Succession in a Covid-19 World

The global pandemic has struck terror into the hearts of nearly everyone.  Business leaders and board members are reeling from the rapid impact on their organizations, across public companies, small businesses, non-profit organizations and more.  Everyone has been affected.

One of the less discussed impacts, which is shaking boardrooms and executive suites, is the issue of leadership succession.  Deciding who leads is a board’s most critical responsibility.  While proactive succession planning has long been a best practice, too many institutions still do not emphasize leadership succession seriously enough or review their plans often enough.  And now, with the scourge of Covid-19 upon us, organizations and boards are quickly taking a long, hard look at the quality and quantity of their succession plans.

One only needs to review the headlines to know that the issue of succession has reared its head again due to Covid-19.  British Prime Minister Boris Johnson is infected.  The CEOs of Altria, British Telecom and Madison Square Garden have all confirmed their infections.  Jeffries & Co. CFO Peg Broadbent sadly died from his Coronavirus infection.  Even before COVID-19, consider that only in recent days did JP Morgan CEO Jamie Dimon return to work from a month-long absence, after emergency surgery for a major heart condition.  Succession is always a serious matter, and never more so than today, when a random and unseen enemy could impact anyone at any time.

What is a board or incumbent leader to do, particularly in more entrepreneurial organizations without a deep bench of talent?  Here are a few key strategies:

  • Designate an emergency successor immediately. There should always be someone appointed to keep the train on the tracks in times of crisis.  This also allows those in control (owners or directors) a bit of time to formulate a long term leadership strategy.
  • Review succession plans for all C-Suite and Key Executive roles (CEO, CFO, COO, etc.) with regular frequency. Regular means no less than annually on a formal basis, and more frequently if a planned orderly transition—such as a CEO retirement—is coming in the not-too-distant future.
  • Take a good look at existing talent development plans across your organization, especially those 2-3 levels below the top. What is being done to develop, coach, mentor, and strengthen the skills and leadership competencies of high potential talent within the institution?  These employees are your most valuable workers, and the ones with the most career options.  Are you truly taking care of their needs while also serving the organization’s future?
  • Centralize efforts at talent attraction, retention and development across the organization. Succession is a multi-faceted endeavor, and needs some level of consistent oversight to make sure that key players are not falling through the cracks or being shortchanged.  It happens all too often, and perceived greater career upside is the single biggest reason why a high potential often leaves.  Do you have a strategic HR leader to assist with these efforts?
  • Lastly, pay personal attention to those up-and-comers. If you’re a leader, whether the CEO, General Manager, Owner or C-Suite Executive, it’s your personal involvement with high potentials that makes them inclined to stick around.  Let your rising stars know that they have a bright future, and that you have plans for them. Communicating regularly does more than almost anything to keep them in the fold.  Then challenge them with special projects, new assignments, and out-of-the-box opportunities, to test them and to help them grow.

Two-thirds of our current CEO succession projects arose from unplanned openings at the top—and this was before Covid-19’s full onset.  We see such leadership transitions all the time in our business, and companies should work to minimize the impact of unforeseen leadership changes.  Smooth transitions of power from within an organization are the least disruptive, and are typically most effective when the rising talent has been well prepared.  Unfortunately, unexpected things happen, and organizations need to be ready for leadership succession in good times and bad.  Hopefully one of the lessons from this global pandemic will be that more institutions will strengthen their succession planning efforts, to better protect themselves in the future.

Alan J. Kaplan is Founder and CEO of Kaplan Partners, a retained executive search and board advisory firm headquartered in suburban Philadelphia. He can be reached at 610-642-5644 or alan@KaplanPartners.com.

 

 

 

Crisis Leadership 101

I don’t claim to be an expert in crisis management.  However, since founding our firm 26 years ago, I’ve met literally thousands of C-Suite leaders and recruited over 100 Presidents/CEOs.  So, I have observed a few things along the way.  Here are three critical elements of leadership which I view as particularly relevant in these challenging times.

Leaders lead from the front   I’ve observed many leaders who revel in their title as President or CEO or General Manager.  They aspire to such lofty roles and then sit in an oversized office waiting for staff to come to them.  In addition, some of these “leaders” assume that because of their title, by definition they have all the answers.  No one actually does.

As the latest crisis was unfolding, I was made aware of a handful of CEOs still planning to attend a conference which—while providing genuinely useful content—also involved a large amount of free time at a posh resort.  Now, we’re all entitled to a little downtime, but with a burgeoning crisis—whether COVID-19 or any other—leaders need to be on the front lines, carrying the flag, reassuring employees and making critical decisions.  When times are tough, people want their leader to exude confidence and be visible out front.

