In my view, succession planning is a critical differentiator between a good and great CFO. CEOs expect their CFOs to have a great bench, and having a great bench of talent prepared to step into any leadership gap is worth its weight in gold to the entire enterprise, not only the finance organization.
Other than technical experience, there is a range of experiences that qualify someone to be a worthy successor (see chart).
But integral to the decision process is the ability to assess whether people are capable of making the jump from the manager and director level to an officer position, which requires strong “soft” skills, such as leadership, communication, and teamwork.
In addition, as CFO, it’s important to communicate your succession plan up, to the CEO and board, to make sure they are aware of the plan; and down, to your officers to make sure they understand what is expected of them to carry out your agenda.
Based on my experiences, I’ve also found the following considerations integral to effective succession planning:
Development and assessment go hand-in-hand with succession planning. Providing high-potentials the training and experience they’ll need to be effective leaders helps in assessing how they are progressing toward readiness to fill future gaps and retaining them.
That’s why I helped to establish a finance leadership academy, focused in part on helping finance team members build their soft skills, as well as strategic capabilities.
Succession planning should start at the recruitment and entry levels, with undergraduate and MBA development programs that draw in and develop people who could someday be officers. It should include development and rotational programs to provide the training, feedback, and experiences they need to be ready to jump to the next level.
Then, at the higher levels, development programs should provide appropriate experiences for senior people. For example, I gave my officers exposure to the board and audit committee. That was important for their development and benefited the board as well.
Make external hiring part of your succession plan. Even the most effective development efforts won’t cover all leadership gaps. Plus, over time, I came to appreciate the importance and benefit of recruiting outside talent in order to bring new ideas and experiences to the organization.
If you can’t identify one or two successors for a critical role from inside the organization, you may have to go outside for someone who could fill that gap immediately or be developed to fill the role in a short amount of time. In fact, I had an open-spend policy on talent, so if I found someone who could be a real difference-maker, I hired them and got them ready for a bigger job.
Today’s high-potential superstars might not fit your succession plan for tomorrow for any number of reasons in this fast-changing business environment. Making that determination requires constant assessment of your talent and being brutally honest in that assessment.
Those kinds of talent decisions are among the hardest to make, but if you don’t make them, your succession plan, your organization, and you could suffer.
About the Author
Charles Holley, retired CFO of Walmart, serves as an independent senior advisor to Deloitte LLP and as CFO-in-Residence of the CFO Program. For more information about Deloitte’s CFO Program, visit www.deloitte.com/us/cfocenter.
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