Succession Planning Best Practice: Tech
The four best practices for succession planning used by tech companies are preparing as early as possible, assessing performance and potential, commitment from the CEO and board of directors, and having regular talent reviews. We have outlined their details and related case studies below.
Succession Planning Best Practice
1. Prepare as early as possible
- Overview: Succession planning should be done early to avoid challenges when a leader leaves unexpectedly. Also, succession planning should begin as early as five years before the exit of the current CEO.
- Example of a tech company and how it is used: Apple applied this best practice. Steve Jobs employed this succession plan when he introduced the Apple University in 2008.
- Part of the University curriculum includes leadership courses whereby Apple employees are thought to think like the founder and learn to make decisions. Apple uses the digital curriculum as their succession planning, a great example of how technology can be used to prepare a company’s leadership succession.
2. Assess performance and potential
- Overview: Another best practice for succession planning is to assess performance and potential. It is done not on past performance, but using a variety of effective ways to evaluate potential with relevant and consistent criteria.
- Example of a tech company and how it is used: This was applied by "IBM where successful planning was made right by establishing great professional development pathways, creating a thriving and positive company culture & allowing candidates to compete at the same level."
- "IBM made an excellent example of internal succession planning when the current SVP, Virginia Rometty, would be taking over as the company’s first female CEO when Samuel J. Palmisano retires. IBM chose its new leader based on merit."
3. Commitment from the CEO and Board of Directors:
- Overview: Succession planning should not be confined to the HR department; instead, it should be led by an organization's top leadership (that is, the CEO and the board of directors). Commitment from the CEO and the board of directors ensures that the process gets assigned the right time and resources to ensure its success.
- Example of a tech company and how it is used: This best practice was applied by Apple, where Steve was also working hard to prepare Tim Cook for the position of CEO. On the other hand, Cook took on a variety of different operational roles, including manufacturing, distribution, sales, and supply chain management before working directly with Jobs to gain experience in the CEO role.
- An excerpt from the resignation letter of Steve Jobs reads as follows: "as far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”
- Tim Cook also shared his view on succession planning, saying, “I see my role as CEO to prepare as many people as I can to be CEO, and that’s what I’m doing.”
4. Have regular talent reviews
- Overview: Having a regular talent review is another best practice for succession planning. It involves the board reviewing talents with the CEO, the CEO reviewing talents with the executive team, each executive team member reviews talent with their teams, and the process cascades down throughout the organization.
- Example of a tech company and how it is used: This best practice is applied by Wipro where the company’s succession planning follows structured talent review and planning process every year, which helps them build a pipeline of talent for succession to key roles. Wipro considers aspects for succession planning such as the strengths, areas of development as well as the aspirations of members of their leadership teams across the organization.
We commenced our research by looking for pre-compiled information on succession planning best practices for tech companies. We searched through websites like TD, CIO, and Forbes. Research results showed some best practices of succession planning in general. We then moved forward to identify tech companies that have applied each of the best practices. To do this, we searched through sources such as TechnologyAdvice and Businessworld. We were able to find some information on tech companies applying and using those best practices for successful succession planning and have summarized the best practices found in the section above.