Success factors for succession in C-level leadership

Building an internal talent pipeline for CXO leadership succession is becoming increasingly important for the creation of future-proof management teams and therefore sustainable, long-term success. What does an optimal succession plan look like – and what are the key success factors? 

If you want to successfully recruit talent for CXO positions, you should consider internal and external succession planning in tandem. And develop strategic selection and talent development processes. 
 

1. A well-integrated internal succession process enables companies to access a more diverse talent pool in a succession situation. They can be more selective on the external talent market, which helps with assembling more powerful management teams with complementary skill profiles.
    
2.  A continuous, strategic internal succession process helps companies identify the changing requirements for leadership roles more quickly and sharpens their focus on the necessary skill set and potential of external candidates. 
    
3. Stringent internal succession planning helps establish a “talent first” mindset among senior management. Developing talent and identifying leadership potential becomes an integral part of leadership and corporate culture – and repositions talent management as a real top priority.

Successful top-level succession planning is a continuous strategic process that is embedded in the corporate culture. At Egon Zehnder, our approach is based on a typical planning cycle that spans approximately five years. All phases of this cycle should be significantly influenced by executive teams, boards of directors and advisory boards. 

The executive teams, boards, advisors and other relevant stakeholders evaluate the development of critical leadership positions:

How will the respective leadership role evolve? Which role-specific skills will be particularly critical for success in five years’ time? Early identification of potential successors, creation of confidential candidate lists, and initiation of internal development steps for talented individuals. 

In this phase, it is important to consider cultural and generational change.
 

The executive teams, boards and other relevant stakeholders review the status of internal development programs based on personal interviews and external benchmarks. 

In this phase, it is important to set up structured systems with clear criteria for assessing readiness for succession – as well as to identify and remove barriers to the internal mobility of talent. 

The executive teams, boards and other relevant stakeholders intensify their interaction with the top candidates and adjust the development plans for the top talents.

In this phase, it is important to manage the expectations of the talents in a targeted manner and close gaps in their skills and competencies.

Final selection of the shortlist for filling the vacant management positions and search for external reference candidates: Check whether candidates with a comparable or better competency profile are available on the market. 

In this phase, it is also important to communicate specifically with talents who have been eliminated during the selection process and are no longer being considered for a CXO position – including attractive alternative offers for their further development. 

Intensified and individual development opportunities for the successor, workshops with the management team, stakeholder management. Involvement of the designated successors in internal mentoring programs and further strengthening of the talent pipeline.

In this phase, well-established feedback mechanisms are important for addressing onboarding issues at an early stage.

• Continuous analysis and evaluation of the requirement profile with a clear focus on future changes that might affect the leadership role.
   
• Ongoing assessments of internal talent.
   
• Ongoing and targeted internal development opportunities for internal talent.
   
• Clear and strong decision-makers who can take corrective action if the process lacks consistency.

In many companies, the focus is on the candidate's previous experience and a skills analysis when identifying and evaluating leadership talent. How well is the manager able to shape the market and strategy? To what extent do they succeed in inspiring people and winning them over to their goals, exerting influence within the organization, and attracting talent? How successfully can they drive change and strengthen customer value and company results? 

However, looking at a candidate's current competencies alone is no longer sufficient. In disruptive times like these, experience and skills are no longer the only key criteria for finding and developing leaders – the unrealized potential of the candidates is also crucial. 

Potential is the ability to adapt flexibly to constant change in the business world and master new challenges in the process. Egon Zehnder's potential model is based on four indicators:

1. Curiosity: How does a person learn – and how do they apply what they have learned to grow personally and professionally and to drive change?
    
2. Insight: How does a person use knowledge and insights to solve problems and implement ideas?
    
3. Mobilizing power: How does a person bring people and ideas together, how strongly do they inspire others, and are they able to reflect on their own behavior and its impact?
    
4. Determination: How does a person deal with challenges and how do they stay motivated in difficult situations? 

These indicators can be identified early on in a career and can also provide important insights into how a leader will perform in a leadership role. This makes potential analysis an important success factor for internal succession planning. 

Companies can take advantage of the opportunity to identify internal leadership talent with the necessary potential for top jobs at an early stage and develop them in a targeted manner. If companies succeed in continuously filling their talent pipeline with high-potential individuals, they no longer have to rely on rapid external searches for suitable candidates for CXO succession, as and when the need arises.