Leaders communicate  In good times, I believe that a leader cannot over-communicate to the troops.  There’s an old saying that “people don’t want to be managed; they want to be led”.  As all good leaders know, communication is a vital part of the role. In times when things are less than ideal, communicating with your team takes on even greater importance.  Knowing what is happening, that there is a plan and a path forward, has a powerful effect on people.  In the absence of information, you get speculation.  So give the news to your people straight up, good or bad, and as quickly and as often as you can.

Leaders must be adaptable  Even the best developed plans may go off the rails in good times.  Market forces, competitive dynamics, insufficient execution, managerial shortcomings and more may make a seemingly good strategy look flawed in the rear view mirror.  Leaders recognize when something is not working, and are able to adjust on the fly, then craft a new approach.  This is not always easy, but highly effective leaders are flexible and resilient.

In the current crisis, things are changing so quickly—literally day by day and sometimes more often—that even the most seasoned leaders may struggle to adjust to new realities.  While your teams will look to you as the leader for guidance and “what’s next”, in the absence of a new plan, the communication and candor of the leader become paramount.

The authenticity of a leader sets the tone of an organization, and being out front and honest with your people will go a long way towards keeping them in the fold and moving forward.   These are indeed trying times for everyone at every level, and surely for leaders of enterprises both large and small.  We will get through this—not without impacts in still unknown ways—and the fundamentals of crisis leadership will be critical for leading your teams into the future.

Alan J. Kaplan is Founder and CEO of Kaplan Partners, a retained executive search and board advisory firm headquartered in suburban Philadelphia. He can be reached at 610-642-5644 or alan@KaplanPartners.com.

 

 

 

 

Integrated Talent Management

Mixing talent with business

In scattered HR departments across the country, professionals are hoping some daunting numbers will spur executives to embrace a bold approach to integrated talent management. Although we’ve seen it coming for years, companies have been forced to appreciate the magnitude – and feel the acute impact – of baby boomer retirements. America’s 80 million boomers are expected to retire at a rate of about 10,000 people per day over the next 19 years, undoubtedly leaving talent gaps in many organizations.

That trend will require companies to embrace bolder talent strategies. “In the past, companies have created business forecasts, then developed talent strategies to support those,” said Mindy Mazer, Corporate Director of Talent Acquisition at AMETEK, Inc. and a former talent executive with several, large Philadelphia companies. “With the changing demographics and the talent pool becoming much more competitive, companies are going to have to do a different kind of planning.”

But how can you integrate your talent strategy with your business strategy and avoid talent shortfalls?

Mine the data

Analyze your existing talent pool and long-term talent needs. This analysis should include demographics of current staff in all segments of your business, turnover rates and costs, existing skills, scarce skills, existing or looming management gaps, and the adequacy of the talent queued up to assume greater roles inside the organization. Also assess the attributes that will be needed to thrive in a rapidly changing economy.

Such data can highlight emerging talent gaps and provide the foundation for strategies to acquire the right talent to meet business goals.

Invest in potential

Armed with that forecast of your talent needs, refine your recruiting, retention, training, succession planning, employee benefits and other talent programs to target emerging talent gaps and workforce realities. This, Mazer warns, is a daunting job and can require fundamental changes to established business practices.

The anticipated shortage of experienced employees and senior-level managers, for example, is prompting some companies to shift their recruiting programs to focus primarily on fresh college graduates and “young potentials.” In conjunction, firms are creating extensive development programs to help those junior employees gain subject-matter, project-management and leadership skills.

“This approach requires companies to think differently. It requires funding and it’s more proactive than many companies tend to be,” Mazer said. The payoff, however, could be the creation of a “bench of talent” tailored to advance your company’s strategic goals.

Effective Boards

Board games, team players

It’s the stuff of Hollywood drama and CEO nightmares. Dysfunctional boards of directors – at least in movies and bad dreams – can be the source is interminable meetings, uninspired deliberation, corporate gridlock and even hostile power grabs.

In everyday business life, however, a board of directors doesn’t have to be anything like that. A great board should involve a group of engaged thought-leaders, diverse professionals and perhaps a few entrepreneurial superstars. This dynamic team will help tackle key challenges, explore growth opportunities, grapple with succession, and strategically advance the company. So, how do you create a highly talented and effective board for your company?

