Each of us in our way are wonderful and whatever organization we join is enhanced by the very fact. In many organizations, the leaders do a great job and from an outsider point of view, you may wonder about the people who will lead the organization in the future. What you are concerned about is Succession Planning or Bench Strength? In an article by Harvey Schachter titled 7 Sins of Succession Planning published by the Globe and Mail, he reviews the book Succession by Noel Tichy. Mr. Tichy believes while succession planning is a major influence in an organization behaviour, the reality is 80% of companies and organizations do not have a plan. They have ideas but not really concrete processes, thus many new managements are going to fail. The reasons are the 7 sins:

1. Great in Theory – have a plan but poorly conceived or inoperable.

2. Lack of Preparedness – we all expect to live a long life, but what happens if we do not? This is something the company was going to do but did not get to it.

3. A domineering CEO – the CEO may deliver the results, however his/her treatment of people under them, may see possible quality candidates leave the organization.

4. Blinded by the Stars – the board is inclined to look outside the company rather than build internal talent. It can be both good and bad.

5. The Halo Effect – the board chooses a candidate who is benefiting from where the company is in natural economic cycle ie rising prices, rising profits.

6. Traits over Experience – companies list the qualities they need and check the boxes, but has the person gone through both profits and losses and how did they do?

7. Fear of Internal Defections – some companies set up race among internal contenders, some of the losers invariably will move to another company.

Linking to dividend paying stocks, these companies have paid dividends for a number of years, as a shareholder you want them to continue no matter what happens at the executive level. Is there a plan? how did the last succession go? depending on how many shares you own – what is the turnover of executives? how is the company grooming its talented people?

There are more questions than answers, till the next time – to raising questions.