Mapping Out an Effective Succession Planning Strategy

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

As companies continue to focus their best efforts on talent management and development, it is important to revisit a key strategy for oil and gas companies’ success in the coming years: succession planning. As many research reports have indicated over the last year, many organizations do not place the emphasis on building this strategy it deserves, thus it becoming a heavily discussed topic. Several questions surround the topic, such as what companies can do to bring these plans to fruition both easily and effectively? How will succession plans differ when preparing for an executive or manager’s departure?

Developing a sound and effective succession planning strategy is not a task to be taken lightly, though a few key practices can go a long way when beginning to map out a strategy. In order for the process to be as effective and painless as possible, there must be buy-in from the Board level and Senior Management from the very beginning of this process. Executives must map out the future of their company and really understand what the company will need in a leader to navigate through the imminent challenges their company will face. There must also be high quality HR leadership to take charge of the planning and to see that these plans are being carried through and to work with the board and senior leadership to set measurable goals. In working with senior management to set goals, the board will gain support for succession planning and establish ownership for leadership development programs. In setting goals, the Board and Senior Management must keep it as simple as possible-measurable goals could include the ratio of internal hires vs. external hires for executive roles or the number of promotions from a company’s high potential pipeline. Too complex of performance criteria could deter those managing the process from executing.

Once these plans have been created at a high level, they can be applied differently to the different roles in need of a succession strategy. The transition from one CEO to the next is a critical moment for companies and puts the organization in a vulnerable state, so a well crafted and smoothly executed plan is essential to the board delivering on their governance responsibility to stakeholders. A plan for CEO succession should be developed and executed at least six months before the current CEO is ready to step down. In the case of an unexpected transition, there should be a pipeline of capable leadership already in place to take the reins if needed. This requires not only a succession plan, but a talent development plan for high potential employees as well. These high potentials should be identified several years before a likely CEO retirement-giving them the time to be trained and developed into C-level managers. This process does differ slightly from mid-senior level management. The timing and transition of this level of role is not as sensitive as C-level positions as they are not quite as visible to shareholders.

As little as a year ago, several research reports were released indicating that the majority of global companies did not have succession plan strategies in place, which is surprising as governance is one of the board of directors’ must crucial responsibilities. Companies are only at the beginning stages of developing succession plans, but we are indeed seeing a rise in positions that are being recruited as a direct result of succession plans being put into place.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

MaxwellDrummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.