Victor Magdaraog, VP of Development Dimensions InternationalHow does a company survive beyond its current leadership?

By managing succession, organizations address business risks as the tasks of strategy formulation and execution smoothly transition to new leaders, grounded in company culture and equally respected by peers and subordinates.

Speaking at a lunch hosted by the Institute of Corporate Directors (ICD) on June 22, Victor Magdaraog, vice president of Development Dimensions International (DDI), said the goal of succession planning is to have “ready-now” leaders for the future. In a 2014 survey, only 15% of organizations said they had people who could take over the top leadership position “now” or immediately. This was lower than the 18% of respondents that had ready-now leaders in 2011.

The same survey showed that although 66% had programs for high-potential employees, 74% of this group also said such programs were “not very effective.” Asked if critical positions could be filled immediately, only 46% said yes worldwide, 48% in the Philippines and 45% in ASEAN.

Magdaraog, who has operational responsibility for the ASEAN and Korea markets for DDI, cited the case of GE, which always has at any one time four to five chief operating officers.

Although not all of them will become chief executive officer, even those who leave also become successful, “which therefore shows that they really were good candidates in the first place.”

To find the right leaders, organizations must first define their desired outcome so that the skills and personal attributes of candidates may be assessed objectively. DDI offers an assessment program that helps identify strengths and areas for improvement of potential top leaders given a particular business context.

“You must be aware that succession does not mean choosing just one. You are actually choosing a senior management team, and the expectation is the team will support whoever is promoted to the top,” Magdaraog said.

He encourages corporations to include talent review in their regular business or operations review cycles.

“Good talent is a competitive advantage in any organization. It is best to grow leaders from within. You can mentor them, train them.”

He cited a 2012 Wharton study that found: “External hires get significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs. They also have higher exit rates, and they are paid substantially more. About 18% to 20% more.”

Magdaraog said it is current management’s duty to identify and make available “ready-now” leaders to ensure organizational sustainability. “Mousetraps don’t grow leaders. Leaders grow leaders.”

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