Map skills and needs

Begin by analyzing the strengths of current board members and identify skills gaps that should be filled by future members. A fully capable board of directors typically includes folks with industry and management expertise, plus specialists in finance, law, human resources, technology, risk, governance, innovation and markets—to name a few.

The board’s nominating committee should focus on candidates with proven qualifications, said Margaret Pederson, President and CEO of Amirexx LLC “Many people want to be considered for board positions when they are years away from being appropriate candidates. People have asked me, ‘Do I have to fully understand a P&L to sit on the board?’ They should have run a P&L before they join a board.”

Diversify, diversify

Many board meetings, unfortunately, still live up to the stereotype of being gatherings of older, white men. Improving diversity within boards is essential, Peterson said, “but I define it as diversity of thought, experience and expertise. The board needs to fully represent the world that the company serves, and be able to communicate with all company stakeholders, especially customers and employees. You want to have a diverse slate of candidates that understand markets across various income levels, geographies, cultures and other demographics.”

Value soft skills

Just as any new employee should fit well with the company’s culture, new board members need to blend well with the board’s culture. A board candidate’s communication style, priorities, personality and even emotional intelligence should be considered to determine how that person would interact with existing board members.

When creating or adding to a board, make the effort to craft an effective team that will collaborate well, challenge and inspire each other, and respect differing points of view. Ultimately, it will help your board achieve its goals of providing leadership oversight, making the best decisions, and advancing critical business strategies.

Bridging the Skills Gap

After years of debating whether the skills gap is real or simply a notion promoted by frustrated recruiters, evidence clearly highlights that American employers are facing a genuine, widespread and worsening gap between the skills they need and the skills the workforce possesses.

In a U.S. Chamber of Commerce survey, over half of small-business leaders said they faced a “very or fairly major challenge in recruiting non-managerial employees.” Among recent Inc. 5000 CEOs, 76 percent said they were experiencing major problems recruiting qualified people. Meanwhile, the U.S. Bureau of Labor Statistics now predicts the number of unfilled jobs in STEM (science, technology, engineering and math) fields will climb to a historic high of 1.2 million by year-end.

Such numbers are leading many people to the same conclusion: Companies will need to become more deeply involved in workforce development in order to avoid critical skills gaps within their own talent pools.

Spot the ‘high potentials’

Studies warn that some employers are exacerbating their own skills-gap problems through their recruiting practices. Specifically, too many employers keep doggedly searching for experienced candidates rather than hiring individuals with the right education, core skills and potential—and then developing those people.

Companies need to identify those high-potential, but less-experienced people and create training sessions, mentorship programs, project-experience opportunities and other professional development offerings to accelerate their growth.

At the same time, companies need to provide existing and mid-career employees with increased professional development opportunities – an item that was cut in many budgets during the recession.

In both cases, professional development program should stretch beyond hard-skills training to develop “whole persons” with solid interpersonal and communication skills, business acumen and management competencies.

Partner with educators

Greater corporate participation in the educational community is also needed to help reduce the skills gap. By supporting STEM classes in middle schools, innovative courses in community colleges, apprenticeship programs, industry-university joint endeavors and educational efforts by professional associations, companies can help foster a more highly skilled workforce and establish themselves as progressive, desirable employers.

This may all sound like a lot of extra work to heap on top of the daily demands of operating your company. However, analysts increasingly argue that heightened training efforts by employers are not just desirable, but essential. Stressing that “education and workforce systems in the United States are failing to keep pace with the changing needs of the economy,” the U.S. Chamber of Commerce Foundation recently called on employers to apply the same importance, rigor and skills used in supply-chain management to talent-pipeline management

Brand Advantage: Employer Branding Becomes Powerful Recruiting Tool

Brand Advantage:
Employer Branding Becomes Powerful Recruiting Tool

Evidence keeps piling up about the growing importance of employer branding in America.

An analysis by LinkedIn of priorities and practices among more than 3,000 talent-acquisition managers concluded that 83 percent believe employer branding has become a critical driver of their ability to hire top talent. Jobvite surveys have concluded that employers who engage in online employer branding fill open positions in less time and attract more talented applicants.

Yet the day-to-day challenges of running a company can make it difficult to execute this growing best practice in talent management.

Ben Goodman – founder of Ben Goodman Creative in Philadelphia – said he has seen practical challenges derail promising employer branding efforts in many companies. “The biggest surprise we find with a lot of clients is that some suggestions we are making – especially around brand and connecting the dots between leadership, culture, consumers and employees – are suggestions that were made internally years ago. But the branding campaign didn’t find a home within the company so it didn’t get implemented,” Goodman said.

