Transcript
Grace Ann Chua [00:05]: For any community to grow, it has to think about building and nurturing the next generation of leaders to take it to greater heights. What should we look out for when considering leadership succession? Welcome to Crafting Communities, your companion to shape a better experience for the people that you care about. I’m your host, Grace and today we have with us Shaily, an HR expert and Tim from Caregivers Alliance who’ll share with us important questions to ask while looking for new leaders in your community.
Grace Ann Chua [00:34]: Hi Tim. Hi, Shaily. Welcome to this episode of Crafting Communities.
Shaily Gupta [00:38]: Hi.
Tim Lee [00:39]: Hello.
Grace Ann Chua [00:40]: Tim, could you share a bit about yourself?
Tim Lee [00:42]: My name is Tim Lee. I’m the CEO of Caregivers Alliance Limited. We assist caregivers of persons with mental health issues.
Grace Ann Chua [00:51]: Thanks, Tim. Hey Shaily. Welcome back again to Crafting Communities. Could you share with our listeners a bit about yourself?
Shaily Gupta [00:58]: Hi once again. I’ve been in the earlier podcasts here. I’m, by profession, a human resource professional, been in the corporate sector for more than two decades. Currently, I’m doing my own consulting assignment in HR advisory, and working on certain products like “Leading in a hybrid environment”.
Grace Ann Chua [01:15]: Yay. So to begin, the question is, why is leadership succession important?
Shaily Gupta [01:20]: That’s a very good question because since I come from a corporate environment, we all lay a lot of emphasis on succession planning. Having said that, lots of large corporates have not done it well, despite having great, great emphasis on succession planning. So, let me start with a story of a real life case study of Microsoft. I think all of us have heard of Microsoft, it is a tech giant. In 2013, the then CEO of Microsoft, Steve Ballmer, suddenly announces that he is going to step down as the CEO till they find somebody else. And that’s when the board mandate started to find the successor.
Grace Ann Chua [02:00]: So, he just announced like, “I’m going to step down”.
Shaily Gupta [02:04]: Absolutely.
Grace Ann Chua [02:05]: And then chaos.
Shaily Gupta [02:05]: And then the chaos. Exactly. Should we look externally? Should we look internally? And mind it, at that point in time, Microsoft was the fourth largest profitable company in America. So, look at the significance of that company. And that is when, lo and behold, all the hell broke loose and the board caught this charter of finding a successor to Steve Ballmer. They had some few names – they kind of got the long list of 100 candidates, out of which reduced it to 20 – and some of the obvious names, like the second-in-command of Qualcomm was looked at as a potential candidate, [but] he got internally promoted. So, for him, Microsoft was not as important anymore. There was another gentleman from Ford – Alan [Mulally]. Though he did not have the tech background, he had a transformation background. He also declined the offer and he also fell off, out of the run. And that is when, for the first time, the board started then looking at potential internal candidates.
Shaily Gupta [03:08]: Satya Nadella, who was now the name that we all reckon with, transformed Microsoft and took it to much greater heights, to where it is. So, why I’m sharing the story is that if you’re not prepared for succession planning, this is how [the] most profitable company could have got badly impacted if you had not got the right person. And look at the extensive search the board had to get into – external and internal – to ensure that Microsoft from there on goes up multiple folds, instead of the situation that they faced. And that’s the reason succession planning is important in my mind.
Grace Ann Chua [03:49]: Any thoughts, Tim?
Tim Lee [03:50]: Well, perhaps I would just like to add another story, where I was kind of personally involved in. So I was working with Siemens, it’s a German company, MNC. So, I wasn’t there when all hell broke loose. Siemens, in their history, they had a time where the company went into a huge challenge because of a corruption case. And it turned out the leadership team was affected, they were completely changed, and the board as well. So they lost practically everybody at the leadership level. This was very challenging, and they had to quickly look for someone external. And they did. I think they found someone who is quite suitable – relevant experiences, led big companies before. And he was there helming the company for a while, but he wasn’t successful in that role. And soon, he was being replaced. And he was replaced by somebody internal. Can you imagine that?
