I just read a great interview with Ram Charan on ceoforum.com. Charan, an acclaimed management consultant and author, studied CEO succession planning, wrote about it in the Harvard Business Review and later discussed it on the CEO Forum.
Charan found that across the corporate world, succession planning is not very sound. That could explain why (in a study that he cites) 40% of CEOs fail in the first 18 months.
“One … study found that almost half of US companies with more than $500 million dollars of annual revenue had no meaningful succession plan,” says Charan. And when CEOs fail? ”The direct and indirect costs of this to both individual companies and the economy as a whole are simply enormous.”
Charan says any board or company that fails to put in place a decent succession plan is ignoring one of their most important responsibilities. At minimum, the board should ensure that at least two sessions a year are devoted to reviewing a minium of five potential candidates - both internal and external.
He also observes, in my view very importantly, that in preparing executives for the next big job, a classroom is not a management development program. Executives need real experience. ”Management training develops awareness, provides tools and resources, and helps people develop strong professional networks, but the real learning occurs on the job.”
This is such an important point that I can’t let it pass without comment. Often our firm is asked to come in and provide a “classroom” experience for high potential executives, largely because it is perceived as good “bang for the buck.” We have developed some very fine programs for leaders on communication strategy and skill. While we certainly konw there is value in the classroom experience, we know that to make a lasting impact we have to work “with” the executives while they’re “on the job.”
That’s the whole philosophy behind our executive coaching program–we work in “real time” with the leader on the projects and communication issues that are on their plate in the moment. Over a six month or one year engagement, the executive has a partner in the process while “learning on the job.” We can accelerate learning around leadership and communication, because they’re problem solving key issues, learning to communicate more effectively and build skill at the same time.
Charan accurately points out that “while companies can provide the opportunity and resources to develop, development is a function of the individual, and their own motivation and capacities.” And I think that’s why “on the job” learning in real time with the partnership of a coach provides the perfect blend of experience and training. You know immediately who is motivated and has the capacity. Those who are motivated have an opportunity to get something else that is rare, and essential, according to Charan - “Basically people need three things to develop: on-the-job learning, rigorous appraisal, and clear performance feedback.”
To read the article, go to: http://www.ceoforum.com.au/article-detail.cfm?cid=6172