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21 June 2005
Succession planning is not taken seriously in SA Just as Thabo Mbeki, president of South Africa, provoked a succession crisis within the government by sacking deputy president Jacob Zuma, many private companies need to realise that they, too, could plummet their companies into crisis mode if a proper succession plan is not worked out - but long before a crisis occurs. So said Org Geldenhuys, a director of executive search and IT recruitment company, Abacus Recruitment. He said IT companies, in particular, often have a high level of staff turnover - even at top levels - due to the serious shortage of skills. "Top management skills are in constant demand and head hunters are always on the look-out to fill executive posts for clients. This can pose serious succession crises for IT companies - most of whom do not have succession plans in place. "Sudden departures, without announcements about successors, can cause quite a stir. Indeed, companies' reputations and overall valuations - including share prices - can come under strain when a top executive resigns and there is no succession plan." Said Christopher Riley, CEO of Pretoria-based notebook retailer: "There is often a common belief that succession planning is mainly a problem for smaller companies and for family-run businesses. After all, who takes over after the founder, the patriarch, gets too old to run the business - especially if his children do not even work for the company, or if they are not up to the job. Lack of succession, in these incidences, can throw a company into disarray and total hiatus and can, in fact, lead to its demise. But it is not just restricted to smaller companies. Succession planning can affect big companies. Just look how the sudden departure of deputy president Zuma has thrown the government and the ANC into disarray. Lack of succession plans remains a major oversight in the corporate business world. Not just here, but overseas too. When a company appoints a CEO it should immediately start looking for his successor, or a shadow CEO. A smooth transition is utterly essential, epically when the there is a sudden departure and not a planned-for retirement. But it is strange that, even when a company knows that a CEO is due to retire, they are slow on a succession plan. Often retirement time is reached and still there is no replacement waiting in the wings. The market understands that companies are made up of people and the key people are the ones who add real value to the company." |