American University of Beirut

Executive Succession Planning: A Critical Conduit to Business Sustainability

​​​As a board member, think about your organization's most valuable executive. Now proceed by envisioning the company without them. The year 2020 has been riddled with political uprisings, economic crises, and a crippling pandemic that altered social behaviors and obligated soaring businesses to rethink their business models. It should come as no surprise that a surge in executive succession follows suit.

The industry knowledge and corporate experience acquired by executives are pivotal in their legacy after succession, be it strategic decisions or team management. It is costly to organizations if board members and CHROs fail to recognize the importance of retaining the implicit knowledge accumulated by executives during their tenure. Fruitful succession events with proper knowledge transfer can boost organizational performance, provide a competitive advantage, promote innovation, and strengthen intellectual property. Thus, understanding the elements that promote knowledge transfer between incoming and outgoing executives safeguards suitable succession planning and, ultimately, the company's sustainability. AUB OSB Professors Rida Elias and Bassam Farah provide critical perspectives for consideration in their insightful conceptual study.

Observe the “predecessor" in action as part of the transition
When planning for immediate or eventual succession, organizational leaders may keep in mind particular strategies to rectify situations for maximum benefit. One such strategy is proximity, which improves the relationship of those involved and optimizes tacit knowledge transfer. A predecessor is often unaware of their tacit knowledge, which provides the successor with involuntary access by observing them in action, thereby promoting the transfer of this type of knowledge. In modern-day virtual offices, this translates to taking part in “virtual meetings and deals the predecessor does during the transition period", states Dr. Elias. Speaking of inclusion, board members may ask predecessors to involve successors in their strategic day-to-day and networking activities, which allows successors to observe how predecessors handle various situations. This encourages the formation of perspectives, avoidance of mistake repetition, and improvement in the successor's self-confidence.

Foster a nurturing corporate culture
The organization is in charge of establishing a learning culture that endorses trust and cooperation, which lays the groundwork for deliberate knowledge sharing. “You have to convince people that knowledge sharing augments, not diminishes, their own knowledge reservoir.", Dr. Elias explains. A competitive culture that solely rewards individual achievement will not only inadvertedly disrupt high organizational performance, but also executive succession. In such competitive cultures, unique knowledge and contribution are considered the only sources of reward. Accordingly, a balance of compensations must be maintained between individual (to maintain motivation) and collective (to foster cooperation and knowledge transfer) achievement. Any prevalent individualistic culture could also be tackled by encouraging participation in awareness workshops, and highlighting the value of and the contributions to personal success through a joint meeting with both parties.

Ask yourself: What makes them willing to get the job done?
The transitioning of executives' roles involves divergent scenarios, and the predecessor's varying levels of character, ethics, dominance, and ego must be taken into consideration. When faced with hostility or attachment, organizational leaders can resort to intangible incentives specifically catered to the person's needs. Dr. Elias highlights: “Do not let the predecessor lose his or her own identity", but rather create a new one for them to lean on as they progress into their next life chapter. With working knowledge of your co-workers, ask yourself: What do they value and what is important to them? Board members must provide a sense of purpose for both departing and incoming executives, and answering the aforementioned question might help them pave the best way forward.

The New Norm: Translating a need into an imperative
The nature of corporate relationships is changing. Executives are being forced to indirectly share their knowledge by having to provide detailed instructions and extensive guidance, since the rushed workplace component is no longer present in virtual meeting spaces. The shift to remote work has subtly incorporated a feedback loop, as opposed to communicating tasks with brief orders on any given workday. In actuality, tacit knowledge is what distinguishes humans from robots. A machine can absorb immeasurable amounts of explicit knowledge, but it cannot perceive and make sense of situations the way we do. This is the edge that humans have, and it is what makes implicit knowledge valuable. Arduous trials sometimes do bring about positive change for those willing to see. “COVID-19 is forcing people to reflect on their tacit knowledge and transform it into explicit knowledge faster than ever”, explains Dr. Elias. The formation of a nexus between the concerned parties would bring about considerable benefits, and future-proof the company from possible brain drain.

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