I’ve been meeting with a lot of executives lately dealing with top leadership transitions. In the next few blogs, I’m going to talk about how knowledge transfer can help executives manage talent risk at the highest level. We’ll start off with the need for developing a strong team approach or “ecosystem” that mitigates the risk to the enterprise when an executive moves on.
For example, I was recently approached by the head of HR for a multinational corporation that specializes in the manufacture of imaging and optical solutions. Like many companies we run into, they are trying to replace a highly successful senior executive in sales who’s going to be retiring. They’ve been grooming a replacement for “Mike” for the last several years. His successor, “Dan” is a very capable, intelligent guy coming over from marketing. Since he’s going into more of a sales role, they need to give him exposure to more of the financial aspects of his new role, things like pricing, the P/L, deal structuring, and sales operations. Dan’s stepping into a job that’s highly political, and very relational. He has to take over for someone who has an uncanny ability to pull people together and get them to make decisions that are good for the company.
Luckily, they’re starting this transition with plenty of time. Mike and Dan have already been working together for over six months. These two like each other and Mike is very invested in helping Dan succeed. In fact, they have a whole year; so it’s not an emergency transition where they are trying to cram this work into a matter of weeks. Mike’s even agreed to stay on as a contractor after he retires to make sure that his wisdom is still available. What could go wrong?
Most organizations treat this transition as one to one; getting a successor to replace this executive. Once they’ve identified the successor, they have him job shadow the retiring exec, and think they’ve got it covered. The trouble with this approach is that it doesn’t reduce the risk, it just transfers the risk to a new person. At my talent risk management and knowledge transfer consulting firm, we think about executive transitions more holistically. Every outgoing executive and his or her successor brings a very unique set of experiences and skills. It is often impractical to expect a successor to step right into the shoes of the outgoing leader. We want to mitigate executive talent risks on three levels:
- Risk to the Company: Traditional succession planning doesn’t spread out the work and skills of the outgoing executive to several people, so there is often still a single point of failure. The risk to the enterprise is huge. In the company we’re talking about today, the executive has a direct impact on the company’s P/L and oversees millions in contracts each year. Mistakes here are going to have a substantial impact on the bottom line.
- Risk to the Replacement: If all of the expectations land on one person and he or she doesn’t have backup, the risk of burnout or overload is substantial. I know you hire the best and they expect to be thrown into the deep end, but why not hand them a life ring instead of an anchor while they’re coming up to speed?
- Risk to the Team: Once the retiring exec is gone and the new leader walks in, the top people on his team are justifiably concerned. They’ve been in a high performing team under a super executive for a long time. Chances are they’re all going to polish their resumes and start looking for other opportunities. The team will stay intact longer if they see they’re being developed along with their new leader.
Instead of just relying on one replacement, we’re using knowledge transfer to create an ecosystem where work can be shared and the whole leadership team has a chance to pick up new skills. In the scenario above, we’ll take a close look at all of Mike’s silos of knowledge and then use our Skill Development Plans to carefully select the skills Dan needs to learn to be successful. In some instances, we’ll have Mike transfer his knowledge to Dan plus several of Dan’s directs so that there is more backup in the ecosystem. As Dan takes over, he may delegate some of this work to his team because he finds them better suited. This sets everyone up for success.
Summary: When you’re losing a key exec, you need to transfer knowledge to more than just the one successor. Having a knowledge transfer system in place ensures that the critical knowledge stored in the head and hands of one departing employee will now be shared by many, reducing the risk to the company, the replacement, and the team.