The good news, he said, is that employers currently have access to abundant, low-cost opportunities to spread their employer brand, including the Internet, social media platforms and mobile devices. To use those tools successfully, however, employers need to engage in some critical thinking.

Question your message

Before launching new branding initiatives, employers need to critically re-evaluate corporate culture and talent needs, identify exactly who they need to reach with their branding efforts, and what message will capture the attention of those talented individuals.

Start with your website

Once you have formed a new employer brand message, start rolling it out through the most readily available tool—your company website. But stretch beyond the polished marketing language of recent decades and provide visitors to the site with genuine insights into your culture. Profiles of staff members, thought leadership pieces, and blog posts, videos or other content generated by employees can show your company’s knowledge, passion and eagerness to advance in your industry.

Limit your efforts

Although the opportunities to spread your employer brand are limitless, your company resources are not. Restrict your outreach efforts to tools that can deliver the most impact and that can be sustained by company staff. Convincing job seekers that your company is lively, engaged and accomplishing exciting things is tough to do with a blog, Twitter account or Facebook page that hasn’t been updated in weeks.

Hiring vampires and other missteps that hurt young companies

Hiring vampires and other missteps that hurt young companies

As vice president for talent at a technology startup, Steve Cadigan knew his company had enormous growth potential. But to realize it, he would have to win the war for talent against some industry giants.

“I was physically surrounded by Google buildings. I had Apple down the freeway, Facebook up the freeway and, in San Francisco, there were sexy, little technology darlings like Twitter and Zynga,” Cadigan said.

By comparison, his company at the time, LinkedIn, looked humdrum to many job seekers. Furthermore, it lacked the financial reserves to match the salaries and perks the coolest companies of Silicon Valley delivered.

Yet during his 3.5 years as VP of Talent, LinkedIn grew from 400 employees to 4,000, executed a successful IPO and grew annual revenues to nearly $1 billion. During a one-on-one talk, Cadigan shared some of the biggest talent lessons he learning while driving growth at LinkedIn and other companies.

Build an employer brand

Young companies need uniquely talented, highly motivated individuals to drive growth, but lack the resources and profile to attract top candidates.

At LinkedIn and elsewhere, Cadigan overcame that hurdle by developing a distinctive employer brand and offering a compelling value proposition to employees. LinkedIn’s brand, for example, included the opportunity to work alongside brilliant professionals and shape an emerging company while creating a product that would help other people find their dream jobs.

Don’t hire vampires

In the rush to place warm bodies in needed positions, managers sometimes hire imperfect fits. Taking the time to identify the traits you need in new hires and recruiting until you find them ultimately produces better results.

“Cutting corners and sacrificing quality standards for talent is a huge mistake,” Cadigan said. “You get some people who are wrong for the organization, and dealing with that becomes a huge distraction. It’s like having a vampire loose inside the organization. It sucks the life out of you.”

Beware of battlefield promotions

In a similar rush to fill managerial positions, executives sometimes give subject-matter experts “battlefield promotions” without assessing the individuals’ management skills and end up with under-performing managers.

The more effective practice is to take the time to provide leadership development within the company, create career advancement opportunities for skilled employees who wouldn’t make good managers, and search for highly skilled managers outside the company.

Driven to change: Pep Boys’ new talent strategy boosts profits

Sometimes the road ahead requires a different kind of driver.

Back when Pep Boys was approaching its 90th anniversary, the Philadelphia-founded automotive services company embarked on intensive efforts to craft a new strategic plan. Although Pep Boys had become a multi-billion-dollar operation with more than 800 stories across the U.S. and Puerto Rico, company leaders believed they needed a deeper understanding of their position in the market, the needs of their customers and the service strategies that would optimize Pep Boys’ profits.

“The Road Ahead” initiative convinced executives to make a strategic shift in corporate culture. Rather than focus on providing the lowest prices to customers, Pep Boys needed to provide customers with a higher level of knowledge and assistance. “We don’t sell, we solve” soon became a company mantra. To fulfill that promise, however, Pep Boys would have to adopt new approaches to recruiting and training.

The company identified the skills and traits employees would need to thrive in the new culture, then retooled the careers section of its website to succinctly describe and attract desirable candidates. Adorned with a photo of a slick, black car, the page asks “Are you built this way?” Pop-up boxes explain how certain skills and behaviors – such as perseverance, creativity, customer service, continuous learning, performing under pressure and being a team player – are as essential to Pep Boys operations as brakes, oil, tires and a smooth-running engine are to any automobile.

