Thursday, July 16. 2009Succession Planning Is Something That Is Essential......John Linton .....but for the life of me, and with no lack of trying, how to accomplish that in the best possible ways and in a reasonable time frame has proven beyond my efforts and understanding. Even a tiny company like Exetel, if it stays in business long enough, eventually grows to a size where you notice that it is much larger than you used to think and that it has become dependent on too few people for far too many aspects of its day to day operations to be 'safe'. We aren't stupid and we did recognise that this would become an issue that we would have to address some two years ago; perhaps before that but I really can't remember when I first raised the issue or the issue was first raised with me. In any event, over at least the past two years we have given an increasing amount of thought to how we would, financially sensibly, put in place a slightly different personnel infrastructure that would allow the company to be unworried if one or more key people decided to pursue their career elsewhere or, heaven forbid, accident or illness prevented them from continuing to discharge their responsibilities for some length of time. Earlier this year we promoted two of our earliest employees (almost exactly on their 5th 'anniversary' of their employment with Exetel) to the respective positions of CIO and CFO both in recognition of their dedicated performance in growing with Exetel through successive phases of what we have had to do and become and in recognition of their wealth of detailed knowledge about how increasingly complex and wide raging automation systems work and, more importantly, how they need to continue to evolve in the future. Those promotions eased the immediate planning and oversight burden on Exetel's directors but did nothing to address the 'succession planning' aspect of developing a 'safer' personnel operating hierarchy. Such a situation can only be brought about by having enough money to duplicate many personnel within any organisation which small companies simply don't have the ability to do because they simply don't have the money to do it nor the management skills that are required to split work loads in a way that keeps two very bright people either happy or gainfully employed. The other issue with small companies like Exetel is that small companies have to employ for their organisation structure which is one or two or some small number of founders and then hiring relatively or very inexperienced and often very young people who 'grow' into their jobs and acquire the skills and experience under that 'autocratic' management structure. This is far from an ideal structure to produce the required experience for management, let alone senior management positions. So there are only two, or maybe I have 'invented' a third, alternatives. The first is to 'buy in' one or more experienced managers at the levels required to manage all or part of a company the size of Exetel which is a problem given that Exetel has a very different management and operational basis than any other Australian company. I have made some attempts to do this over the past nine months but the resumes of the people deemed suitable by the two or three personnel agencies I've had discussions with are so far from what I think we need I've pretty much abandoned that scenario. The people with the apparent experience and skills wouldn't want to run a small company on skinny budgets and suffer the austere regimen that exists within Exetel and people with less than those skills would just not be able to do the job. The second method is the 'over-promote' crash through or crash theory of all very bright people can do anything given the chance and give inexperienced current employees the 'opportunities' to "show their worth". I have done that once in the past and watched it done differently by Jodee Rich at One.Tel some years ago - both had undesirable outcomes for different, but in some ways similar, reasons. My experiment with radical 'management fast tracking' was to write an outrageously phrased ad and run it in the main section of each States major broadsheet taking up one third of a page. The ad produced over 1,000 responses from which I hired 8 people and then ran an 18 months hands on General Manager training program which I was heavily involved in teaching many formal 'classroom courses' as well as spending a great deal of time sharing my experiences and knowledge of both the company and the industry and mentoring. The company also paid for the selected people to obtain an MBA at the university/management school of their choice. While the program achieved almost all the objectives set for it, other issues prevented it from being seen to be a success in the longer term. Jodee Rich took a different approach which was based on his enthusiasm for the views expounded by Ricardo Semler in his book "Maverick!" (any google search will give you any number of summaries). While I am not in the best position to judge the overall results of that program my personal observations were that it was a miserable failure - partly because Semler's 'scheme' addressed a completely different scenario to that which existed at One.Tel and, of course, the well established employee base at Semco in terms of skills and knowledge was totally different which removed a key attribute of that which was the main spring of success at Semco. In my 'despair' I've thought of a third way which is to buy a smaller company/ISP than Exetel which has an energetic CEO plus, possibly, one or two other managers with a deep knowledge of the industry and the future technologies who would not require the training and mistake making experiences of 2 and would eliminate most if not all of the problems with 1 above. However, it's obviously a long shot and while we will see what may be possible, I don't hold out much hope of that path proving to be the solution. However the clock continues to 'tick' and our luck can't last forever so we need to actually do something sensible in the near future. Trackbacks
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Have you considered a new equity partner?
$$ plus specific skills H. Comment (1)
Our need is for a senior manager/CEO.
While money is always useful, we have no need for additional funding/equity. It would also mean that we would have to turn Exetel into a commercial entity (making a sensible commercial return) which isn't why I involved myself with it in the first place. Comments (5)
I imagine any CEO would be entirely focused on increased profits for shareholders.
I imagine someone from within the ranks of Exetel would be best for such Senior Management / CEO roles, perhaps even someone who was around and dedicated when the 'near death' experience, you posted a short while ago could be ideal - dedicated enough to give a damn about the ongoing success of Exetel. Comment (1)
Exetel isn't in business to make money for its shareholders and never has been which is something a 'conventional' CEO would have very significant problems coming to grips with - Exetel is run more like a charity.
We have, hitherto, always promoted from within and will continue to do that - but there are no 'internal candidates' for the CEO position at this time - though that may change in the medium term future. Unfortnately our need is now rather than some future time. Comments (5)
"While the program achieved almost all the objectives set for it, other issues prevented it from being seen to be a success in the longer term."
Is this intentionally left vague, or can you offer some clarification as to why it wasn't a long term success? Comment (1)
It is a paragraph in a blog illustrating part of a point - it is/was not intended as an in depth analysis.
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I would guess that your public mention of the third option will bring a sudden increase in those random calls from people trying to sell someones business to you
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I have had three emails since the blog was posted.
Blogs can be powerful tools. Comments (5)
JL,
Promoting from within the ranks nearly always works - you know what you are getting. Having said that, there will always be times when going external is a better option, not just from a timing perspective, however also from the 'fresh set of eyes' perspective. Having worked for the same Telco/ISP for the past 11 years and more recently in a senior executive position with the same, I have enjoyed the luxury of working with 500-600 other employees, who all have different competencies. Out of some 30-odd promotions I have been directly involved in over the years, only one of these didn’t turn out the way we’d hoped. By doing this, we have probably missed out on opportunities to take in a fresh set of eyes with different skills. We’ve done well so far, but like many other organizations looking at the ‘what next, new directions and horizons etc’, it’ll be key to consider external candidates for positions that were traditionally promoted. This includes looking at people outside of the industry, who might look at things a little differently than some of us who are engrained in the industry. Just a pity I’m in Melbourne. Comment (1)
G'day
My only suggestion in addition is to include your agents in your list of possible candidates, as some of the better performing ones might have a reasonable knowledge of Exetel amassed and perhaps have the same values as yourself. Perhaps with the new TV advertising you might become better acquainted with some of us The only other option I can think of is along the lines of five golden tickets... Comment (1)
You mentioned in this blog a while back about employing the Sri Lanka manager and having 3 great choices and it was hard to pick. Maybe you can get someone from over there to move to Australia?
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It's an interesting thought and one well worth considering.
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