When one of the richest men in the world begins to talk about who will take the reins of his empire after his own time, the world sits up and takes notice.
Warren Buffett and his company Berkshire Hathaway has been in the news recently about a much vaunted race between two of his top lieutenants for the top job once Buffett steps down. Who lands the top job is not as relevant as the slew of candidates that Buffett has available for the picking - a sign of a company that has truly invested in creating leaders for tomorrow.
At the other end of the spectrum lie family owned businesses, which make up between 80 to 90 percent of all businesses in the United States. These are businesses that keep the wheels of the economy turning, creating jobs and producing goods and services without which the Apples, Googles and Facebooks of the world would be irrelevant. It is a well-documented fact that just 30 percent of family owned businesses survive past the first generation. Even fewer (12 percent) last into the third generation. And a huge culprit in this systemic death of our economy's bread and butter businesses is poor succession planning.
Does it always have to be this way? Not really. Are there steps that all companies can take to mitigate the blow of a leader moving on? Most definitely. Here's a sampling.
The first step in succession planning is building a pipeline of great employees who have the potential to take on leadership positions in the future.
If great results are what you're after, good people who know what they're doing and actually enjoy doing it are your best bet to begin with. However great be the pressure of expanding the company or taking the load off of your existing employees, never recruit in a rush. Especially for important positions.
When hiring, pick individuals who don't just have the right experience and qualifications, but ones who are inherently good people; people who work well with others. Your new crop of leaders does not have to come from outside the organization. In fact insiders who know the business and are adept at managing changing environments are tailor-made for leadership positions.
Identify existing employees who take initiative, are capable of creative thinking and work well under pressure to groom them into roles that are key to your organization's future.
Once you have identified your pool of potential leaders, it's the organization's duty to equip them with the tools to help them make the leap.
Training and development programs are traditionally seen as spending a weekend once a year at a fancy resort listening to 'experts' speak about things that may or may not be directly applicable to one's organization, heading back to work and promptly forgetting about the junket that you just attended.
The ideal leadership development program works on polishing your employees' skills on an ongoing, everyday basis, instead of dumping a bunch of textbook theories on them over the course of a week or ten days.
You could sponsor long-term executive leadership programs at reputed universities for your handpicked employees. In such environments employees get a chance to apply what they learn in school at the workplace on an immediate basis. Another option is to join hands with training and development organizations that build training modules perfect for your organization's needs. Carry out training sessions on-campus on an ongoing basis with employees also having a say in the training modules that they would like to attend.
A culture of ongoing learning beats weekend training retreats.
Nearly 70 percent of all Fortune 500 companies invest in mentoring programs as the answer to building future leaders.
The most critical aspect of mentoring is its one on one nature, where handpicked employees team up with existing leaders to build a long-term learning relationship. Mentees or proteges learn from seeing and living high-pressure situation through their mentor's eyes. Grasping new concepts and seeing decision-making in action becomes a more natural and rewarding process.
Mentors don't have to be from the same function as their protege; the insights and experience that a mentor brings to the table makes up for any initial learning hiccups that the pair may have.
An example of a thriving mentoring program exists under Boeing's 'Boeing Education Network' which offers structured mentoring to future leaders at the organization. Employees from across departments, even across geographical locations meet, discuss and learn how to become effective leaders. In the words of Rick Stephens, senior vice president, Human Resources at Boeing, "Part of the 'leaders teaching leaders' approach, mentoring gives leaders the opportunity to learn as well as to define and model leadership."
The true mettle of a rising star is how well he or she manages to cope under pressure. A talented, high-performing employee must be offered the chance to move beyond the every day and be presented with the next level of challenges. As Bob Nunnally, COO of the Ambit Group puts it, "expose them to the new."
Offer your leaders-in-waiting the opportunity to lead a new project, set up operations in a new country, or even strike out on an independent entrepreneurial project within the organization's framework. World beating products like the Post-it note, Gmail, Google's AdSense and the Sony PlayStation are the result of pioneering entrepreneurial projects by budding leaders and unstilted support from 3M, Google and Sony respectively.
The responsibility of spearheading your own project automatically instills in employees the drive to learn skills they need to lead the organization in the future.
The smartest organizations understand that people put in their best when they have a clear quid pro quo presented to them.
Recognizing the successes of your star employees is something most organizations already do for employees across the board. For employees that you want to groom into your future CEO, a mere pat on the back may seem hollow.
Offer your next generation of leaders a direct incentive in your organization's growth. Giving top employees stock options is a way of putting the reins to their success in their own hands. It not just motivates them to push harder and reach higher, but it also instills a deep sense of belonging with the organization - something that is essential in a future leader.
While not there may not be a Tim Cook for every Steve Jobs, a wee bit of proactiveness can stave off a leadership vacuum looming in your organization's future.