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Cardea Concepts

A CEO and Board Member’s View on Succession Planning

July 14, 2018

Posted by: Linda P. Hudson


In our increasingly competitive global market, any superstar should be considered a flight risk, and, in the eyes of more demanding boards and activist shareholders, any CEO is vulnerable. That makes it ever more important that we have a strong, deep, qualified bench of talent for every key position in a company.

 

As a former CEO of BAE Systems, Inc. with 40,000 employees and nearly $14B in annual revenue, as well as a current member of three boards (Bank of America, Southern Co. and Ingersoll Rand), I must be honest and say my personal experiences with succession planning and management have been mixed, often because there were not strong policies and practices that stood the test of time and transcended leadership and board changes over the years.

 

However, my recent board experience confirms a heightened awareness of the importance of good succession planning and a more active engagement of boards, not only in CEO succession but in key positions throughout the organization. It is a regular board topic, and we often interact with high potential employees, so we can form our own opinions of the talent we discuss.

 

In a webcast hosted by The Conference Board, I discussed what it takes to develop a pipeline of potential senior leaders and how to manage the process of succession. Based on my experiences and observations about what has worked effectively, here are my ten lessons for successful leader development and succession planning.

 

  • Lesson 1 – No matter how good an employee is, they are marginalized if they are not visible and can’t communicate their ideas. Make sure early career training and development programs emphasize written and oral communication skills. I made the conscious decision four years into my career that it was the people part of business that I loved the most, so I chose a management role over a technical role and never looked back.

 

  • Lesson 2 – High potentials must be identified in their late 20’s or early 30’s and targeted development must start then. It takes decades to develop a CEO. So without diligence from HR and robust corporate processes, a well-intentioned CEO or board can only do so much.

 

  • Lesson 3 – Talent trumps experience and expertise every day. Be willing to take a chance and stretch your super stars. You’ll find out right away if they’ve got what it takes. At a key point in my career, I was appointed president of a subsidiary that produced munitions for the U.S. government. I knew nothing about munitions, but I had a strong cross-functional background – engineering, quality and production – and I had managed global multi-billion dollar programs: all requirements in the job description.

 

  • Lesson 4 – You must move people around to different roles for varied experiences to develop general management expertise. My continued willingness to move and take on new challenges enhanced my reputation and brought me to the attention of corporate executives.

 

  • Lesson 5 – Don’t be afraid to create a role to test a rising star – take them out of their comfort zone because managing change and ambiguity are critical leadership traits. After my division was acquired by another corporation, I learned that I had impressed the new CEO during the management briefings (there goes the importance of communication again), and I was offered a promotion and position at corporate headquarters as the Vice President of Business Development. Only later did I discover this position was created for me as a development role and to be evaluated more closely.

 

  • Lesson 6 – Place leaders in increasingly larger roles because many leaders don’t scale well. It takes very different skills to run a $1B business compared to a $15B business. Understand all aspects of the job and make sure candidates are evaluated against real world requirements. At BAE Systems, Inc. we began to structure more interactions between mid-career high potentials and senior management so we would know our talent pipeline better. Instead of talking about how many years a person was away from the next position, we began to focus on how many jobs away they were.

 

  • Lesson– Be brutally honest in defining job requirements and be diligent in removing bias from the process. No company can survive the rapidly changing business environment of tomorrow with clones of their current set of leaders. You can have great job descriptions and an unbiased process but you have to find qualified candidates, inside and outside the company.

 

  • Lesson 8 – Scan broadly for qualified candidates. Focus on diverse and non-traditional candidates and develop diverse interview panels. Gradually, progress will be made in diversity and average age – an important factor with an aging baby boomer workforce.

 

  • Lesson 9 – HR must have a seat at the leadership table. You can often determine your company’s commitment to succession management by looking at the CEO’s org chart. No processes will become ingrained in a corporate culture if the owners and advocates don’t have a seat at the table. HR practitioners play an important role in making the succession management process work effectively.

 

  • Lesson 10 – Identify those aspiring leaders that embrace change and can manage transitions. Successful organizations of tomorrow will largely be shaped from the bottom up – gone are the days where people just follow orders – they want to know why, and they want a say.

 

Need a shorter list than these 10 lessons? Then I’d sum up my succession management experiences with these three key points: start early, move often and scan broadly.

 

The process of taking raw talent and nurturing it, challenging it and shaping it year-upon-year is one of the most rewarding aspects of my career. If you missed today’s live broadcast and would like to register as a guest to receive a recording of the webcast, please email or call The Conference Board customer service department with full contact information and the following:

 

Conference KeyNotes webcast code: KEYNOTES

 

Customer.Service@conference-board.org | (212) 339-0345 (Monday through Friday 9am-5pm ET)


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