What does Sir Alex Ferguson have in common with the Queen of England? It might sounds like the start of a bad joke, but the answer highlights a serious issue that concerns many British businesses. Both of these individuals are at the top of their respective industries, and both hit the headlines recently with regards to succession planning.
In the space of 24 hours, Ferguson announced his retirement as Manchester United’s manager after more than 26 years, while the Queen attended Parliament for the official state opening with Prince Charles at her side for the first time since 1996. Many commentators suggested this hints that the Prince is being primed to take over duties from his mother, while Ferguson’s announcement had a more definitive outcome, with the appointment of Everton’s David Moyes the following day. While very different in theory, the two cases can provide some valuable lessons on succession planning for British businesses.
In the short time it took to make the announcement on Ferguson’s replacement, share values of the club plummeted by almost five per cent. Investors were understandably worried about who would fill the role, after the entire process was kept highly secretive. And you have to wonder exactly why that was the case. We all knew Ferguson was due to retire at some point in the near future, so what was the value in hiding plans for his replacement from the public? Perhaps it was a bid to avoid a repeat of the impact on players’ performance when he previously announced his intention to retire. In the absence of a suitable candidate already within the ranks, commentators began speculating about who could fill the gap from an external pool.
Given the huge success Ferguson has had as a manager, it’s fair to say that he is a master at succession planning on the playing field. Indeed, one of his core principles was the development of young players from within the club. The list of examples where this was the case is almost endless; with Scholes, Giggs and Beckham being some of his more obvious protégés. Time and again, Ferguson managed to blend new talent with senior players to recreate the team and push the club to victory. And chief executive David Gill, who is also set to step down this summer, has said Ferguson has put in place a new training facility at Carrington as part of his legacy plans for the club. Gill commented: “We knew that his retirement would come one day and we both have been planning for it by ensuring the quality of the squad and club structures are in first-class condition.” Clearly, Ferguson’s example and ability on the pitch is unrivalled, yet Ferguson’s succession plans for his own replacement failed to be communicated in quite the same manner.
Time and again this situation is mirrored in boardrooms around the country; everybody knows a certain member of the C-suite is due to retire, but they fail to act in enough time to groom existing staff as a replacement. This historical lack of succession planning and talent development within a business all too often leads to chaos and overspending. When senior roles come to the market with no obvious replacement in-house, HRDs are forced to source from an external pool, offering seductively high salaries and equity packages to tempt top talent into the business. This leads to another problem down the line, as, satisfied with their generous contracts, these individuals often become entrenched within the organisation, leaving no room for staff beneath them to progress.
Nurturing existing talent within any workplace is an essential facet of succession planning and overall recruitment strategy. This is something the Royal Family appears to be trialling at present, making way for the inevitable time when Prince Charles takes the throne. It will be interesting to follow how The Firm manages this crucial process, which seems to have started with an element of flexible working introduced into the Queen’s daily life, as she scales back on public appearances and overseas visits. Later this year, the Prince will represent his mother at the Commonwealth Heads of Government meeting in Sri Lanka, with the support of the Prime Minister. The family would be wise to continue this forward-thinking approach to ensure all plans are in place for the smoothest possible handover.
Whether you are running a business, a football club or the country, a clear framework for succession planning is an essential part of successful business management. While best practice differs for every single business, the consensus is that succession planning activities should adopt an open-book approach and be common knowledge to all those involved, if not the entire business. After all, there is no point earmarking an internal candidate for progression if they have no idea this is the case and choose to leave the business before ever finding out. The plans should then form part of a strong overarching recruitment strategy, taking into account both internal and external talent pipelining that can take the business forwards in the months and years ahead.