Leadership Lounge: The Art of Succession: How to Identify Tomorrow's Leaders Today

Summary

Podcast Summary: Redefiners - Leadership Lounge: The Art of Succession: How to Identify Tomorrow's Leaders Today

Introduction

In the episode titled "The Art of Succession: How to Identify Tomorrow's Leaders Today," hosted by Russell Reynolds Associates' Leadership Advisor Hoda Tahoun and former CEO Clarke Murphy, the focus is on the critical importance of effective succession planning in leadership roles. The discussion delves into the challenges organizations face in identifying and developing future leaders, the common pitfalls in succession planning, and strategies to ensure a smooth leadership transition that aligns with organizational goals and culture.

Key Topics Discussed

1. Urgency in Succession Planning
2. Common Mistakes in Succession Planning
3. Identifying and Developing Leadership Potential
4. Maintaining Relevance in Succession Frameworks
5. Balancing Succession Development with Personal Leadership Growth
6. Benefits of Effective Succession Planning

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1. Urgency in Succession Planning

James Diggins, Leadership Advisor at Russell Reynolds Associates Singapore, emphasizes the importance of initiating succession planning early:

“I think timing is crucial. The longer the duration you have, the easier it is to start... start as soon as you are appointed, enroll and start thinking about it.”
— James Diggins [01:54]

James highlights that delayed succession planning can leave organizations with limited internal options, forcing them to rely heavily on external candidates, which may not always align with the company's culture or long-term vision.

Emma Coombe adds that immediate succession planning ensures organizations have multiple internal candidates developed over time, providing flexibility and strength in leadership transitions:

“A reasonable sized business... would hope to have a minimum of two, if not three internal options that they'd been developing over a multi-year period.”
— Emma Coombe [02:49]

2. Common Mistakes in Succession Planning

Rebecca Slan Jerusalem, Leadership Advisor in RRA's Toronto office, identifies key pitfalls:

“One common mistake... seeing succession planning as an exercise really in replacement planning... It's really important to emphasize that if done well, succession really encompasses development over the long term.”
— Rebecca Slan Jerusalem [05:44]

Rebecca warns against treating succession as a checklist rather than a continuous development process, stressing the need for ongoing talent identification and growth opportunities.

James Diggins further discusses the mistake of not prioritizing key roles:

“Some companies... don't prioritize the key roles. So pick the key roles... if it's the CFO seat, which is now increasingly seen as a CEO succession seat, you know, pick that.”
— James Diggins [07:39]

3. Identifying and Developing Leadership Potential

The hosts explore strategies to uncover and nurture leadership talent beyond the obvious candidates.

Rebecca Slan Jerusalem introduces the concept of a leadership blueprint:

“A leadership blueprint... involves really well defining the criteria of success for that leadership role.”
— Rebecca Slan Jerusalem [09:16]

This blueprint includes qualities like curiosity, adaptability, resilience, social intelligence, systems thinking, self-reflection, and a broader purpose—key indicators of potential leadership.

Emma Coombe shares insights into the methodology used by Russell Reynolds Associates to identify hidden talent:

“Individuals fill out a suite of questionnaires... we also have a cognitive test that develops an output on how strategic an individual is.”
— Emma Coombe [09:59]

She recounts a success story where an overlooked internal candidate was identified as a high-potential leader through their comprehensive evaluation process, demonstrating the effectiveness of structured talent assessment.

4. Maintaining Relevance in Succession Frameworks

Stacy Shapiro, Leadership Advisor in RRA's Atlanta office, discusses ensuring succession plans remain effective amidst changing business conditions:

“Role profiles are dynamic... thinking about annually refreshing what good looks like from a senior leader standpoint.”
— Stacy Shapiro [11:27]

Stacy emphasizes the need for flexibility in succession planning, advocating for broad and robust talent pipelines to adapt to shifts in the macroeconomic environment or organizational strategy.

Emma adds that internal succession reduces risks associated with external hires, especially during turbulent times:

“Having internal options is without doubt a huge advantage.”
— Emma Coombe [12:45]

5. Balancing Succession Development with Personal Leadership Growth

The conversation shifts to how leaders can balance the development of potential successors with their own growth and leadership responsibilities.

Stacy Shapiro suggests redefining personal success as enabling team success:

“Finding that success will be on the basis of what they're able to get done through a team and enabling the success of those around them.”
— Stacy Shapiro [18:47]

This mindset shift encourages leaders to view succession as an integral part of their legacy, fostering a culture of collective achievement.

Emma Coombe underscores that effective succession development is not a burden but an opportunity to enhance organizational resilience and leadership continuity.

