Company Succession Planning -- a Strategic Issue

By Mason Dirickson

"The call" is seldom expected and always unwelcome....

"The call" this time was to advise me that the president of our company had suddenly, and unexpectedly, taken ill and died. Vernon Lucy passed away on November 19, 2009. Vernon was a 45-year career veteran with Infilco Degremont Inc. ("IDI") in Richmond, Virginia. He had served for the past 11 years as IDI's president. Vernon was intertwined in all aspects of the day-to-day operations of the business, he was deeply involved as the company's interface to both the water and wastewater industry, and he was the point man for the international sales efforts of the organization. To say that Vernon would simply be missed is an incredible understatement.

As the company and its employees grieved over the loss of Vernon Lucy, it became readily apparent that the company was facing a business loss of unknown proportions. Just a quick review of Vernon's files of nearly 10,000 business cards, and an email address book of thousands more, was the tip of the iceberg of what business knowledge had been lost.

Like many companies, Infilco Degremont has a process for succession planning. There are the annual meetings and prerequisite forms to be completed and placed in the file until next year. "The call" is seldom expected and always unwelcome.

The loss was a true and real-life test of the company's succession planning. There were some hard and important lessons learned. The two key learning points were:

It is not succession planning, it is succession management;
It is not about filling out a form for the files, it is knowledge sharing.

The planning process of looking at a company's needs in succession is all well and good. However, in most cases companies just stop there and the neatly completed forms get dropped into some file folder that is neatly put away in a file cabinet in Human Resources.

The importance of succession is beyond the planning and directed at the management of the critical business issue. Failing to manage succession is a strategic issue that could push an organization into collapse. Remember, the idea is not just that succession as a topic was discussed; it is what specific, concrete actions does a company take with the information gained that really matters.

Succession management involves several important steps:

Identification of the key positions in the company.
Understand the likelihood of a key position vacancy because of retirement, normal turnover or attrition, or other planned movement.
An in-depth review of potential successors and an assessment of their readiness to step up or move into a vacant position.

It is okay to realize and understand that a key position has no immediate potential successor -- the realization is the starting point for succession management.
Develop specific action plans for the succession of each key position where one or more internal candidates are identified. The action plans will include:

Keep in mind that the succession management process needs a champion to ensure the progress and successful completion of the various elements. If we are talking about your business, then you may need to be the champion. The buck has to stop somewhere, why not at the place where it will do the most good?

In ensuring the business will continue and prosper, the second key learning point is knowledge sharing. Knowledge sharing is beyond the training and experience gained in candidate development. Knowledge sharing hones a fine edge on development; it allows for the proper execution of the new skill sets.

So how do you go about giving and receiving knowledge?

The starting point for knowledge sharing is close and consistent contact between the person with the knowledge and the person receiving the knowledge. Knowledge sharing is more than "what I do" or "how I do", it is "why I do" the things that I do. Knowing how to take "x" and do "y" makes much more sense when the results can be leveraged knowing why to take "x" and do "y".

An example will help in the understanding of the concept. -- In order to build a highway, a foundation of packed stone is required to support the paving material. Add to this the fact (or skill base) that the packed stone is also needed to stabilize the soil below thus providing a longer useful lifespan of the highway. The knowledge sharing that the stone stabilizes the soil becomes important when the situation presents itself in the future on another road building project. Now the questions can be asked regarding the stability of the soil, the size and depth of the stone, the stone compaction specification, etc. The knowledge shared brings to life and animates skill sets.

Now that we know that "why" is a good thing, let's see how we go about knowledge sharing itself. It begins with direct, one-on-one, face-to-face contact between the person with the knowledge and the person who is to receive it. The practice is similar to a teacher and student, except the relationship is active and participative. There is also a common goal between the two in that the knowledge will be shared. The student, or knowledge recipient, must walk in the shoes of the teacher. The student must continually request the knowledge while the teacher must require the learning. The relationship between the teacher and student must evolve to become both compatible and congenial. The old phrase of "joined at the hip" works well in describing the desired relationship. Knowledge sharing helps polish skill sets.

How is IDI doing in the time since the loss of Vernon Lucy? While overall, okay, there are still gaps to be filled. IDI was very fortunate that Vernon was organized and shared his knowledge over the years. Some lessons have been learned in that there are areas for improvement in our succession management and that process has begun. The one major item that can never be replaced following such a loss is the relationships that developed over years and sometimes decades. Vernon is certainly missed but is well remembered for the many good things he brought to the company. His legacy continues.

The final step in reviewing a company's succession management process is testing it with various "what if" scenarios. It becomes the people side of a business continuation plan: