It takes a team of highly competent C-level executives, whose skills and experiences complement each other, to grow a business. When a member of that team leaves, it creates a void until a suitable replacement is hired and brought up to speed. Consequently, any C-level vacancy can jeopardize company plans and business results, but the lack of a CEO is the most problematic scenario, followed closely by a vacant CFO seat.
Developing a leadership pipeline and prioritizing succession planning are important strategies in limiting the risks associated with C-level departures. Even so, companies don’t always implement these crucial human capital strategies. According to Harvard Business Review, this unforced error “leads to excessive turnover at the top and destroys a significant amount of value—close to $1 trillion a year among the S&P 1500 alone.”
A specialized executive search firm plays an important role in identifying and attracting highly skilled and experienced leaders for top-tier executive positions like CEO, CFO and others. But beyond addressing current executive needs, these firms are adept at cultivating robust talent pipelines and proactively preparing for potential departures at the C-level through strategic succession planning.
By Approaching the Search with Curiosity and a Genuine Desire to Learn Your Culture and More About Your Existing Executive Team
With any open position, and particularly one at the top, there is more to filling it than simply finding candidates that meet the role’s requisite skills and experiences. Critically important is finding talented leaders who complement the culture, both organizationally and at the team level, to foster continuity. This is especially important during a time of leadership change but also during times of economic and market uncertainty. Without cultural alignment, the likelihood of a hiring mistake resulting in turnover is more likely, and these mistakes, or mis-hires, get more costly the more senior the position is.
As an executive search firm learns the specifics about a company’s culture and gets familiar with other members of the leadership team, deeper insights about what it takes to be a successful executive at that organization are developed and used to inform the search process. But the search does not only take place externally. An inquisitive approach to executive search also means helping to identify and assess high potential employees (HIPOs). HIPOs, when paired with a seasoned leader or provided with executive coaching, create incredible value and contribute to the succession pipeline for future executive openings. Conducting both a real-time executive search while also grooming for future executive replacements can create a distinct competitive advantage for an organization, ensuring that they never find themselves without leadership or a robust talent pipeline.
By Comparing the Market to High Potentials
Hiring committees often want HIPOs to be included in the executive search process for a C-level role. Sometimes, this is because the HIPO is a viable candidate. In other cases, it’s because the CEO or the board wants to introduce internal candidates to the executive hiring process, helping them to see what is required to reach the next level in their careers.
In either case, you need an executive search firm that takes internal candidates seriously. If they’re the best candidate when compared to the market, the HIPO deserves the C-level role. It’s a bit trickier when this person falls into the not-quite-ready category because no company wants to risk losing a rising star if and when the person doesn’t get the position. Transparency is key in these scenarios.
I make this promise to all internal candidates: Once the market has been evaluated, you will either get the opportunity, based on your merits, or you will be able to look at the external candidate and understand why they were chosen. In the latter case, a HIPO comes away from the process with a clearer sense of what skills – both hard and soft – they need to further develop in order to be considered for the next executive opening. In these situations, HIPOs gain a leader they know can help them in their development, which ultimately supports the company’s succession planning goals.
By Building the Succession Bench
When evaluating external candidates, the executive search firm will be looking to answer these important succession planning questions:
- Do they have a proven track record of building strong benches of future leaders in similar environments?
- Do they possess the emotional intelligence and experience to ease any disappointment of internal candidates and to motivate these HIPOs? What have they implemented that was effective in the past?
- Have they helped teams increase their performance and productivity by coaching and developing all team members, not just HIPOs?
- Do they know how to fill direct report seats to create the right bench?
By Focusing on Long-Term Relationships
An invested executive search firm is interested in ensuring your business is poised to grow now and in the future. With the help of A-list talent who are aligned culturally with your organization and who complement the rest of your executive team, an organization can weather any storm. Creating critical connections and alignment among top leaders is paramount to success, especially during times of change and uncertainty. Long-term visionaries make great executive search partners.
Additionally, executive search firms that look beyond the C-suite and have capabilities that extend to the whole team can be incredibly powerful.
CFO and CEO Succession Planning Is Easier with the Right Search Firm
A significant part of the value lost annually by companies without good succession planning is in intellectual capital. In this regard, building and maintaining leadership pipelines is not a nicety; it is a business imperative. Being planned doesn’t mean there won’t be leadership compromises when or if someone in the C-suite decides to leave unexpectedly. What it does mean, however, is that there are steps and partnerships in place to act quickly and deliberately when turnover happens. By prioritizing succession planning, organizations fortify their resilience and competitiveness in a dynamic business landscape.
Looking for a partner for your executive hiring needs? Reach out to us today.
Article by Sandy Boyce, managing director at Focus Search Partners.