Pipeline to Success

How companies and employees benefit from corporate succession planning

Just hours after CEO Jim Cantalupo died of a heart attack in April 2004, McDonald’s Corp. had a new chief executive in place. The quick move reassured employees and investors that the company was still in good hands. But within weeks, Cantalupo’s successor, Charlie Bell, was diagnosed with colorectal cancer and stepped down six months after his appointment. He died in January 2005. Jim Skinner, who had been tapped by Cantalupo as vice chairman in 2002, became the company’s third CEO in less than a year.

In business, as in life, the unexpected can happen. Executives resign, burn out, and sometimes die. Proper succession planning prepares a company for significant losses and reduces what could result in major setbacks in operations.

Succession planning is a process of strategic and tactical steps to ensure a pipeline of talented individuals. Preparation strategies include updating job descriptions or competency models, assessing high-potential employees and leaders, ensuring the development of internal talent through training and mentoring, and buy-in from senior management.

“When a successor is named, it’s really the end result of the entire talent management process-from beginning to end,” explains Audrey Williams-Lee, senior director of talent management for McDonald’s USA.

Experts agree that any successful corporate diversity program must be connected to the organization’s succession plan. McDonald’s vice president and chief diversity officer, Pat Harris, points to examples of how proper succession planning has provided opportunities for black employees within that company: The marketing career of William Lamar Jr. was enhanced when he was fast-tracked to learn operations and eventually named general manager and vice president of the company’s Atlanta region before being appointed to his present position as chief marketing officer for McDonald’s USA. Karen Wells was placed in an accelerated operations program, which led to her becoming vice president and general manager of the Indianapolis region. Today she is vice president of strategy and innovation for the company’s U.S. market.

Unfortunately, too many companies fail to recognize the benefits of such planning. William J. Rothwell, author of Effective Succession Planning: Ensuring Leadership Continuity and Building Talent From Within (American Management Association; $65) notes that it takes an average of 48 days for companies to fill a position and as long as a year for some senior-level posts. “It costs you money to leave a job open,” Rothwell says, “and even more at the senior executive level.”

Of course, succession planning is difficult if a company is unaware of its future internal needs, says Lynne Morton, a management consultant and principal of Performance Improvement Solutions Inc., a New York-based organizational development firm. She suggests that companies update competency models and job descriptions and keep abreast of talent resources.

Says Steve Heinen, principal at Mercer Human Resources Consulting: “Succession planning ties into the company’s long-term business and strategic planning.”

Ensuring that diversity is integral to the plan may require broadening the range of those involved in the selection process, suggests Rothwell. “There is a tendency for people to clone themselves in the selection process,” he says. “The way to avoid

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