Tim Lee [04:46]: So, this was someone who was a CFO. Very much we will think that he’s been in the finance side of things. But the truth is that he has been exposed to all kinds of businesses within Siemens. He has been groomed. So, there has been succession planning. And he fitted into the role very well because he was in all the leading businesses in Siemens and he has all the necessary connections internally. He knows a lot of people, the different business units, and he’s familiar with the culture and the other talent pool that you can tap on, and so on. He was really successful as well. Today, they have beaten GE and so on, and they’ve continued to be very profitable. But I’m sharing this because, well, just like what happens in Microsoft– if companies don’t prepare for that, it might be quite devastating for the business. So business continuity, maybe long-term sustainability, all these are in question.
Tim Lee [05:45]: So thankfully, big companies have the ability to make sure that they build a pool of talents throughout the organisation. So, even when they lost the top leadership, they could continue to service their clients, and build, and so on. But very quickly, they could also find whether externally or internally, somebody, and in this case, the example I shared is more of a person who happens to be groomed for many years within. So, if you ask me, succession planning [is] definitely very, very important.
Shaily Gupta [06:16]: Especially when you have iconic names heading the organisation – you know, you had Steve Jobs heading Apple, and when he fell ill, the whole world was talking, that would Apple be the same without him? But I guess because his prolonged illness gave him enough time to get the person into his shoe and work towards it, and that’s how Apple continued to do well. Though everyone was very worried that after Steve Jobs, would Apple be the same? Because he was iconic. He was legendary, literally, in that space. So yeah, that is how succession planning is very important. And we have enough examples of bad succession planning, sudden successor that you had to look for, or well-planned succession. And each of those incidents, how they have impacted the large corporate giants, there are enough case studies.
Grace Ann Chua [07:10]: The question in my mind, in the story that both of you shared, talked about how when they were looking for a leader to take over, they looked externally. Why do people look externally versus looking internally?
Tim Lee [07:21]: Perhaps I can contribute an answer because that relates to me as well. I was never in the social service sector. So about four years back, I had the chance to join Caregivers Alliance, which is not a large charity. We are, at that time, only 26 of us. So, we [gave] stories of big huge companies. Yeah, they can have a talent pool, succession planning. But how do you do this for a small company? And worst still – social service sector, how do you invest in that? So yeah, that was a great challenge. When there was a need to find somebody to take over, they had no choice but to look outside. So, I was brought in, and thankfully, the journey has been good. I’m still around.
Tim Lee [08:05]: Yeah, so that’s where perhaps we bring ourselves a little bit down to earth again. So Microsoft, Apple, Siemens, these are huge companies. What about in the charity sector? Yes, there are some big ones, but most of us are small. So for us, the challenge is actually very pragmatic because if we are very dependent on the leader, especially if that leader is the founder, then everything may fall apart if you don’t get a good successor. So continuity, business continuity. Or in this case, [charities] , they exist for beneficiaries. So, if this thing breaks down and you’re so dependent on the executive director or the founder, then what does that mean? The beneficiaries suffer. So, continuity is important for succession planning – making sure that no matter what happens, you lose key people or the top guy leaves, things still go on so that service don’t get disrupted.
Tim Lee [09:04]: But I think the challenge for us, even as a medium-sized charity, is that we have to think ahead as well. We’ve to think about what worked for the last seven years? What do we need to change so that we are better able to continue to be relevant for the future, to continue to meet the needs of our caregivers? Because basically, we exist for our beneficiaries. And that’s so important. So I think succession planning is truly important. I think we don’t just look at one person, because I don’t think it’s just the executive director. I think even in a small organisation, the organisation needs to think about who else [is] within the organisation, whether a manager or even not necessarily a manager, maybe an individual contributor but holding certain skills that is so crucial for that organisation. Who is this person? What are the skills that they have? So, if this person needs to go, what do we need to do so that service is not disrupted, and so on. Or if you think about the future, if this organisation is going to need to adapt to the future, what new talents must you bring in, critical roles, and maybe new managers, new leaders as well. So, I think it applies whether you are a big MNC or a small charity, I think we need to think about that.
