An impending CFO job change would obviously jump-start the process. But to formalize succession, Allen says that the first step involves encouraging executives to think about what would happen to their companies if they couldn’t do their jobs for some reason. “People then start thinking about the good of the organization as a whole rather than the protection of their own position,” she says.
CFOs who do advocate succession planning tend to have experienced it elsewhere. Both Richardson and Shaffer, his predecessor as CFO, joined Qwest after long stints at Goodyear. “We came from a company that focused very hard on giving people the experience to move ahead in their careers, and we brought the same thinking to Qwest,” says Richardson. Similarly, when Barbara Klein arrived as CFO five and a half years ago at CDW, a direct marketer of computers and software, she brought her knowledge of succession planning from past employers with her.
After gaining buy-in for a succession program, creating a formal planning document is a valuable next step. Working with a human-resources executive, Klein helped draft one for the finance department to aid managers in identifying high-potential employees. The document helped to institutionalize the process and got people focused on succession, says Klein.
At Qwest, Richardson meets with his senior team several times a year to discuss the highest potential candidates in every function from tax to investor relations. These staffers are paired with mentors and considered for different career-development possibilities, including assignments to new roles. Richardson also runs an annual performance-appraisal process. “I’d say I spend a few hours quarterly [on succession planning], but it’s really a continual process,” he says. “It’s important to make succession planning a way of life.”
Rotating the Talent
Central to that way of life is the rotation of high performers through different jobs in and outside finance to broaden their perspective and expand their skill sets. Rotations also help finance chiefs assess whether their instincts about a particular employee are right. But “getting a rotation program started is tough,” says Steven Ehrenhalt of Deloitte Consulting’s Finance Transformation group. Because finance departments feel short-staffed, “there’s a lot of trepidation when you talk about moving someone out of his or her role.”
At CDW, Klein says the gain outweighs the short-term pain. “Only by giving people new experiences and stretching them,” she says, can you see whether they can assume new roles. Recently, for example, the head of financial planning moved into the marketing department to help manage the overall marketing budget. Another longtime staffer moved from the credit department to treasury and returned, energized by his new perspective, to lead the credit staff when his former boss left.
Even unsuccessful rotations “give you a lot of information about what candidates need to work on or what their limitations are,” says Heather Ishikawa, an organizational consultant with CPP, a workforce-development firm. Instead of giving up on that candidate, however, Ishikawa says CFOs should monitor the situation and return the candidate to his old position after 90 days if problems materialize. Any longer and the person’s peers — and even the person himself — may start to doubt his abilities. After moving the employee back, the CFO can assess whether a different rotation might work better, whether additional training is needed, or whether the person is better off staying put.