Review of the demographics of general counsel within the Fortune 500 foreshadows the transition that approximately 25 percent of these companies are facing in the next few years and indicates a compelling mandate for a strategic approach to the inevitable.

Succession strategies that provide smooth transitions in key leadership roles are an essential aspect of a company’s risk management profile. For the general counsel role, which carries with it the mandate for holistic risk management across an enterprise, succession planning should be a high priority. How companies address mitigating gaps in key leadership roles, and retain and develop talent, impacts investor confidence and may impact rating agency evaluations and even regulatory harmony.

In a recent benchmarking survey conducted by the Conference Board, 44 percent of companies reported that developing top talent to support their organizational goals was the greatest challenge they would face in the next 12 months.

Most organizations today still approach succession in the GC role in a less than strategic manner. In many cases, it has been ad hoc and “as needed” replacement planning. In other cases, it has been more granular, focused on developing particular individuals, or hiring “ready now” candidates for potential future roles (a challenge in itself). However, none of these approaches mitigate the organizational impact of a key gap resulting from the absence of planning. Such impact includes loss of “blocked” talent, or selection based on past track record. This does not necessarily foretell capability for handling the company’s goals and challenges ahead as a leader.

The approach

Recognizing why GC succession planning is so critical leads us to the question of how to proceed, particularly for companies without a systemic organizational approach, which may be far behind processes employing the scientifically validated tools available today. A true succession process goes beyond the identification of a replacement. It extends across and into the fabric of the organization to identify those leaders who are judged to be ready, ready soon or have high potential that can be developed for future leadership roles.

“Best-in-class” succession management will not be uniform from company to company. The variations in business size, geographic scale, future goals of the company, and the size of the legal function all affect the process. Companies that lack internal resources to maintain such processes can rely on consultants for the process and the assessment. However, the overarching mandate is to look beyond the “ready” talent and delve into the roles and levels below, planning for the future. Approaching the “ready now,” “ready soon” and “those to watch” with different action plans is a hallmark of an effective succession program. Another tenet of an effective program is “buy-in”—the investment of key stakeholders—to ensure succession data is fresh, updated and relevant.

Building the framework

While approaches and tools may vary, a succession framework requires certain questions be asked in order to set the plan in motion. Firstly, the framework requires alignment on the need for such plans and programs, which means agreement that the GC is a key leader.

Secondly, there must be agreement about the company’s goals, as well as the cultural core values that govern how to attain those goals. Such accord will help define which characteristics and traits are essential for success in the GC role in that particular company.

Thirdly, a useful succession framework includes a process to identify an internal pipeline or “bench” of talent. The identification will require assessment of “ready now,” “ready soon” and “high-potential” talent, their strengths and weaknesses as leaders, as well as any substantive gaps in practical experience. Development plans should then be created to shore up the skills and characteristics needed for the GC role in the particular company.