Last week my friend and professional colleague Lois Creamer posted a great article on her LinkedIn profile that I was so glad I happened to catch. It was INC Magazine’s article about why Netflix CEO, Reed Hastings resigned.
The article is a great read, an amazing lesson in self-awareness, and probably the most powerful example of how to successfully create and execute a succession plan in your organization.
Every Organizations Needs a Succession Plan
Reed Hastings started Netflix more than twenty-five years ago, and over time he took Netflix from a small subscription model company to the streaming service we know and love today. Netflix’s growth is quite an inspiring story. And his departure is a big deal, as he has been at the helm through some of the biggest changes Netflix has made: going from a DVD company to streaming, the development of original content, and the transition to ad based revenue.
With so much success on his resume you may wonder why Hastings is stepping down. Good question. His reasons are valid ones, and should be considered carefully by leaders. He is stepping down, in essence, because he sees where the company needs to go to continue to be successful, and he realizes he is no longer the best person to take the company there.
Every leader has a timeline, like it or not, and so do you. Not that you cannot continue to add value to your team or company, but there is a sunset on when you are truly the best person to be at the top. And Hastings realized that, and while he will be giving up the position of CEO, he will move into the role of Executive Chairman. Still adding value, but turning the day-to-day operations of the company to leaders he feels are better qualified to take Netflix where it needs to go.
There is so much to take in from Reed Hastings’ announcement, and so much to learn regarding why succession plans succeed or fail.
3 Components of a Succession Planning Success
Here are three ways to ensure your succession plan does not fail:
Go Out On Top By Setting the Right Time To Step Aside
Without a formal succession plan, leaders rarely recognize when it is time to step down and turn the future of their organization over to someone better positioned to help the company succeed. And understandably, it is not an easy thing to do or admit.
A few years ago, a good friend of ours retired at an age that many of us thought was a bit young. He was a heart surgeon, and had a reputation as one of the best in the industry.
When I asked him about retiring, the answer he shared was something I will never forget. He said that his father, who is also a surgeon, had shared with him that when you start to feel your skills slipping, you need to know that the nurses and other doctors will have been talking about it for months.
In other words, when we see that we are no longer the best qualified for the job, we are often the last to know. Hastings realized, the best way to add value to your company is to go out on top.
Choose, Develop and Train Your Successor
Leaders often hesitate to step down because they have no one qualified to serve as an adequate replacement. No one is ready to move into the position and lead the company forward. Just look at the mess of succession plans in companies like Disney and General Electric.
But Hastings has been preparing his leaders for years. In the article, he discusses his strategy of slowly delegating the running of Netflix to two future leaders for years. He was not just training future leaders, but actually gave them the reins before he was out of the picture.
Succession plans are never easy, but leaders can look forward and plan their time to step aside. Invest the time now to not only develop your future leaders, but give them the opportunity to lead while you are still there, giving your succession plan the best chance of success.
Integrate the Succession Plan into Your Overall Business Strategy
Succession planning should be integrated into the overall business strategy to ensure that it aligns with the organization's goals and objectives. This includes ensuring that there is a clear understanding of the organization's future direction and the roles and responsibilities of potential successors. It also involves regular review and updating of succession plans to ensure they remain relevant and effective.
There are several effective ways to integrate your written succession plan into your organization's business strategy:
- Align with Organizational Goals: The succession plan should align with the organization's overall goals and objectives. This includes ensuring that the development and preparation of potential successors supports the organization's future direction.
- Regular Reviews and Updates: Regularly reviewing and updating the succession plan is important to ensure it remains relevant and effective. This should include assessments of the organization's future needs, changes in the business environment, and the capabilities and readiness of potential successors.
- Involve Key Stakeholders: Succession planning should involve key stakeholders, including senior leaders, HR professionals, and managers. This helps to ensure buy-in and support for the plan, and helps to ensure that all relevant perspectives are taken into account.
- Provide Opportunities for Development: Providing opportunities for employees to develop the skills and knowledge they will need to succeed in future leadership roles is an important component of succession planning. This includes mentorship programs, job rotations, and leadership development programs.
- Communicate the Plan: Effective communication of the succession plan to employees and stakeholders is crucial for its success. This includes explaining the purpose of the plan, how it aligns with the organization's goals, and what employees can expect in terms of career development and opportunities.
- Incorporate into Performance Management: Incorporating succession planning into performance management processes can help to ensure that employees are evaluated and rewarded based on their potential to fill critical positions in the future. This can include setting goals related to leadership development and providing feedback on employees' progress.
The Cost of Lack of Succession Planning
Failing to pay attention to your leadership pipeline and succession strategy will cost your company not only in bottom line results, but market share, customer loyalty, and talent development.
Understand and embrace that leadership is not forever. The more you invest in developing the next level leaders, the stronger chance your company has of succeeding long-term.
