The financial results for your first quarter were very strong and indicate a continuation of last year’s record performance. Adding to the great news, the sales forecast for the next ninety days appears to be ahead of this year’s plan. On Monday afternoon you have a meeting scheduled with your leadership team to share the great news, review the first quarter and prepare for quarter two.
On Monday morning your Vice President of Sales gives you his two week notice and letter of resignation. In his letter of resignation he is very complimentary of your company, the leadership team and also expresses his appreciation for the opportunities you gave him. He is concerned about some projects that need to be finished and is prepared to finish them before he leaves so that no “balls are dropped.” His reason for leaving is not included in his letter but based on your relationship he tells you verbally:
- He had been approached several times over the last eighteen months by a search firm. He was not actively looking but your customers rave about him.
- His will be leading a new international business development effort.
- The opportunity is a new experience with increased challenges and a significant increase in responsibility and income.
You recall many of your customers complimented you numerous times on how much they trusted him and how they appreciated his proactive leadership of your company’s customer relationship experience. You remember discussing his recommendations to implement this growth strategy for your company and his desire to be challenged as a business person.
Were there other indicators you missed that caught you by surprise? Are there indicators you remember from the personal performance reviews and career development discussions you had with other key leaders on whom your business depends?
So, who is next in line to manage sales for you? Are they ready to lead others?
Regardless how you feel about this resignation, losing a key leader or a highly skilled specialist is an emergency event for the business and potentially disruptive and costly. As CEO or owner you have several options to replace your key leader or specialist:
- Promote an existing leader/specialist from your current team or hire a contract specialist/consultant.
- Appoint an interim replacement while you evaluate your options for a long term solution.
- Invest the time and money to search for an outside permanent replacement.
To minimize the disruptive impact and cost of emergency departures, there are two tools that help better prepare for the future and reduce the impact of these emergencies.
- A succession strategy and plan to protect the needs of the business. For the public corporation or a major non-profit, internal succession is a critical business process to identify and develop top level leadership candidates as well as future leaders throughout the organization. Both the succession planning process and career/talent development programs should be aligned with the future needs of the business. For privately held and family businesses, developing and preparing the next generation addresses unique emotional, leadership, legal and financial challenges that are often faced in business succession.
- A career and talent development plan to address the needs of the team. Based on the needs of the business and the competitive environment for talent, CEOs and Owners should develop a career ladder and talent pipeline designed to help attract and retain the talent for the future needs of the business.
Here are 5 examples where best practices for managing both succession plans and career development ladders help businesses and organizations achieve success:
- Public Company or Non-Profit CEO. Prepare candidates for CEO succession while developing other internal candidates for key executive/leader succession.
- Family business succession. For each generation the owners must prepare for both family and non-family leadership change and in some cases change of the ownership.
- Building and selling your business for highest value. As founder and owner your business will be attractive to a potential buyer if it is not dependent on you. Having a strong leadership/management team in place will help make your business more valuable.
- IPO success. Similar to a public company, the founders and owners need to work with expert advisors and boards to attract and retain the right leadership and functional talent to get the business ready for a successful IPO process and IPO transition.
- Growing successful small and medium sized businesses. Regardless of size, you must be able to attract and retain the best talent to achieve the growth goals you have for your business.
Build your succession plan to meet the future leadership needs of your business. Build your talent pipeline to improve retention, attract the best talent and challenge candidates to be ready to move into key roles.
- 2014 Report on Senior Executive Succession Planning and Talent Development. Stanford Graduate Schools of Business. Feb 2014
- Saporito, T.J. Ten Key dimensions of effective CEO succession. RHR International. Jan/Feb 2013
- Drotter, S.J.; Charan, R.; Building leadership at every level: A leadership pipeline. Ivey Business Journal. May-Jun 2001