The Drucker Society of Georgia is working with a non-profit client on Succession Planning. Peter Drucker saw that management was a social science and that people needed to be treated like assets versus costs. What advice would you give on making Succession Planning work best?
The first step for any leader is to hire and give increasing responsibility to highly capable people in the organization--that is, to embrace and nurture strength in others, rather than to fear it or resent it.
Some of Peter Drucker's ideas on this important topic can be found here, in a March 2008 column that I wrote for BusinessWeek: "Buffett's Plan for Successful Succession."
http://www.businessweek.com/managing/content/mar2008/ca20080313_699927.htm
I really like the following insight from your article:
"The management shelf is crowded with books on the subject. Drucker, though, kept things pretty simple. One hard-and-fast rule is that the leader heading for the exit should never select his or her own heir. He or she can be part of the process—but shouldn't control it. Otherwise, vanity is apt to override most every other consideration. We tend to pick people who remind us of ourselves when we were 20 years younger, Drucker said. First, this is pure delusion. Second, you end up with carbon copies, and carbon copies are weak."
Elliott Jaques found two mission-critical conditions for successful organizations. The first was enterprise-wide coordination and the second was--consistent with your article--that people be promoted by someone at least one level above their boss.
There may be an innate quality to leadership, but it can also be cultivated. Both for general effectiveness and succession planning, organizations need to systematically nurture leaders. One way we do this at the Drucker Institute is through monthly all-staff meetings, each led by a different member of the team.
These sessions can range from the teaching of a favorite Drucker principle to a case study developed from a particular niche in the organization to the sharing and analysis of a professional success or struggle.
In terms of leadership development and succession planning, the benefits of this process are twofold: team members gain insight into the workings of the various branches of the organization; and each member of the organization is given opportunities to lead the rest of the group.
Cultivation and grooming of leaders so that they have the right set of skills, experiences and knowledge is very important. However, equally important is the cultivation of the roles needed - especially in a non-profit board. It is rare that the person best suited for leading the board during the fund raising period for the new school stadium is the same person with the patience and tenacity to lead the board and oversee the actual construction. So as the board cultivates the right people it is important that the role of the leader (and each member) is clear.
In the same manner, maintaining a long-term vision means grooming people who both understand the vision and what is needed, at that time, in terms of leadership to make the vision a reality. Too many organizations get "whip sawed" by bringing in outside talent at the top. Sometimes a change in direction is needed and an outside hire can stimulate and shake up a complacent organization. Better, though, if succession planning groomed future leaders in a way that the organization never gets complacent and never veers off the path to success. As Drucker pointed out, it is the role of the current leader to groom the right successors so that the organization doesn't collapse when he/she leaves - and that takes real vision.
Succession planning built on developing the "right" knowledge and skill sets from past predecessors as Jack Bergstrand suggests will not likely lead to competitive advantage. The same structures and routines of the past no matter how well improved or made more efficient will not win into today’s global markets. There is a bigger problem with succession planning than in the past. As a manager, I have seen the morale of workers decline over the last two decades. Today’s youth have seen members of their family “right sized” and as a result, my observation is loyalty to companies have suffered as a consequence. The best and brightest will not stay for long unless they feel engaged and appreciated for their contributions at all levels in the organization. I agree with Bergstrand, in Reinvest Your Enterprise, that softer management skills are needed to build caring competent and loyal future leaders.
Why do we think the best and brightest will come from outside the ranks of our own company—Could we be responsible for stagnating our creative workers and potential limited the pool for succession planning?
Bergstrand shows some innovative ways to reinvent our organization by empowering and unleashing the creativity of our workers. An example is Bergstrand idea that a leader of a team is provided monetary reward in which 60% of the award is to be distributed to members based on their individual contribution. The team leader closest to the task determines the amount of reward given to each member. This is not the same as a person suggestion what award to give each team player. Bergstrand method motivates each member to contribute, knowing the person best able to evaluate their contribution will base the rewards on their contribution to the success of the team.
Another train of thought evolves around what Bergstrand calls “Co-creation,” which he distinguishes as different from consensus. Co-creation, according to Bergstrand, starts a little slower but speeds towards a decision and requires an ultimate decision-maker. My 29 years of management experience with consensus actions is that the process is painfully slow movement towards compromise, in which some of the best and brightest ideas can sometimes be lost or may come to the decision-based on ideas discussed months earlier after chasing every rabbit down the hole. Yet, countless hours are wasted in meetings reaching compromises that no one has their heart and soul in (nor are the costs of such meetings counted or costs of lost opportunities based on delays to reach compromise).
In my opinion, the best successors are those who live and breathe and in-deftly understand the company from the ground up. Now, the task is to grow and keep these individuals.
Merrill, Thank you very much for your insights. You make a great point that in the best cases successful succession planning is the byproduct of boards and executives having envisioned, designed, built and operated a conducive and sustainable organizational environment that supports it. This connects very well with the points that Alan, Lawrence, Rick, and Peter Drucker himself have made -- tied to the notion that non-profit and for-profit management is (to a large degree) a social science.
Hello Jack,
Regardless of where the successor comes from, the ideal outcome for every succession planning effort is one in which the newcomer introduces some thinking and practice into the organization that is deemed "innovative and positive" - while acknowledging and respecting elements of the existing culture that are viewed in the same light. It is hard to argue that succession planning can be complete and successful without formulating a good understanding of: what new vision the successor is bringing in; what elements of the existing culture the successor is expected to sustain; and the mechanisms through which this two-way exchange is likely to take place.
Therefore, first of all - borrowing from the EDBO framework presented in your book - I would like to emphasize the need to have formal mechanisms built into the succession planning effort that allow successors to transfer the E (i.e., the vision), for which they have been brought in, to the O (i.e., culture - "the way things are done") through effective collaboration with those who can bridge the gap with the D and the B they provide. Needless to say, different visions may require different paths of transfer to organizational culture, so organizations need to have the flexibility to create appropriate pathways through which innovative and positive thinking can travel.
Similarly, the reverse path needs to be present for the two-way exchange to be complete. If not already aware, the successor needs to be made cognizant of the innovative and positive elements of the existing culture that are desirable. For that, there need to be clear paths from the O (i.e., the culture) to the E (i.e., the vision). Otherwise, the valued traits of the culture cannot be effectively integrated into the successor's vision for the future.
In conclusion, I firmly believe that the effectiveness of successor planning (and for that matter, the effectiveness of all management functions) in an organization greatly depends on the inherent flexibility of that organization's formal structure. A structure that can be (re)configured on demand will create agile capacity for an organization that will allow its E, D, B, and O resources to simultaneously manage the speed and direction of all change efforts - including that of replacing one of its members with another.
I know all this is hardly new for you and many of those who have already commented here, but I wanted to tell the story through my own voice, in case it connects with a different audience, in a different place, in a different way.
Ozgur, Thank you very much for your perspective. I think you've connected the dots in a great way. I especially like your combination of needing to simultaneously provide leadership through E-D-B-O and understanding through O-B-D-E. Thanks again!