6. Benefits of Effective Succession Planning

Rebecca Slan Jerusalem outlines several advantages of robust succession planning:

1. Talent Optionality: Providing diverse development opportunities ensures multiple capable candidates for key roles.
2. Retention of Key Players: Investing in employee growth fosters loyalty and reduces turnover.
3. Creation of a Talent Culture: Encourages ongoing development, feedback, and alignment with organizational values.

“When succession is done effectively... it ensures optionality about who could fill that role... creates a sense of loyalty and interest in staying in the organization.”
— Rebecca Slan Jerusalem [14:04]

She shares a case where promoting a leader aligned with the desired organizational culture transformed the company's internal dynamics, demonstrating the profound impact of thoughtful succession decisions.

Stacy Shapiro highlights the importance of transparency in retaining non-selected high-potential candidates:

“Transparency around the process is critical... providing feedback... helps retain talent even if they weren't selected for the new role.”
— Stacy Shapiro [16:43]

Emma concludes with a powerful quote from Microsoft CEO Satya Nadella, encapsulating the essence of effective succession:

“My dad... always used to talk about institution builders as those people whose successors do better than they did themselves.”
— Emma Coombe [19:35]

Conclusion

The episode emphasizes that effective succession planning is a strategic, ongoing process integral to an organization's long-term success and stability. Leaders are encouraged to start early, prioritize key roles, develop a comprehensive leadership blueprint, and maintain flexibility and transparency throughout the succession process. By fostering a culture of continuous development and aligning succession strategies with organizational goals, companies can ensure they have the leadership depth to navigate future challenges and opportunities.

Key Takeaways:

1. Start Early: Initiate succession planning as soon as assuming a leadership role to allow ample time for development and assessment.
2. Long-Term Development: Treat succession as an ongoing process focused on developing internal talent rather than merely filling vacancies.
3. Leadership Blueprint: Define clear criteria and qualities required for future leadership roles to guide talent identification and development.
4. Maintain Transparency: Ensure open communication throughout the succession process to retain and motivate high-potential employees.
5. Adaptability: Regularly update succession plans to reflect changing business environments and organizational strategies.
6. Cultural Alignment: Use succession decisions to reinforce and cultivate the desired organizational culture and values.

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This comprehensive discussion provides valuable insights for leaders aiming to refine their succession planning processes, ensuring their organizations are well-positioned for sustained success and robust leadership continuity.

Transcript

[Rebecca Slan Jerusalem]

Foreign.

[Emma Coombe]

Welcome to the Leadership Lounge, a place to kick back and listen as our experts dissect some of the biggest questions leaders face today. I'm Emma Coombe, Leadership advisor in our London office. As a leader, identifying and developing the next generation of leadership talent isn't just important, is critical. No decision will have a bigger impact on the performance of your business and its enduring legacy. Yet many leaders struggle with effective succession planning despite understanding its importance. In this episode, we're uncovering how forward thinking leaders approach succession. Why do many succession efforts fail? How can you spot leadership potential beyond the usual suspects? What actions can you take today to transform succession planning into a cornerstone of your leadership legacy? But first, remember to share any burning questions you want our experts to answer by emailing redefinersusslerynolds.com it would be great to hear from you. And if you enjoy listening to our episodes, leave us a five star review on Apple or Spotify. Let's dive in to help us explore this critical topic. I'm joined today in the Lounge by James Diggins, a leadership advisor in Russell Reynolds Associate Singapore office who specialises in executive succession. James, welcome to the Leadership Lounge.

[James Diggins]

Thanks Amir, appreciate you having me in the lounge.

[Emma Coombe]

So James, C Suite tenures are decreasing across industries. Our research found that CFO tenure is at a six year low while CHRO tenure was just 4.4 years in 2024. With leadership transitions happening more frequently, sewing succession planning is happening with a new sense of urgency. What first concrete steps should leaders take to build an effective leadership succession process?

[James Diggins]

I think timing is crucial. The longer the duration you have, the easier it is to start and I think my advice would be start as soon as you are appointed, enroll and start thinking about it. It gives you time to assess your team and understand what you've got and then help think about what development they may need and what your external options are. Leaving it too late is a really bad position to be in. We were called to do the CEO succession of a very well known global financial services company three years ago and the call came from the chairman to say hey, we need to do CEO succession. And we said when? And he said I need to do it now. We said what are your internal options? He said one. And so the board at that time meant they only had the choice of who who the external candidates are available at that time and one candidate internally. That's not a place you want to be in.

