The Benefits of a Succession Horse Race

horse race

Many directors fear that a protracted succession horse race will kill the momentum of the business, but the most successful companies nurture a culture of competition to find the best leader for the job. While this process will take some time, it can have significant benefits for your business. It will ensure that you’re able to identify the best leader for the job and will increase your company’s likelihood of success.

Taking a succession horse race

A succession horse race is an important part of a company’s leadership development process. It’s also a great way to minimize risks. Companies that have a strong succession culture regularly develop promising executives in the company. They adopt several practices, including benchmarking the frontrunners against external talent.

The classic succession horse race pits two or three senior executives against each other to determine who will be the next CEO. The winner assumes the role and becomes the new CEO of the organization. Although some executives may not like this process, it defines a clear timetable for succession and helps organizations identify the next leader. In fact, many companies, including General Electric, have developed excellent leaders through succession horse races.

Disruptive nature of succession horse race

While a succession horse race can be an effective tool for identifying top talent, it can be disruptive if the process is not implemented properly. To avoid this, organizations should focus on developing senior leaders from the top down. In addition, boards of directors can mandate that the CEO and senior management team establish succession processes.

While some companies choose to keep their succession plans private, others choose to make them public. The shareholders may feel entitled to know, and the financial media never turns down a juicy story. In Berkshire Hathaway, for example, the succession plans have been subject to speculation for years. As a result, some large companies are creating succession “horse races” in which senior leaders vie for the job. However, these practices can be divisive and result in a talent exodus.

Benefits of succession horse race

The benefits of succession planning are many. They encourage accountability in the organization and build a culture of leadership development. In this process, future stars are identified and groomed in critical roles until they are ready to lead the company. The process also signals to employees that they can hold the position of leader.

While succession horse races are fun and exciting, they can also cause disruption if not properly executed. They must be used with caution, and the board should carefully consider the organization. It should adopt strategies to minimize disruption.