“I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come. I hereby resign as CEO of Apple. As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”
This was the resignation letter of Steve Jobs in August 2011. The succession plan in the letter was not just a line. Steve had properly planned for it. As part of his succession, Steve set up Apple University in 2008. Apple University is highly secretive and media-shy. However, it teaches “What makes Apple, Apple”.
Apart from that, Steve worked hard to prepare Tim for the CEO role. Tim was rotated to multiple roles in manufacturing, sales, distribution, and supply chain and then was trained for the CEO role with Steve Jobs.
What is Succession Planning?
Succession planning is defined as a process of enhancing organization resilience to the attrition of employees holding critical positions. This is generally done by creating a talent pipeline for leadership roles and developing the identified successors to take up the roles over a period of 12 to 36 months.
Why Succession Planning?
Succession planning is done to take care of REDS. Here is what REDS mean.
- Retention of Institutional Knowledge– Any organization performs better if it is able to retain Institutional Knowledge. Institutional knowledge gives an edge as leaders and critical role holders are able to make better decisions at a faster speed.
- Enhancement of morale and retention– The second reason for doing succession planning is that it gives hope to the talent that they can grow with the organization. That enhances morale and gives a reason for people to stick with the organization.
- Dearth of talent– Somehow, the talent for critical positions is limited. Over and above it is hard to find. Even when you are able to spot the talent, it is even harder to attract the desired talent.
- Specialized competency development– Despite Swiggy being there, people prefer to cook at home. There are multiple reasons for doing that including taste, touch, hygiene, digestion, economics, etc. The same is true for organizations. They can customize the specialized competency development considering their preferences, culture, hygiene, economics, and acceptability.
The question is why now? What has changed? Why has succession planning suddenly become a hot topic? Here are the two major reasons.
1- Great Resignation and Great push
The great resignation has not only affected the frontliners. CEO attrition has grown by 29% in the first quarter of 2022. The salaries of the IT executives have touched insane levels.
A Deloitte study shows that 70% of executives are planning to leave their positions due to emotional health issues. The market volatility and social pressures are responsible for the emotional health of the executives. Over and above, 40 listed
Indian companies lost their CEOs due to coronavirus last year. All this made Sebi even stricter about succession planning to safeguard investor interests.
2- More than just filling vacancies
Pandemic brought Volatility, Uncertainty, Complexity, and Ambiguity to life all at once. This indicates that the competencies required for future leadership positions are going to be very different from the current competencies.
You don’t need succession planning just to fill the vacant positions. You need to develop your current leaders for the competencies of the future so that they are able to retain the future avatar of their positions.
In simple words, the process of succession planning is BET for the future.
1- Business Assessment
Succession planning starts with business assessment. Not for today, but for the anticipated business challenges of the future. These anticipated challenges lead to the identification of critical positions.
The job design, competencies and organizational knowledge required to deliver the business results are the first milestone of succession planning.
2- Employee Evaluation
The second milestone is to find high-potential employees. You do not have to give electric shocks to the employees to find their potential. Pool identification can be done by simple screening of the basics like capability to deliver, positive attitude towards the organization, and aspiration to take higher level roles.
This is followed by a competency evaluation of the identified pool against the desired competencies. The talent which is groom able and requires lesser time to reach the desired competency level is earmarked as a succession pool.
3- Talent Development
Employee evaluation is just diagnostics. It can tell the potential areas for improvement. The real value comes from working on the improvement areas. The delicate part of the exercise is to ensure the buy-in and involvement of the talent pool in preparing individual development plans (IDP). The IDPs may include job rotations, mentoring, coaching, leadership shadowing, and high-pressure assignments.
Internal competition boosts the value and intensity of succession planning. The effectiveness of succession planning further increases by deploying a measurement system. Typical measures used by organizations include Bench Strength, % IDP completion, and talent pool retention.
Finally, Tim Cook is successful and has been following the footsteps of Steve Jobs in preparing a bench of CEOs for his succession. That’s how succession planning works.