[Emma Coombe]

Yeah James, that example highlights very clearly the dangers of delayed succession planning. A reasonable sized business that can afford to have really good talent, would hope to have a minimum of two, if not three internal options that they'd been developing over a multi year period. And it sounds like your client didn't have that. And it really means that they lose tremendous leverage and flexibility. And our research confirms this is a widespread problem in our board culture and director behavior study carried out last year with over 1,000 supervisory board level directors responding, only 29% said they had a three to five year CEO succession plan. Whilst this data point is concerning as a firm, the great thing we are seeing is this number trending upwards. More and more boards and nomination committees are investing time and energy into identifying and developing their talent and at least three years ahead of a succession event. James, what else do you think leaders should prioritise when beginning the succession planning process?

[James Diggins]

The other two things are roles and then alignment. I think if it's a public company, understanding what roles people are playing and that could be the chairman, the non co chair, the chro and the CEO and understanding who's going to take the lead, what the cadence of the communication is going to be and who's going to drive the process and for which role is really important. And then the last is alignment. I think good organizations that do this well have got a really clear picture on what kind of challenges the organization is facing, what kind of opportunities they're facing and therefore what some of the implications are for leadership.

[Emma Coombe]

Those are excellent points James. And of course having clearly defined roles in succession planning is key, but for me it's the alignment piece that is most critical. Reaching a point of alignment on what we might call a future success profile. What you want the next leader to really bring takes considerable time and effort. For example, you might ask all of the board directors to fill out a survey to then have an in depth interview. And playing back where there are areas of misalignment across the key constituents allows everybody to make sure that they're focusing on the same thing moving forward. And as that pertains to strategy and then to what the next leader should look like. Let me now bring Rebecca Slan Jerusalem into the conversation. She's a leadership advisor in RRA's Toronto office and has guided numerous organizations through the succession planning process. Rebecca, welcome to the leadership lounge.

[Rebecca Slan Jerusalem]

Thanks Emma. I'm pleasure to be here Rebecca.

[Emma Coombe]

Our recent research also uncovered that only 44% of board directors feel that their company's CEO succession plan will result in an effective candidate being appointed. We know there's no universal playbook for succession and it's nuanced but what are some of the common mistakes that leaders make when it comes to succession planning?

[Rebecca Slan Jerusalem]

One common mistake I see is organizations seeing succession planning as an exercise really in replacement planning, that is who will fall into what roles or what boxes on the org chart. It's really important to emphasize that if done well, succession really encompasses development over the long term. That means that the organization, organization is actively identifying key talent on a regular basis and actively providing them with development opportunities and experiences that allow them to grow. Too often succession is really a check the box exercise at a critical point in time as opposed to having a long term focus.

[Emma Coombe]

For me, Rebecca, that distinction is crucial. And of course, internal candidates often require a different set of experiences to make them fully credible when a succession is required. So for example, you could have somebody who's grown, grown up in a finance function, who needs to be given responsibility, leading a P and L, running a region or a business unit. Or you might have somebody who's got certain geographic experience but must have exposure to the largest region before they can be really credible. And one of my clients wasn't forward thinking enough in terms of the internal candidates. They'd identified two, and it was only 18 months ahead of the CEO stepping down that they were given exposure to a new region and actually had to very quickly get their arms around it and not really have enough time to prove themselves. I think the board found it all quite a rush and in hindsight would have loved to think about this even five years in advance. So that candidates had the right set of experiences and could really be compared on an equal footing when the actual succession took place. So when organizations only think about leadership talent, when there is a gap, as it were, they miss the opportunity to invest in their internal talent. Coming back to you, James, what other common mistakes do you see leaders make when it comes to succession planning?

[James Diggins]

One of the things that I think some companies trip up on is they don't prioritize the key roles. If you've got a CEO, they tend to have between, you know, eight, nine to 12 direct reports. You can't necessarily allocate the same time on succession for all of those key reports. So pick the key roles. If it's the CFO seat, which is now increasingly seen as a CEO succession seat, you know, pick that if it's a business role or some of the key business roles or sales roles, depending on the organization, you may want to prioritize them.

[Emma Coombe]

CEOs certainly need a targeted approach when they're thinking about their colleagues who have the most Potential, James and so I totally agree with you. Aligning with the board, with the nominations committee on who those most likely internal successes are and then really making sure they're tested by giving them new opportunities. Maybe it's group wide projects, if they're in a CFO role, maybe it's mentoring and developing other leaders in the organization to test their followership. These kind of activities are so important to make sure that people can really get ahead and as I said, be ready for the moment when the succession process takes place. I'd now like to turn back to you Rebecca. When identifying future leaders, we often gravitate towards candidates who are highly visible or remind us of ourselves. It's human nature. But this can of course create blind spots and missed opportunities. And Rebecca, it'd be great to hear from you on how CEOs and CHROs can develop more sophisticated talent spotting skills. How can they uncover leadership potential in unexpected places across an organization?

