Last week, in the monthly movers and shakers email, we highlighted five recent changes of CEO within the UK market.
What was particularly noticeable, was that most of these leadership changes came from contractors. We have Graham Prothero stepping up at Galliford Try, Alex Vaughan at Costain, Andrew Davies moving to Kier, Tim Beale taking the helm at Keepmoat and Nick Roberts joining Travis Perkins.
This got us thinking, just how frequently does the leadership spot change hands?
In 2015 we produced a report looking into the backgrounds of contractor CEO’s, out of the 20 biggest contractors in the UK, 11 CEO’s have been replaced within the last 3 and a bit years.
55% is quite a staggering percentage.
So how often do companies in our sector promote leaders from within?
We looked at 100 big names in the transport and infrastructure sector and found that 59% of their Managing Directors were promoted up internally. Just looking at the five appointments from last month, three of those were internal moves; Galliford Try, Costain and Keepmoat.
Heathrow Airport, Arup and Stagecoach are other positive examples of succession planning, frequently promoting up from within to their top positions.
Not only does a well thought out succession plan mean that the business is prepared, it also gives employees a direction and goal to work towards. If they know that you are investing in their training and development within the company, then they will more likely buy into and commit to the long terms business objectives.
While it may seem obvious to have these plans in place, in practice it is tricky to get it right. Here are our tips for successful succession planning:
1. Recruit for progression
Succession planning needs to be a long term perspective. In the short term, it is critical that new hires fit in with the plans. Recruit people who want to progress and gain experience in other aspects of the business. People who are interested in what your company can offer them and not just what the initial role will offer them.
At interview make sure to question long term career ambitions, finding out how the role they are being interviewed for fits with their career plan, and establish that their goals are aligned to the company’s.
Give examples of people who have progressed within the company and demonstrate the career path that they took so candidates have an understanding of what is required and expected of them to reach the most senior positions.
24% of candidates we place with our clients are promoted within the first 18 months of joining. A more usual progression path is a step up every 3 years.
2. Recruit for cultural fit
Cultural fit is something that we have talked about quite a lot, and that’s because it is so fundamental to the success of the business. If employees don’t match the culture of the company they won’t last long term.
Make sure that hiring managers, interviewers, recruiters, and everyone at your company can identify critical characteristics that align with the company’s culture. Psychometric testing can help with this.
When we meet with new clients, we make sure to carry out a robust briefing process on both the role and the company, so that we can assess if candidates that we put forward will be a suitable cultural fit.
3. Move people laterally
Succession planning isn’t always about moving people up the hierarchy. In order to prepare employees for leadership roles, it is crucial that they understand the business as a whole.
Moving people between divisions (and functions) gives them a wealth of experience that they wouldn’t have if they spent their entire career with one focus.
This also means that if someone has experience across multiple divisions, should the Managing Director of any of those divisions leave, you have a candidate that can readily move across and fill the role.
4. Involve the right people
Planning for the future leadership team must be carried out by c-suite executives. At any other level you risk bias or blockages, for example a divisional MD may not want to lose their top performing Operations Director to another department and so could dissuade the decision.
The current leadership team must make it a priority to weigh in with their concerns and questions. Just because a plan is in place doesn’t mean that it can’t be altered or adapted if the candidate ear marked for progression doesn’t meet up with expectations.
An executive search consultancy can help to facilitate these discussions and work with the leadership team to identify the qualities that are most important. We have been asked in the past to provide an independent assessment of whether or not candidates are ready to make the step up, and how they compare to their external peer group.
5. Training and Development
Global construction and engineering company Fluor suggest that succession planning boils down to three parts – 70% of development coming from experience, 20% from coaching and 10% from classroom or other training*.
Whilst experience is undeniably the most important element to developing a strong leadership team, executive coaching courses or mentoring schemes shouldn’t be overlooked when looking to develop your internal talent pools.
Does your business have comprehensive succession planning in place?