In Germany, New Lessons on Succession

Chancellor Angela Markel’s surprise decision to step down leaves Germany facing a challenge companies can try to avoid.

If you are on the board of directors, you might not be thrilled if your company happens to be “Germany Corp.” at the moment.

In a move that rocked the political sphere, Germany’s chancellor Angela Merkel has recently announced she’d step down in three years. Sure, that’s a ways off, but Merkel has held the position for more than decade and been a clear if not stable fixture that will be hard to replace. And for now, few experts see any obvious replacements. 

Succession plans in the political world are, of course, different than those at a company. “There’s no assurance that the up-and-comer politician might not get impatient and challenge the leader to an election,” says Alan Guarino, Vice Chairman in our CEO and Board Services practice for Korn Ferry in New York. “It’s not like corporate America.” Still, a growing number of firms are waking up to the often-ignored importance building high-level pipelines far in advance.

Making sure you have candidates in that pipeline “doesn’t just happen by accident,” says Guarino. “Leadership succession, especially at the top of an organization, requires forethought and a strong process for grooming the next generation to be ready.” In practice, that means giving a cadre of many high-potential employees roles that stretch beyond their experience. The idea is that those employees with potential for future leadership jobs will be able to rise to the needs of their new position. 

Those positions -- which should be across a variety of functions from finance to operations to marketing will help the various employees grow. This process, while time-consuming, will also weed out employees who are either not suited to the top job or don’t want it. The whole thing may take decades. That’s especially true when talent is hired either directly from college or grad school.

“Those companies that do it better, think beyond succession planning,” says Barbara Ramos, Head of Assessment and Succession EMEA, and Senior Client Partner for Korn Ferry, based in the Firm's Madrid office. They don’t focus on filling the top one or two jobs. Instead, they look at succession planning as a process through which talent gets developed. She notes that when the focus is all on filling the CEOs job things can go awry. “It becomes a political game and typically becomes quite dirty.” 

Ramos notes that the best in class firms now don’t necessarily think about specific jobs they will need to fill in the future but look to make sure their employees have the right capabilities. “In the past, the choice would be to pick a strong candidate to fill a job,” she says. These days the work of executives isn't as simple. The matter comes down to the reality that there is now so much disruption and change in the economy. "It is much more fluid," says Ramos. Human resources executives need to plan a workforce around future jobs that don't yet exist. “The task is to build capabilities that will be useful in the future," says Ramos.