The Death of the “Irreplaceable” CEO Successor tells the real story of Kerzner International Ltd, a company that operates luxury hotels with properties in Mexico, Maldives, Mauritius, and other locations.
When Kerzner’s executive chairman and founder: Soloman Kerzner, was 71 years old, he handpicked his son, Howard “Butch” Kerzner age 42, as his successor. The plan seemed flawless, Butch was talented, and his father had groomed him for the role. No one was better prepared for the top job than him.
Unfortunately, tragedy struck when Butch was killed in a helicopter crash while surveying sites for a new luxury resort in the Dominican Republic.
Shortly after Butch’s death, Kerzner was notified that the proposal for an integrated resort in Singapore, which Butch was championing, had been rejected by the Singapore government. This was then a vital project for the company’s future, and it had suddenly gone up in smoke.
On top of it all, the company was again faced with the dilemma of finding a suitable successor for the founder. Eventually, Soloman Kerzner was forced out of retirement to bridge the gap. (Source: The Wall Street Journal)
Two Critical Lessons from the Death of the “Irreplaceable” CEO Successor
- It is high-risk to invest all development efforts into a single successor—no matter how talented—and not develop a deeper leadership pipeline.
- The worst time to jumpstart a dormant or inactive succession process is when a crisis hits (whether via a surprise resignation or the death of the intended successor)
If there’s still wonder as to the importance of succession planning to the survival and success of your organisation, here are six main ways succession planning benefits your business:
5 Business Benefits of Succession Planning
1. It disaster-proofs your business
Death of the ‘Irreplaceable’ CEO Successor” provides a classic example of the disaster that can arise when an organisation does not effectively execute its succession plan. The fact is that life is unpredictable, and a failure to prepare for the surprises of life can throw an organisation off balance completely.
If we consider it essential to buy insurance to protect our company’s assets from natural disasters, fires and theft, why do we trivialise ensuring the continuity of critical positions and employees in our organisations? The reality is that a well-executed succession plan is the only way a business can insure itself from failure.
Don’t make the mistake of thinking that there’s much time or that your organisation is immune to vulnerabilities like the illness or death of key executives or the sudden resignation of high-potential leaders within the business. On the contrary, it pays to work with the mindset that anything can happen and to prepare accordingly.
The best time to start talking about succession planning is now. It may be daunting to start the conversation; however, the sooner you get to work on your succession plan, the more secure your business is for the long haul.
Consider it a business continuity insurance that secures all the investments you’ve made in your company.
2. It helps you identify your most-promising future leaders
Contrary to popular belief, effective succession planning involves more than just a replacement planning process. It also includes a comprehensive employee development system. Typically, formal succession planning requires your company to:
- Identify the positions that are most vital to the company’s future success. It’s important to understand that these need not all be C-suite positions.
- Select the internal candidates with the values, experience, skills, and desire to take on those critical jobs.
- Talk to the identified candidates about their interests and career plans.
To effectively execute these steps in succession planning, you’d have to thoroughly review your organogram to help your leadership better understand its workforce’s strengths, weaknesses, opportunities, and threats.
A thorough workforce assessment will expose the potential vulnerabilities in your organisation’s leadership pipeline. This, in turn, will hopefully create a sense of urgency to cross-train key employees in specific roles.
If there’s no good fit for your critical roles after you’ve looked through your internal candidates, then an external search can begin way before the need arises to fill the role.
Another crucial advantage that succession planning offers a business is that it helps ambitious, less-experienced internal candidates realise that they have a future in the company if they are willing to work. This often proves to be a potent retention tool and a source of motivation for junior managers who want to advance their careers into top management.
3. It creates a structure for training and development
Once your company has identified the potential candidates for senior positions, it becomes easier to assess their capabilities ahead of time, identify any competency gaps and begin grooming them for their eventual succession.
Professional development for potential leaders will take a slightly different dimension from the regular training programmes. There will be more mentoring, job shadowing, coaching, and a gradual increase in more advanced responsibilities. In addition, certain positions may demand that the candidates return to school for additional education or professional certification.
By courting potential successors early, you afford your employees time to acquire the competencies they’ll need to perform well in their senior roles. So, it always creates a win-win situation for both companies and their employees.
4. It helps to maintain board and shareholder trust
Having a clearly defined and communicated succession plan demonstrates to invested parties that you proactively manage current staff and plan for the future.
All too frequently, we hear reports of outsider CEOs who show great promise, only to fail in a short time. Sadly, such disastrous hires often damage the company’s reputation and long-term growth. Consequently, some Boards mandate that a CEO must name a successor.
In addition to the CEO role, naming successors for other key leadership positions consolidates the trust of invested parties.
5. It gives a sense of direction to the business and enables it to plan for the long term
No matter the size or structure of the organisation, having a defined succession plan gives a sense of assurance to everyone and allows them to focus on top-line goals like growing the business.
When there’s a succession plan in place, retiring employees automatically know when to start handing off their years of hard-earned knowledge and transition meaningful working relationships before they leave.
It is also best to live with the consciousness that change happens fast. The tragic story of Kerzner International Ltd confirms that no organisation is immune to tragedy or crisis. This awareness should humble leaders and enable them to do what needs to be done to secure their organisation’s future.
In summary
Considering how much energy and sacrifice it takes to build a successful company, it is easy to understand why leaving succession plans to chance does not reflect sound judgement. The fundamental objective of a succession plan is to ensure the longevity of your company
If your business needs support developing its succession from scratch or upgrading it, Workforce Group can walk you through the process. If you need further clarifications or require the help of our senior and experienced consultants, please reach out to us at hello@workforcegroup.com.