The company also rolled out a program of ongoing and tailored training for both new hires and existing employees. It expanded and updated in-house training programs to reflect its new culture. Through in-person and online lessons as well as on-the-job coaching, the program covers onboarding, product knowledge, automotive theory, technical skills, information technology, finance, and company-specific systems.

The training also encompasses, customer service, time and stress management, and leadership development. The results of embracing a new culture and developing a talent force to implement that culture have helped converted stores experience double-digit sales increases, despite the tough economy.

Culture Clash: Don’t let corporate culture issues derail your merger

Corporate culture may be a soft concept, but some days it packs a very big punch.

Consider the impact of corporate culture on mergers. In the rush to complete due diligence and seal the deal, few companies conduct a cultural survey of both legacy firms and develop plans to effectively blend the two cultures. Fewer still delay, alter or abort mergers based on findings that cultural differences could jeopardize the deal’s success.

Yet studies show roughly 75 percent of mergers fail to meet financial performance expectations. And, executives often point to incompatible cultures as a prime cause of those financial shortcomings.

Mike Monahan – who executed nine mergers and acquisitions as CFO of the private equity firm, PetroChoice Holdings and now serves as the CFO of NutriSystem, Inc. – offers some advice on how to prevent corporate culture from derailing your strategic growth plans.

Setting clear business goals for the merged company and quickly showing progress in achieving them is essential to creating an effective culture and a successful merger, Monahan says. That focus helps employees understand their role in the merged company and the reasoning behind its culture, and fosters confidence that the company is capable of achieving its goals.

Leaders of the merged company need to be dedicated communicators. During its acquisitions, PetroChoice implemented several communications practices – including weekly e-mails about company accomplishments, annual meetings and travel schedules that gave company leaders face time with employees in distant offices – in order to discuss merger benefits, address operational issues, and keep morale high.

Finally, leaders of merging companies need to be willing to adjust their expectations for the new corporate culture even after the merger is complete.

“You have to be willing to be flexible after the deal closes, and open to new ideas because it’s impossible for both companies to fully know each other and their strengths and weaknesses until you merge,” he said. “There are always surprises. We were most successful when we had the right leaders who were flexible, open-minded and respectful of the different partners. In those situations, you end up getting to the right place, even though it may not be exactly what you outlined at the outset of the merger talks.”

Corporate Social Responsibility Programs

Fostering “impact careers” to benefit your company – and the world!

As competition grows for top talent, companies are realizing that one of the most compelling things they can offer talented workers is the opportunity to create an “impact career.”

Beyond competitive compensation and professionally satisfying work, many workers want their jobs – and their employers – to have a beneficial impact on the world. In one a Stanford University study, MBA graduates expressed a clear preference for jobs at socially responsible companies—and reported they would sacrifice an average of $13,700 in salary to join such companies.

Many companies are working to satisfy that desire through Corporate Social Responsibility (CSR) programs. Many programs, however, aren’t thoughtfully implemented and, consequently, aren’t impacting the world as desired or delivering full recruitment and retention benefits.  A few practices could improve that situation.

Crowd source your CSR

The CSR programs which inspire the greatest employee engagement and generate the biggest impact don’t come from the desk of the CEO.  They come from the employees.

Whether you are starting or revamping a program, involve your employees in identifying key CSR goals that fit with your company’s products, operations, markets and corporate culture. Ask employees for ongoing suggestions about ways to achieve those goals and for their participation in putting ideas into action.

Combine training and CSR

Whether your CSR goals involve lowering your company’s carbon footprint or improving working conditions in a developing nation within your supply chain, CSR programs can generate opportunities for employees to tackle different challenges, develop new skills and foster leadership abilities.

Enable employees to step out of their comfort zone and lead a work crew on a Habitat for Humanity house, organize a charity golf tournament or drive efforts to eliminate work-site waste. You will end up with an employee who is more stimulated, more skilled and more committed to the company.

Communicate, communicate

Mentioning your CSR efforts on one page of your website or once in your annual report isn’t enough. Make CSR part of your employment branding and frequent in-house communications. Post updates on your Facebook or Twitter account, your intranet, bulletin boards or company newsletter. Frequent, short communications can sustain excitement and drive accomplishments in your CSR initiatives.

A few thoughtful measures could both improve your impact on the world and make you a more desirable employer in the process.