Scenario planning has become familiar for strategy retreats, but what about succession planning?
It's one of the techniques that Alan (A.G.) Lafley, former chief executive officer of Procter & Gamble, shares in Harvard Business Review as he describes the process the company used to find his successor, which might be useful for other companies to consider:
Involve the board early
Mr. Lafley was sensitive to the fact he was an "accidental CEO," selected in a hurry in 2000 after the sudden departure of his predecessor. Although everyone assumed his tenure would last several years, he insisted planning for a successor start immediately, even when there seemed to be more important issues.
One of the P&G board's six meetings each year was devoted to the succession issue. Every director was encouraged to meet at least twice a year with business or functional leaders without any corporate P&G leaders present, to get to know them in an open manner. And time was set aside before and after every board meeting for directors to interact with senior executives on almost any subject of their choosing.
Rethink the CEO's role
With the outside directors responsible for the succession, rather than Mr. Lafley, he realized he needed to define his own role. On the board he became the catalyst for CEO succession, leading an inquiry he tried to make rich in dialogue and debate as they tried to identify and assess candidates.
In the company, he assumed the role of leadership coach, identifying, training and evaluating people with the highest potential. "It was my responsibility to develop as many potential CEOs as we could – leaders who could be ready and able at any time to lead P&G under any circumstances we faced in the global economy, the consumer products industry, and our company – not to cull out the one best candidate," Mr. Lafley writes. It was a horse race, and he wanted as many horses in it as possible.
Meet high-potential leaders
Every month he had one-on-one conversations with 15 to 20 high-potential leaders to talk about what they were learning and how they were addressing their biggest business and organizational opportunities. The executives were expected to choose the agenda and lead the conversations, which were free-flowing, with the CEO not holding back in his questions or being bashful in his expectations of them. "I learned not only what they thought, but how they thought," he notes.
Mr. Lafley, who retired from P&G in 2010, realizes that the process of picking a CEO can never be scientific. But the company's board agreed on a 10-point list of criteria for senior executives. The list included: character, values, and integrity; high energy and high endurance; embraces change; calm, cool and resilient in the face of conflict and criticism; and an institution builder.
Explore multiple scenarios
The P&G board studied scenarios of what the future might look like and what kind of CEO would be needed in each instance. Mr. Lafley suggests that if your company tries this approach, factors to consider include: developments in the global economy; core industries; technology industries; customers; competitors; and, of course, your company's strategy and business model.
Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager for The Globe and Mail's T.G.I.M. page, management book reviews on Wednesdays and an online work-life balance column on Fridays. He has also written a series of articles for The Globe called The Leadership Guru Interviews, which can be found on the Globe Careers leadership advice page.