In the Journals: Building Bench Strength

Developing new leaders on the finance team isn't only about planning for the future. Succession planning and bench strength also affect your company here and now.

“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 companies…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

More articles:

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.

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