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Published on April 23, 2008

Josh Goh

Special to the Nation

When the possibility of expecting a male heir from Japan's Crown Prince Naruhito and Princess Masako had diminished, there was serious deliberation in the Japanese palace  about whether female members of the royal family should be allowed to ascend to the Chrysanthemum Throne - something that has not happened since the 1700's.

A male heir was finally born to Prince Akishino and Princess Kiko in 2006, and the Imperial family now has its succession plan for the next two generations.

Unfortunately, the same cannot be said for the corporate world. In the most recent Forbes' Chief Executive Network Survey, nearly 56 per cent of C-level respondents said their companies do not have a formalised succession plan in place.

The myth most managements hold about succession planning is that the company does not need a succession plan now, even though unplanned leadership changes can happen unannounced.

The thing about succession planning, like all crisis management planning, is that you never know when you will need to put your plans into action.

 Jack Welch, ex-chairman and chief executive of General Electric,

is a strong advocate of succession planning. In 1991, nine years before his retirement, he made it known that choosing a successor would be the most important decision he had to make.

For example, the sudden demise of a current leader or forced resignation of a senior executive can disturb the equilibrium within the organisation.

If the previous leader has been the face of the organisation and strongly associated with the brand, it could affect morale and even shake investors' confidence.

These are issues the top management needs to address during a time of uncertainty when there is a leadership transition.

The development and training of a successor requires time and resources.

It is important for the incumbent executive or even the board of

directors to determine the skills and capabilities that the new leader

would require in order to face

the challenges in the next five to ten years.

The process takes about two to four years: from identifying the prime candidate to the day the candidate assumes the leadership role.

During this time, the successor is trained in the different functions within the organisation and given maximum exposure.

In today's talent crunch, a sound and effective succession plan strengthens brands.

The fact that an organisation is willing to identify, develop and invest in potential leaders sends a very strong message that the organisation values human capital.

Whether the institution is a royal family, multinational or small business, it is important to have a structured succession plan to ensure the continuity of the empire.  

Josh Goh is corporate services manager at GSI Executive Search.