What if selecting your next leader was as easy as playing a game of tag or duck – duck goose? Would you trust the person who is tagged? Do you think you can trust the “goose” to run your fortune 500 organization? Unfortunately, some organizations select their next leader as if they are playing a game from their childhood. Their loyalty to the individual is based on biases or linked to the success in one area such as financial performance. For example, you have a sales executive who has consistently exceeded their goals. Their team has continually doubled and tripled the company’s revenue. Is this enough proof that this person will be an effective leader? Do you pass them the torch to run the business without any further demonstrated evidence on their performance?
According to a study conducted by PricewaterhouseCoopers, $112 billion in shareholder value is lost annually due to companies selecting the wrong individual to lead the organization. This reported failure is linked to things such as passing the torch to the next person in line, classifying the person as a likeable leader or the powers that be considering this person a safer choice. Any way you slice the pie, $112 billion is a lot of money to carelessly flush down the drain because there was no sustainable plan in selecting the next leader. So, how do you create a successful succession plan? An organization should be proactive in creating a succession plan. Simply put, you should not wait for the need to happen before you start your quest on identifying the next leader. Additionally, if you have not already, you should create an environment where feedback is the norm. This will be key in helping those identified leaders hone the necessary skills required for the next step. There should also be training opportunities provided to employees that are deemed as high valued employees. This represents some of the steps an organization can take in identifying and selecting their next leader.
As you can see, there is a lot to consider when selecting your next leader and it shouldn’t be left up to a tap on the shoulder declaring “you’re it”. Successful organizations are methodical in their approach to selecting their next leader. The prep work for the next incumbent should have commenced long before the need and there should be evidence that supports the decision in naming the person as the leader. Working with one of our knowledgeable and skilled consultants may prove to be beneficial in creating a succession plan to identify highly skilled employees and investing the proper amount of time and resources into their development, thus saving the organization money in selecting an otherwise unqualified leader.