Grace Ann Chua [10:22]: Yeah, leadership succession is important at all levels, and even for the different functions. What I hear is that you’re talking about management, the staff on the ground, the leadership team, but even at a board level, leadership succession is also important for renewal and fresh ideas coming in to continue to build the organisation and take it forward.
Shaily Gupta [10:38]: Totally. Interestingly, he said something when you asked that, why do we have to go externally?
Grace Ann Chua [10:44]: Or why do people think externally first?
Shaily Gupta [10:47]: But he answered something very interesting for me, Tim answered, that – If communities – especially in the social sector – if the whole organisation is very small, the leadership bandwidth is limited to one person leading, there is one commander and many executors because that’s the size of the organisation. In that situation, what do you do? Should you force fit somebody internally? And that is where I think many times, people may have to look externally.
Shaily Gupta [11:17]: Second, I think I wanted to bring up the three points – what do you look for in your succession, and because of which, many times, probably you get compelled to look outside – is that in your successor, the person must have a vision. As Tim was saying, it is not about managing your current role, but is there a person who can take this organisation to the next level? Does he or she have the vision to grow and adapt to the new ways of working? It’s not just about managing it operationally right now. Many times if you have grown in the same environment and culture, your ability to think outside the box and have that vision gets curtailed– sometimes, I’m not saying always. The second is what you look for is a person has a potential or a competence to deliver what is required. They have shown a consistent track record of transforming the company, consistent track record of delivering high level performance and execution, because then there is an immediate respect for the individual. And the third, and that is where probably your question, Grace, “why do we go external?”, is an acceptance of the person. If all of us have grown together in the same organisation and suddenly out of the three of us, Grace has been picked up and made the CEO of the organisation, Tim and Shaily may not be very happy to report to you.
Grace Ann Chua [12:48]: Okay. Yeah, I see that.
Shaily Gupta [12:51]: So is there an acceptance? Do we accept that Grace can be our boss tomorrow? And all these things take time and effort. Many times, due to lack of a visionary in the organisation, you will find many people with consistent competence and performance track record, [but] the lack of acceptance, you end up going outside. Even in the Microsoft example, the first choice was to look outside because nobody could fill the shoes of Steve Ballmer. But Satya Nadella was right there under their nose all this while. And look at the exemplary performance that he has delivered for Microsoft in these years.
Grace Ann Chua [13:28]: I mean, I think it’s interesting. You mentioned that point about whether your peers would be supportive of someone internally stepping up to become the next CEO or the next leader. But I was also thinking about how if it’s someone internal, who already is accepted by their peers, that will also make it so much easier because that person has a network, has established rapport, like we’ve grown up in this company together and I suppose as long as there’s support, right? It can go two ways.
Shaily Gupta [13:55]: It can. By any standard, if you were to say in my mind, if you can look at a candidate internally, nothing like it, because the person has the institutional knowledge, knows the internal processing systems, has credibility with the regulators and everything. And more often than not, it’s a big plus that is provided if we can find the person.
Tim Lee [14:17]: I feel that while we agree that succession planning is important, I think the truth is that so many things can upset the plans, whatever plans we put in place.
Shaily Gupta [14:28]: Agree.
Tim Lee [14:29]: Yeah. So whether internal or external, to me, I’m grappling with this challenge right from the first day I took on the job. So, the board was careful to point out to me one of my responsibilities was really to look around and see whether among our team, within our organisation, are there one or two who might be suitable. And I need to groom them, I need to give them opportunity. As what Grace said, the best is naturally if one of them is seen to be the leader because everybody looks up to him. That would be quite easy for me to hand over the baton to that person. That is what every leader should do. When you take on a job, you should start thinking, “What’s next? Who might be the next person?” But I think when I say that plans need to change, it’s also because things change. Over four years, in my role, I have changed my org chart so many times, because the strategy changes, new opportunities came, and so on. It’s inevitable.
