“Many companies face a 40 to 50 percent attrition of their senior executive teams over the next five years,” writes consultant John Beeson in Business Horizons magazine. Moreover, according to a report by the Conference Board, the number of Americans ages 35 to 44 — a demographic pool that could help restore those teams to full strength — is projected to drop 18 percent over the next decade. That’s inauspiciously in step with the retirement trend of current corporate leaders.
And as if identifying future leaders weren’t difficult enough itself, Beeson also notes that “even leading-edge companiesÂ often find themselves challenged in making the crucial transition” that will prepare the next generation to take the reins. “They gather lots of information,” he observes, but they “lack a toolkit to implement their knowledge.”
Beeson’s article provides the toolkit that takes succession planning from idea to action, beginning with “the six basic steps involved in identifying and developing future leaders:
• Defining the potential
• Crystallizing needed development
• Selecting highest-leverage development approaches
• Clarifying learning and development objectives
• Providing needed support and reinforcement
• Evaluating development progress and learning ability
Some of the specifics that Beeson examines include increased span of control in candidates’ current positions, cross-functional projects and task forces, “stretch” job assignments, mentoring and coaching, and participation in trade and industry associations.
At the Chicago Mercantile Exchange, building bench strength is a strategic imperative. “Our business and our technology are very complex,” says chief executive officer Craig Donohue, and “not a lot of people [externally] understand what we do. We need cross-functional teams to focus on very specific strategic business goals and objectives.” Support from the top is essential, he adds, since it’s difficult for junior managers to focus on long-term, big-picture issues. “Succession planning has to come from senior management,” maintains Donohue.
Succession planning and bench strength aren’t merely about tomorrow, adds Beeson; they also affect your finance team here and now. “One of the most powerful motivators for top talent retention” is the belief in the possibility of career advancement,” says Beeson. “If you don’t have strong leadership in finance, that’s not an environment future leaders want to work or remain in.”
Building Bench Strength: A Tool Kit for Executive Development
from the November-December 2004 issue of Business Horizons
Anatomy of a Fraud
from the October 2004 issue of CSO magazine
Overreacting to a fraud can be as damaging as the crime itself, writes author Scott Berinato in this magazine serving chief security officers. In recounting a check-tampering case and its aftermath, Berinato notes those who commit fraud usually do so by abusing a position of trust, and that most antifraud controls are just “simple, good business practices” such as checking up on references and maintaining duplicate financial statements in different locations. But perhaps Berinato’s most important “control” lesson is that victims of alleged fraud must control their own reactions. In the check-tampering case, a business owner sought restitution with a belligerence and ferocity that proved counterproductive. In her crusade to lay blame on any party that might have contributed to her hiring the perpetrator, she ended up in a tangle of disputes and accusations of racketeering, defamation, and extortion.
How to Assess Your Company’s Strengths and Weaknesses
from the October 2004 issue of Darwin magazine
Martial-arts expert and finance executive Tom Dorman sees a parallel between conditioning your body for combat sports and conditioning your company for the marketplace. “While the positive frame of mind will direct the body to achieve whatever goals you set for it,” writes Dorman, only a conditioned body can “withstand the abuse and remain resilient” under the pressure of battle. The same goes for a business; no amount of mental fortitude can overcome superior people, product, and organization. Dorman shows how to analyze your company’s total strengths and weaknesses, compare them with the competition’s, and lay the groundwork for your company’s “conditioning program.”
The Wild West of Executive Coaching
from November 2004 issue of Harvard Business Review
Companies spend a total of roughly $1 billion a year on executive coaching, but in a largely understudied field, it’s difficult to separate the experts from the quacks. “The essentially human nature of coaching is what makes it work — and also what makes it nearly impossible to quantify,” say authors Stratford Sherman and Alyssa Freas. To choose the right coach in the absence of universally reliable credentials, it’s helpful to look for a doctoral degree, experience as an executive, or a background in psychology. But “perhaps the most important qualifications,” write the authors, are “character and insight,” especially as they add to the chemistry between coach and executive.
A New Marketing Mix
from the October 2004 issue of CMO magazine
“Why can’t marketing and finance be friends?” asks the author, a chief marketing officer who chose to remain anonymous. A step in the right direction is acknowledging the differences between marketing types (“extroverts who live on the bleeding edge of creative trends”) and finance types (“fiscally conservative, fact-driven ratio lovers).” To build a stronger relationship with the CFO, writes the author, the CMO must talk in terms that the finance department can appreciate — for example, by laying out the ROI of a proposed initiative. And don’t stop there, adds the author: “Make sure that each level of the marketing organization is partnering with its respective level in finance.”