[Rebecca Slan Jerusalem]

What we really recommend is a leadership blueprint. This involves really well defining the criteria of success for that leadership role. The second piece here is really about the factors to spot talent. And when we think about the critical factors in succession, what we're really thinking about is do they have potential to grow in role? Is there curiosity, adaptability, resilience? Are they, do they possess social intelligence? Do they use a systems thinking approach? Are they able to kind of self reflect and have a broader purpose? And these are really qualities that are the hallmark of who has potential to continue to evolve their leadership.

[Emma Coombe]

You're absolutely right, Rebecca. And often looking for these qualities can lead to surprising discoveries in our methodology. We come up with quantitative data. Individuals fill out a suite of questionnaires that builds their leadership profile, how others experience them as a leader. And then we also have a cognitive test that develops an output on how strategic an individual is. That's combined with an in depth interview with a, with a search advisor and with a psychologist. The output of this is that we really do get to spot where talent lies in an organization. And recently I was working with a client where one individual had waited for a long time for her boss to retire and the organization had really overlooked her potential. And for us, she was just the shining star buried away with such big potential. It was incredibly exciting to spot this talent, to talk to the client about why it made sense to really invest in her as somebody for the future and to have enough data to underpin this as well. I'd now like to introduce our final voice into the conversation. Stacy Shapiro, Leadership advisor in our Atlanta office Stacy, welcome to the leadership Lounge.

[Stacy Shapiro]

Thanks Emma. It's great to be here.

[Emma Coombe]

So, Stacey, succession plans are typically developed during stable periods, but executed during times of significant disruption or transition. How do leaders ensure that their succession frameworks remain relevant and effective even when business conditions shift dramatically?

[Stacy Shapiro]

Thanks, Emma. It's a great question right now as we see particular periods of ambiguity and uncertainty. And I think an important reminder is that role profiles are dynamic and so thinking about annually refreshing what good looks like from a senior leader standpoint, the qualities that are likely to predict success based on the macroeconomic factors, internal factors, strategy, culture going to evolve across time. And so I think the other piece from a succession planning standpoint is that it's human nature to want to quickly converge on one or two top candidates, those individuals that a leader thinks are best prepared. But keeping those pipelines broad really enables an organization to be well prepared in the event that the environment shifts. We see oftentimes an organization that thinks they need a commercial leader, but because of shifts in the macroeconomic environment, they realize after six months or 12 months that actually what they need is a much more operationally oriented leader. And so to the extent that pipelines are robust and broad, it enables more stability across time.

[Emma Coombe]

I think, Stacey, you've made some great points. And organizations that are in a position to support internal succession planning, in my mind, have massively de risked the situation. It's so hard with all the referencing in the world to make sure that an external candidate is going to land well. And so having internal options is without doubt a huge advantage. In my experience though, what I find is that if a business has gone through a series of profit warnings, if it's been negatively impacted even by factors outside of its control, it can be very hard for a business to allow for CEO succession with an internal candidate. Quite often investors aboard actually want to see a fresh face, somebody from the outside, even if in the medium term it could have been better to support and back an internal candidate. So I think it's a really interesting thing for us to reflect on as leadership advisors and sometimes maybe there's an argument to push harder to support internal candidates because they are a known entity and they understand where an organization needs to get to. A recent report by the Society for Human Resources Management found that organisations with a strong succession planning process in place have a 95% higher shareholder return compared to those without a succession plan. Rebecca, what other benefits have you observed?

[Rebecca Slan Jerusalem]

Well, when succession is done effectively, it is a long term, year over year approach where key talent is developed on an ongoing basis. And this ensures a number of benefits, including talent optionality. So if long term succession planning exists, key talent is given a wide variety of development opportunities to prepare them for the next level. And done correctly, this will ensure that when a role does pop up, there is optionality about who could fill that role. The second benefit is really the retention of key players. And in offering key talent growth opportunities, the organization is really, really signaling to them that they are valuable and worthy of investment. And that in turn creates this kind of sense of loyalty and interest in staying in the organization. The third benefit is really about creating a culture of talent. So leaders become well versed in talking about their talent. There becomes an emphasis on long term development planning and growth. People become comfortable giving and receiving feedback. And when succession decisions are made, it can reinforce the type of talent and broader culture the organization actually wants to cultivate. So, you know, for example, right now I'm working with a professional services firm and they recently replaced a long standing leader who really espoused a siloed kind of eat what you kill mentality. And there was a lot of dysfunction in that group. And so this internal promotion really went to someone who was less well known, but who leads in a way that the organization really values. And by replacing him with this leader who espouses more of the culture and leadership characteristics that the organization is really wanting, it has really started to change the very nature of the organization's culture.

