Is Succession All About the ‘Name in the Box’?

Whatever the circumstances of a leader’s sudden departure, the outcome is the same: Companies are left to deal with an abrupt change, forcing decision-makers back to the drawing board. How prepared are you to handle the situation?

Is Succession All About the ‘Name in the Box’?

3 Mar 2017 by  Ridhima Khanduja & Sek Ying Min

Today’s business landscape is evolving in the most unprecedented of ways. Recent events, such as the issue on diesel car emission, forced the CEO of Volkswagen AG to resign. Similarly, the CEO of Suzuki and Honda also stepped down amid scandals on fuel economy tests as well as the Takata airbag failure. And that’s just in the automobile industry.

Whatever the circumstances, the outcome is the same: Companies are left to deal with an abrupt change, forcing decision-makers back to the drawing board. How prepared are companies to handle the situation? Have they been proactive in building a pipeline of leaders to take over critical positions overnight? Or have succession management initiatives been all about replacing the ‘name in the box’?

Looking inwards

Research from the Aon Best Employers Malaysia 2016 study shows that Best Employers fill 28% more job openings with internal candidates compared to market average. 56% of HR leaders in Best Employer companies have also identified high-potential development and succession management as a long-term priority.

So, what are the benefits of preparing internal successors over external hires?

Increased Acceptance

An internal successor is one who has stayed with the company through its ups and downs, and understands the company’s culture, legacy processes, sensitivity, and nuances of key stakeholders. This not only increases acceptance of the successor, but also enables him/her to visualise expectations of the role in context.

Increased Credibility

Internal successors have proven track record of consistent performance across various business domains in demanding times, desired organisational behaviours, and made strong technical as well as functional contributions. As a result, they are able to establish credibility amongst stakeholders, even before they officially assume the leadership role.

Increased Successful Transitions

Internal successors can prepare to transition to bigger roles by taking on additional responsibilities beforehand, or by serving in an ‘acting’ role before assuming the permanent one. This provides an opportunity for the organisation to validate the suitability of the successor, and increase the rate of success.

How to go beyond the ‘name in the box’?

1. Incorporate strategic business goals when determining critical roles and future successor profiles.

When evaluating desired leadership skills and critical roles, consider factors such as impact on business growth, operational continuity, and potential difficulty in talent sourcing due to the incumbents’ legacy knowledge as well as availability of candidates with niche skills.

2. Align the science and art of selection.

Based Aon Hewitt’s Top Companies for Leaders study, there are three key pillars to define successor evaluation criterion:

  • Ability: strong performance. General cognitive abilities, social adeptness, technical skills, communication and influence skills contribute towards strong business performance.
  • Aspiration: the will to grow. The ambition and the inner work standards that people hold themselves and others that leads to measurable results.
  • Agility: the ability to grow. The basis of agility is an openness to experience and self-awareness.

Top companies use a combination of multi-rater feedback tools, cognitive ability tests, personality tests, work-based simulations and interviews to assess these three pillars.

3. Apply fact-based calibration.

Top management or even board members in an organisation need to be the audience when calibrating critical roles, especially at CXO levels. The conversation should focus on looking at each successor with multiple data sources, beyond past achievements and performance, to identify two to three potential candidates for each critical role.

4. Prepare for a continuous journey.

Successors need to be put through a structured development journey championed and monitored by the board and CXOs. Based on Aon Hewitt’s Top Companies for Leaders study, the top three opportunities offered to senior leaders in global top companies are developmental assignments (80%), leaders serving as teachers (80%), and cross-cultural awareness training (72%).

5. Constantly re-evaluate to prepare for uncertainties.

In Malaysia, all public-listed companies have included succession management as a key focus area for the board. Some have even gone beyond using typical financial metrics and have included Succession Outcomes of pivotal positions as part of the CEO’s and management team’s Long Term Incentive Plan (LTIP). This shifts the mind-set of ticking the box of succession management to the actual succession results.

Succession management is a journey that requires collaborated effort from the leadership team, board members, the incumbent, and peers to continuously support and enable a successful transition. With this collective effort, the transition from one leader to the next is no longer about filling the ‘name in the box’ but about successfully assuming the ‘role in the box’.

Start a conversation with us

Need help with succession management in your organisation? Get in touch with us.

Ridhima Khanduja & Sek Ying Min

Ying Min Sek is a senior consultant with Aon Hewitt in Malaysia, experienced in human capital project management and delivery covering leadership assessment and development programs, competency framework design and employee engagement. She holds a BSc (First Class Honor) in Psychology, from Sunway University and Lancaster University, UK.

Ridhima Khanduja heads the Leadership, Performance & Organisation practice in Malaysia. She helps organisations deliver business growth plans through effective Human Resources interventions in Organisation Design, Competency Design and Implementation, Talent Assessment and Development, and Performance Management. Ridhima is a certified facilitator on multiple psychometric tools. She has a Masters in Human Resources & Organisation Development (MHROD) from Delhi School of Economics, University of Delhi.

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Ridhima Khanduja
Ridhima Khanduja
Kuala Lumpur, Malaysia
YingMin Sek
Sek Ying Min
Kuala Lumpur, Malaysia
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