suite to middle management, must constantly look out into the workforce to identify employees who have a high potential for leadership, and put development systems and processes in place to help those employees grow. When a company finds itself looking outside its own four walls for leaders, it is a sign that executives are not putting enough time and attention into employee development and succession planning.
When identifying high-potential employees, leaders must look at skills and competencies. In order to excel at succession planning, however, leaders must go one step further and consider the company culture. If an individual has all of the management skills in the world, he or she will not benefit the organization over the long term if their personal values and style do not align with the culture that the organization is trying to cultivate.
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Looking Beyond Skills: The Importance of Culture Alignment
When an organization believes that culture is important, that culture must come into play in any succession planning process. Skills and strengths are critical when identifying high-potential successors, but those individuals must be advocates of company values in order to ensure that culture can continue to thrive.
In order to ensure that culture can be maintained, this means looking internally for successors. In large organizations, the talent pool is bigger, giving leaders a deeper bench of potential candidates to look at and choose from. This can be a little more difficult in small and medium-sized enterprises. In order to mitigate against this challenge, leaders at SMEs must hire strategically and identify individuals whose personal styles meld well with the company culture, and who have the potential for long-term leadership development.
In large organizations that care about culture, leaders need to focus their time and attention and developing their teams so that there is a steady and readily available pool of high-potential candidates who can move up the ladder while keeping the company values intact.
Considering Culture in Succession Planning: A Cautionary Tale
One of the most famous and frequently cited examples of failed succession planning comes from The Home Depot. Bernie Marcus and Arthur Blank, the founders of the home improvement superstore went to great lengths to create an organization that had a “people first” culture. They emphasized employee development, and treated employees as an investment rather than an expense. As a result, they cultivated an environment where employees at all levels – from cashiers to executives – were engaged in their work and felt they had a stake in the organization.
Despite all of their emphasis on internal employee development, however, Marcus and Blank made a critical misstep when it came time for them to exit the company. Rather than promoting someone from within, they looked outside The Home Depot team. They chose as their replacement Bob Nardelli, a former GE executive who left the company when he was not named as Jack Welch’s successor.
The results were disastrous for The Home Depot. The culture at GE could not have been more different from the culture at the Home Depot and Nardelli’s leadership reign was short lived. Customer complaints soared and talented employees who spent their entire careers at The Home Depot left en masse. Since that time, the company has adjusted and attempted to return to the culture that Bernie Marcus and Arthur blank built, but The Home Depot will forever go down in history as an example of how not to conduct succession planning.
When it comes to identifying potential future leaders in the organization, executives and managers must consider a candidate’s values and how they align with company culture. Succession planning is about long-term sustainability, and without cultural alignment, the future of the organization could be at risk.