[Emma Coombe]

That's a really powerful example, Rebecca. And I imagine it took a huge amount of work for your client to get comfortable with appointing somebody who was less known and had a very different style, but clearly is having such a positive impact on the organisation. This shows succession decisions are among the most powerful cultural levers available to leadership and they signal what behaviours are truly valued, not what's just written in a mission statement. So, Stacy, not every succession candidate can be selected for a bigger role. And one of the big questions that we're often asked by our clients is how they can retain the talent that has been unsuccessful, particularly as clearly this talent has been identified as high potential. And yet they've had to be let down on their ambition to be considered for a new role higher up in the organization. What advice do you have for our clients in this situation?

[Stacy Shapiro]

I think first and foremost, transparency around the process is critical in making sure that individuals who are in the process feel well informed about any process that they're going to be part of. And ultimately, once a decision is made, that the candidates also have a degree of transparency into how the decision was made and certainly receive feedback both in the context of the successful candidate and transparent feedback for the individual who is not successful. And I think a great example of this we recently did a CEO succession for an organization. There were two internal candidates. One of course ultimately was successful and was named the CEO. For the individual who was not successful, what the organization did was be very clear with that individual about their development opportunities and the gaps to fill, ultimately providing an expanded role that really served to help that individual fill those gaps. In terms of their experience. This had the benefit of one making that individual feel well informed about the process supported in their development. And the organization retained this individual for about two years.

[Emma Coombe]

I think that's really good advice, Stacey. And frankly, it's quite likely that individuals who are not successful in such high stakes processes will leave. But the fact that your client kept somebody for two years is great. And hopefully one part of any candidate in a really high stakes succession process, one part of their responsibility is to think about backfilling for their own role. So hopefully an organisation has that well advanced and if they do decide to leave, there's such not such a big hole to fill. For our final question today, it can be difficult for leaders to balance developing their successes whilst continuing to lead the business and go on their own journey. How can leaders effectively balance developing potential successes while engaging in their own personal and professional development?

[Stacy Shapiro]

I think this really requires a leader to redefine what success will look like for them. It's an important mindset shift for a leader to go from a career which has really been based on their own merits and their success has been based on what they individually have been able to accomplish. And this shift really becomes defined finding that success will be on the basis of what they're able to get done through a team and enabling the success of those around them. I think recognizing that in many of these situations the CEO may be at the end of their career, they may not be moving on to another executive role. And so in those situations it's particularly emotional and I think there's an added degree of sensitivity that is required there.

[Emma Coombe]

You're absolutely right, Stacey. It's all about mindset. The most effective leaders view developing potential successes as an opportunity, not a burden. It's not a time drain, it's not a distraction from their own growth, frankly. It allows them to do other things, hopefully better and it forms their legacy. This is what is there after they've gone. Next generation of leaders coming through. And on this point I'd like to close the episode with a quote from Microsoft CEO Satya Nadella on the importance of leaders being what he calls institution builders. He said, my dad, a civil servant in India, always used to talk about institution builders as those people whose successors do better than they did themselves. I love that definition. I feel that if the next CEO of Microsoft can be even more successful than I am, then maybe I've done my job right. If the next CEO of Microsoft crashes and burns, that may result in a different verdict. This captures for me the essence of effective succession planning perfectly. It's not just about filling positions, it's about building institutions that thrive long after we've moved on. That's the real test. So our time in the lounge today has come to an end. In 30 seconds, this is what we've learned. Start succession planning early, ideally as soon as you step into a new leadership role. View succession as an ongoing development process, not just a replacement exercise. Design a leadership blueprint where you clearly define what the criteria of success for that particular role in the future. And lastly, maintain transparency throughout the succession process to keep potential successors engaged and motivated. If you have any topics or burning questions you'd like us to cover in future episodes of Leadership Land, then get in touch. Email your questions to redefine ussellerynolds.com and if you've enjoyed listening to this episode, leave us a five star review on Apple or Spotify. You can find us on LinkedIn and follow us on X raonleadership. You can also find us on Instagram edefinerspodcast and you can now subscribe to our YouTube channel. Until next time. Goodbye.

[Rebecca Slan Jerusalem]

It.