To ensure business continuity, succession planning is crucial to any business.
This is a process of ensuring that talented individuals with potential are identified and groomed to take over a role should the individual holding that role leave or be incapacitated for any reason. When done right, succession planning presents huge benefits to the company.
The most obvious benefit is ensuring that the business can continue into the future without the reliance on a single individual.
Other benefits include improved employee morale and cost saving in replacement searches to find external talent. Employee morale and commitment increases when employees know that they have a future in the organisation, their talents and commitment are noticed, appreciated and rewarded. Succession planning should be an organisation wide practice and part of the culture of rewards and performance management. It should be properly coordinated and owned by the individuals identified, line managers, human resource practitioners and senior managers alike in order for it to be successfully implemented.
To drive the desired transformation in the country, succession planning is integral, particularly succession planning at C-suite level where transformation statistics are showing that there is limited dents being made.
C-suite positions are limited and competition is fierce but research has also shown that there is greater business success when those positions are occupied by internal individuals who understand the culture of the organisation and can manoeuvre organisational dynamics to achieve results than bringing in new individuals.
Research done by Harvard Business Review suggests that when the business is in need of a turnaround, externally sourced CEOs tend to perform better than those internally sourced. However, when the business has been performing well and needs a step change, internally sourced individuals with potential perform better when given the opportunity to be the CEO.
This is where an effective succession plan is critical to guide the board on the individuals to identify for the opportunity to be promoted.
Succession plans are not always effective, hence it’s important to make succession part of the organisation wide culture and owned by line managers, right up to the board of directors.
The Nedbank announcement of Jason Quinn as the CEO to take over Mike Brown when he exits next year has been a prime example of succession planning that has been ineffective.
Mike Brown, Zimbabwean born, was appointed in 2004 as the CEO at Nedbank. A role he served at nearly six years before he was elevated to the CEO position, taking over from Tom Boardman who had done a great job at stabilising the organisation by driving a people-centred culture.
Brown was, therefore, an internal appointment who continued on the culture built by his predecessor and was at the helm for 14 years when the announcement was made in June this year that he would be retiring next year.
As expected, the announcement was met with hopes that an opportunity had come for Brown to be succeeded by a candidate from under-represented designated groups as per the country’s employment equity targets.
Since Nedbank has been fairly stable as well under Brown, it was expected that an internal succession plan was in place, with Brown having served 14 years as CEO, enough time to groom someone internally to take over from him.
However, in February, four months before the announcement of Brown’s retirement, Daniel Mminele had been announced as the new board chairman, signalling that he would not have had time to engage with both Brown and whomever successor Brown would have prepared for his exit.
Therefore, it is not entirely surprising that the CEO search process has produced an external candidate from the same bank where Mminele was CEO at. This simply confirms why succession plans must be bought into by all who will be involved in executing them.
When one looks at the transformation track record of Jason Quinn, one can see a white male executive who is a promoter and supporter of transformation. He has a record of building and leading transformed teams.
This somewhat explains why a majority black Nedbank board would find comfort in missing the opportunity to go down in history as having appointed the first Nedbank CEO from designated groups.
This would have been a great story to tell in a country that so desperately yearn for representation of black and women at the echelons of corporate South Africa.
However, leadership is about solving complex problems. Popular solutions are not always the right solutions. At times bravery is required to carve a new path. As the Black Management Forum, we wish this majority black board, led by Mminele success and we will closely be watching how they turn this missed opportunity into victory for the transformation agenda.
Dr Sibongile Vilakazi is the president of the Black Management Forum.