Developing a CEO succession plan for your company

24 April 2013 10:22 am Coaching @en

‘Coach Kriengsak, I want to discuss CEO succession planning with you,” Jutha tells me.

“Khun Jutha, who is your successor?” I ask.

“Khun Pairoj.”

“Is he aware of your intention?”

“Yes, he is.”

“When will he replace you?”

“I plan to step up to become executive chairman in three years. By that time, he will be ready and can assume the role of CEO accordingly.”

“Sounds like you already have a good plan for him. What’s your concern?”

“I’m concerned about his leadership judgement.”

“Khun Jutha, leadership judgement has three main domains: judgement of people, of strategy, or in a crisis. Which one concerns you the most?”

“Crisis.”

“How do you know?”

“A few years ago, when Thailand and our own business were feeling the impact of the ‘hamburger crisis’, Khun Pairoj didn’t perform well in my view. He waited for me to guide him on most critical decisions.”

“What is your plan to help him improve crisis judgement?”

“I don’t know. Any ideas, Coach?”

“Khun Jutha, how did you learn to have effective judgement in a crisis?”

“Experience has taught me.”

“How can you create experiential learning for Khun Pairoj?”

“It’s not easy, especially when there’s no crisis. Right now, our companies in the group are doing well. All of us are in growth mode.”

“Khun Jutha, do you know how pilot training works?”

“Yes. Pilots are required to fly a certain number of hours in a flight simulator prior before flying a real plane. The rookie pilot is not flying solo. He or she is a co-pilot with a veteran.”

“How can you apply this knowledge to a development plan for Khun Pairoj?”

“Coach, I have some ideas:

– I could acquire a small company that is experiencing a crisis. Then I could send him to run it under my supervision.

– I will look at a department that is facing a crisis and ask Khun Pairoj to supervise the department head.

– I will create a series of crisis case studies and work with him on those cases.”

“You’ve come up with several options. How do you materialise them?”

“I think I can start on the crisis case studies within three months. I’ll meet with him once a week and work on a case. Each session will last two hours. I will observe how he manages the case and listen to his rationale. Then I’ll give him feedback. In addition, I’ll add my own judgement and views. In parallel, I will explore the possibility of acquiring a troubled company or looking for internal departments that are facing problems.”

“I like that. What could go wrong?”

“This requires a lot of preparation time and also a lot of meeting time together. I’m worried I won’t have time.”

“Why?”

“Because there are so many things on my plate right now.”

“Why?”

“I don’t know.”

“Okay Khun Jutha, let me share with you a story Influencing Up by Allan R. Cohen and David L. Bradford. The authors describe a case study called the ‘Hospital Experiment’. A CEO and his direct reports are attending a leadership workshop and given the following assignment:

“Imagine the CEO is quite sick and can’t be disturbed for the next seven months. Although he’ll recover and come back, the company doesn’t plan to replace him in the meantime. Instead, you, collectively, must divide up his work, with individuals taking on the tasks they think they can perform satisfactorily.

“Usually, these three things happen:

1. Sixty to eighty percent of the boss’s job can be handled. The teams say the work is more exciting than the work they normally do.

2. The boss who observes this exercise warns each individual about the weak points of each performer. This, of course, is supposed to be the feedback that the boss should have given the executive earlier but never got around to doing.

3. The boss asks the others: ‘What is my job?’ Then the teams say: ‘Your key job is dealing upward and sideways with upper management and other divisions, not wasting your time with things we can do.’

“Khun Jutha, what’s the learning point from this story?”

“I could be less busy by delegating several tasks to my team.”

“Let’s do a quick guesstimate. How much do you think you could delegate if you really had to?”

“At least 30% of my work. And about the same 30% of my time would be gained.”

“Now you can have more time to develop your successor.”

“That’s true, Coach.” He smiles broadly.

“What is it?” I ask with curiosity.

“Coach, this was a good discussion. I think I’ll share this case with other of my direct reports. They will be able to delegate more to their subordinates.”