3 Oct 2016

Over the past few months, there have been a number of people in high profile positions facing almost daily questions and speculation concerning when and how they will hand over their respective roles.  Tony Blair has told us that he will be leaving No. 10, but we do not know when, although it is widely rumoured that he has made a deal to pass on the reins of power to Gordon Brown.  Sir Ken Morrison, of the eponymous supermarket chain, has told the press that he will “gradually relinquish power” to his newly appointed CEO.  Meanwhile, Sven Goran Eriksson announced he was leaving before the World Cup Finals and his successor was confirmed before his employment had terminated.  So what can we learn from those in the media spotlight when it comes to succession planning for lower profile senior executives? 

Below are some top tips for HR managers (and senior executives!) seeking to ensure that the time is right for the senior executives to move on and leave the business in the best capable hands for its long-term survival.

  • Starting the plan.  Succession planning should ideally start several years before the executive intends to retire or move on.  It is prudent to have an emergency plan in place at all times, in case of unexpected illness or incapacity.
  • When is the right time to go?  There is an overwhelming desire amongst senior executives to go at the top of their game.  Nobody wants to be pushed out.  On the other hand, seeking to “make history” before leaving, may cause the executive to hang around that bit too long.  The law allows CEOs’ performance to be managed, as it does for more lowly staff, and HR can assist the Board in processes to manage up delivery, or mange out the executive.  Otherwise, the state of the business and market conditions are likely to be the best indicators of the right time to go. 
  • Announcing a deadline.  Obviously, the deadline should not be announced unilaterally – which would be a breach of the contractual duty of trust of confidence on either side!  There are pros and cons to letting people know that the executive intends to retire, and when he intends to be gone by. 
  • On the plus side, it focuses minds and should assist the business to recruit a successor who is aware of their future role.  Also, if there are murmurs of discontent and staff are beginning to think it is time for the executive to move on, a public deadline may assist to placate the executive’s critics in the short-term.   
  • On the downside, once a date is set, many staff members may treat the executive as history.  It is not uncommon for staff to distance themselves from any controversial or unpopular decisions made by the current incumbent and ‘turf wars’ to develop.  If the business is not ready to be handed over on the date set, there are likely to be problems for the executive, his successor and the business in general.
  • Once an internal announcement is made, the news will leak so ensure that a press release is ready to go at the same time as all staff are told.  Customers, clients and suppliers should also be informed as swiftly as possible after the staff announcement.
  • Internal or external successor?  Many large organisations now have “talent management departments” which monitor the brightest and most able employees with a view to grooming them for the top positions.  Recruiting externally for someone with appropriate levels of market experience and ambition may help to bring in new ideas and freshen things up after the executive’s departure.   Whatever approach, it is probably best to involve the current incumbent in the process.
  • The executive’s team.  Any succession plan must deal with a re-organisation of the executive’s team, if appropriate.  This must cover both short-term arrangements as well as longer-term projects.  It is unwise to speak to team members and colleagues about plans for the future until just before an announcement is made.  However, if the executive’s team is quite small, it is likely the team will realise what is happening.  In such circumstances, unduly delaying the appointment may cause uncertainty within the team. Staff will want to know who is replacing the executive, and what the plans are for the future, as soon as possible.
  • Handover.  Once the executive has made the decision to leave, a timetable should be set to ensure that his successor is in place and developing the skills required in order to take over effectively.  This will often form part of a severance deal, which would normally be incorporated in a compromise agreement.  Ideally, a public handover period of fewer than six months should be implemented.  Timetables for the handover should be sensible, with room to manoeuvre, but above all they must be adhered to.

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