Tim Lee [15:32]: So, I think as an organisation or as a leader, I think one of the most important tasks I have is to make sure I build a team. I can’t be sure one of them will be able to be accepted as the next leader, but I also need to build a team in the sense that even if something happened and the top guy needs to go, and we have no choice but to look for someone outside, well, as I said just now, if the leadership team is properly developed and processes are in place, and so on, then we don’t suffer any consequence because of the lack of a successor right at the top. Things still function, because the bench strength is strong – the next level, they know their job. While they may not be the top leader, but they have enough experience and ability to mobilise everybody else, so that the next person coming in will still have every opportunity to succeed. And in fact that leads to the next point. Succession planning is also about how you prepare your organisation to help the next person to succeed.
Shaily Gupta [16:34]: Yeah, totally.
Grace Ann Chua [16:37]: Before we close the episode, a question for our listeners: what would be one reason you would like to give our listeners on why they should start thinking about leadership succession for their organisation or their communities right now?
Shaily Gupta [16:49]: The one big reason I see is the continuity of the service. Business continuity – especially I think COVID has kind of taught us how fragile the world is, how fragile we are. Currently, Russia-Ukraine war, everything kind of tells us how uncertain the world is. Leadership bench strength is extremely critical, succession planning is extremely critical to overcome any such uncertainty that you may face in the future for business continuity, I feel.
Tim Lee [17:17]: So for me, I felt that even if you are part of a small organisation, it is for you, whether you’re the leader or part of the leadership team or maybe a board member, to think innovatively and creatively about what’s going to happen next, in the next couple of years. And if you have clarity about that future organisation or state, then you have to think about the present leadership team, whether there might be a gap. What do you need to do to change the org structure, bring in more talents in a particular area, and even consider that maybe there comes a point whether the ED may not be the best person to carry the organisation forward to the next place?
Tim Lee [18:04]: So I think even for smaller organisations, we should be motivated to think ahead, because I think what we do is really meaningful, in [the] social service sector. So we should continuously think about how can we improve? What needs are we not meeting? And what do we need to do in terms of doing things differently? And if that’s the case, what kind of people do we need? And be prepared to say, “Ah, let’s invest in that.” “I’m thankful for my board, I think they are supportive.” So, we have managed to do some changes with a hope that we bring in more people who are having all those diverse skill sets that together as a team, make us better able to look ahead and plan for the future. But not just plan for the future, but to also adapt.
Tim Lee [18:47]: Things can be pretty disruptive, even though we have a set of plans. I think the idea here is that bring together a team, who can learn together, adapt together and work together well, so that whatever comes their way, they are able to manage. And if they believe that what they do is important for their organisation, then it doesn’t matter. If for some reason, one of their leaders need to go, they’ll just continue because they believe in what is the mission of the organisation and they have been working long enough with one another to have that trust relationship. And let’s say it’s a top leader, for example. I’m sure they will give their support to help that new leader succeed. So, it’s not about finding the next person, it’s really about helping the whole organisation have that culture of being very open, wanting to focus on the mission of the organisation. Everybody pulled together to help the organisation succeed.
Grace Ann Chua [19:40]: Thanks, Tim and Shaily, for joining us for this episode. Join us for the next episode, where we’ll be diving deeper into how you can start planning for leadership succession in your organisation.
Shaily Gupta [19:51]: Looking forward.
Tim Lee [19:52]: Thank you, Grace.
Grace Ann Chua [19:55]: We’ve got much more to share about community leadership, and we’ll be continuing this conversation in the next episode. So tune in as we talk about the hows and whens of leadership succession.
