Author of another wonderful book: “What Got You Here Won’t Get You There,” Marshall Goldsmith writes here that a leader’s greatest challenge can be knowing when it’s time to step aside. And just as challenging is the often overlooked, frequently thorny question of how you step aside. The goal would be, during the transition, for the departing leader to maintain his dignity (many don’t), enjoy his final year or so in the office, and put his successor in a position where he or she will have a great chance of winning.
This book offers candid advice on succession from the outgoing executive’s perspective; however Goldsmith doesn’t focus on the strategic or technical issues.
This book is also not intended to be a human resources manual, so it doesn’t address succession planning and areas such as compensation, stock options, and other HR concerns. What this book does focus on are the behavioral concerns related to succession. This book was written to help CEOs and any high-level professionals 1) prepare for transition, 2) choose a successor, 3) coach their successor, and 4) pass the baton.
Goldsmith stresses that too often succession is presented "as a dry, "check the boxes" process during which seemingly robotic executives are only concerned with buzzwords like strategic fit, core competencies, and long-term shareholder value." In actual practice, though, he writes that the process of getting ready for succession is often influenced by emotions as much as it is influenced by logic.
Here are some highlights from each of the four areas that Goldsmith addresses:
I. Preparing for the Transition
- Slowing down and letting go is typically very difficult. If you and the company are doing well, why would you want to quit now? And if things aren’t going so well, you won’t want to give up. Determining whether or not you are really ready for succession is a critical first step in the process.
- Make an honest assessment of what you will be letting go of. You will need to cope with, among other things, a change in compensation, status, power and authority, your relationships, and your level of contribution.
- Knowing that you will become a "lame duck" and a "former CEO" is hard to accept. But it is a reality. Making peace with this and learning how to deal with it will make things a lot easier for everyone.
- Don’t worry about "finishing on a great note." Instead, make those tough, unpopular decisions that are good for the company. Focus on putting your successor in a position to succeed.
- It will be critical to properly transition from you running the company at full speed, to choosing and developing a successor, to creating the rest of your life.
- Goldsmith writes that from his learnings, the three most important variables that executives identify in order to have a "great rest of life" are: contribution, meaning, and happiness. (Note that money, health and relationships are not listed as key factors – because CEOs report that they are typically already doing fine in these areas.)
II. Choosing a Successor
- The development of a great successor is one of the most important accomplishments that a CEO can achieve. (What message is sent to your leaders when you, as a CEO, cannot develop your own successor?)
- But should you develop an internal or an external successor? Goldsmith lists some pros and cons for both but concludes that "external CEOs come with extremely high risk and that you should develop an internal resource if at all possible." A cost-benefit analysis of the options is always a good idea.
- You as CEO (and as a coach of your potential successor) need to make certain that you really want this person to be the next CEO. A lot of time, money and energy can be wasted if this is not the case.
- Before the succession decision is made, it is critical that your potential successor establish positive relationships with all key stakeholders such as board members, her leadership peer group, direct reports, and important customers and suppliers. Utilize a critical stakeholder assessment in this determination.
- Everyone has areas of improvement need, and successor CEOs are no different. And as with all people, for a potential successor to achieve positive change, the deep motivation for this change will have to come from inside him. And his motivations must be for the right reasons.
- An outside coach or CEO can help the successor achieve authentic change, but they cannot make the successor achieve authentic change. As Arnold Schwarzenegger noted, "Nobody ever got muscles by watching me lift weights."
III. Coaching their Successor
- The selection of an executive coach should be driven by the needs of the company and those of the potential successor. Hire a coach who specializes in those areas.
- At the CEO level, most requests for coaching are behavioral – not technical, functional, or strategic.
- Some advantages of utilizing an outside coach include confidentiality in collecting data, their credibility and capability, and a lack of time by the CEO to commit to the coaching process. Also, taking the lead in coaching the potential successor is often not the best use of the CEO’s time or talents.
- As a leader, your successor needs to clearly understand – before taking the job – how much CEO behavior matters to the people she will be leading. If she wants to be a great leader, she will need to "make peace" with watching what she says and observing how she acts…for the rest of her career. There is no "off" switch when she is around the people who she will be leading.
- Involve key stakeholders in the development of your successor because he will need their support, they provide different perspectives, he will learn from them, and it increases the stakeholders’ buy-in regarding the process and the candidate(s).
- The more successful we become, the more we fall into the superstition trap: "I behave this way. I am a successful CEO. Therefore, I must be a successful CEO because I behave this way." Don’t fall into this trap. Your successor CEO will NOT need to think, behave, and be like you in order to be successful.
- Successful human beings tend to overweight our own strengths and underweight our own weaknesses when evaluating others. Many of us have a natural tendency to forgive even large errors that resemble our weaknesses and to punish even small flaws that occur in our area of strength. Be conscious of this when evaluating others.
IV. Passing the Baton
- As CEO, be crystal clear when you are leaving and who your successor will be. Also, how to announce this and how to inform the successor CEO and key stakeholders is very important.
- As the CEO, you need to avoid the "buyer’s remorse" that is too common in the transition process. Once the final commitment is made, let it go.
- Give the key stakeholders all the credit for the successor CEO’s personal improvement. They (presumably) have been a critical part of the development and selection process and their efforts need to be recognized.
- Show some class on the way out. Do whatever you can to make your successor a winner. Get over your own ego.
Frances Hesselbein has noted that "Successful transition is the last act of a great leader" and this book’s author aims to "help leaders "move on" to a next phase of life that provides meaning, contribution, and happiness."