There is no future for organizations which do not train a successor
Global enterprises pre-select a successor and go through training and verification

Hyeonman Shin(CEO)
Careercare Newsletter(November, 2014)

               One of the problems when starting and growing a business is instability of an organization. When the organization of the company is not stable, it is hard to make the business work. For the sustainable growth of the company, securing human resources timely is important but this is not easy as it seems. Sometimes, one or two employees’ leave can put the entire department in a difficult situation. Especially when the very person is a major executive, the aftermath is so severe that the entire operation of the department sometimes can stop at once. Then, what one should manage the human resources to secure the stability and leap for the rank of the large companies?

               Basically, if the organization is to be stabilized, middle executives should be firmly settled. There are several director class executives in charge of the each department in the middle sized companies. CEO should have recruited such executives more or less in various ways. But it is very hard to recruit and secure the middle executives who support director executives, even if CEO pay attention. Request to headhunters also concentrated in middle class executives. Especially when venture companies want to become middle or large companies then the middle executives must be secured. If CEO and director executives are someone who can start the growth engine of the company, it is middle executives who take in charge of growth of the current stage and are capable of pushing the company to the next level.

               One of the big variables of securing the middle executives is the director executives. Middle executives, unlike entry level staff members, do not choose a company just by salary, a title or brand. Before they make decision, they definitely thoroughly think whether they would-be immediate superiors who will direct and evaluate them.

               Thus, when director level executives fail to recruit competent middle men, or existing ones frequently leave the company, it is natural to assume that there’s some problem in executive’s leadership. And when the executive is not aware of his problem, or fail to amend or make up for it, the company seriously need to consider replacing him.

               Succession issue also needs attention regarding stabilization of an organization. Global enterprises designate successors of major positions in prior. If being appointed for major position, he must consult with HR department and designate about three candidates who will succeed him later. So in case that his position is emptied, one of three will assume the position. Thus, in large global enterprises, major positions are seldom unoccupied.

               Would-be successor can either be found from outside or trained from inside of the company. There’s no right answer for this. It depends on the company’s situation. But one need to keep in mind that it takes some time to train a successor. So, when time is short, find someone from outside first, and then look for a better successor or start training. It is definitely hard to find outstanding talent all at once. Thus, it is advised to find the best person under the current situation while securing the organization’s stabilization.

               Training successor needs to be push ahead with enough time. Jack Welch, the former CEO of GE, started CEO succession program in June, 1994. He first set up the board’s MDCC (Management Development and Compensation Committee), and made it select 23 candidates. For the next two years, the board had exclusive interviews and evaluation of various aspects, and had cut down the candidates to number eight. And then, the board conducted the position rotation training and management ability evaluation for the next three to four years. The finalists were narrowed to three, and Jack Welch selected one of them. Thus, Jeffrey R. Immelt was selected as the current CEO after 6 1/2 years of the formal succession process.

               Jack Welch himself also became GE’s CEO after 6 years of systematic training and bloody completion. This is because Reginald Jones, his predecessor also started the successor program in 1974 with six candidates on the list including Jack Welch himself.

               When the period of a successor program is too short, training and verification will be insufficient. With this problem in mind, GE generally starts the successor training program six or seven years in prior. Thanks to this, candidates are usually young executives in their 30’s. With enough time, training and verification process are very thorough and strict. Well-prepared candidate have become CEO and assumed the management; there never have been confusion during the transition in GE.

               Successor program does not have to be only for the CEO candidates. It can also be conducted among major positions that play major management roles in a company. When candidates are selected and go through training and verification, an organization can be better stabilized and grow further.

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