Succession planning within Legal and Compliance functions has become a more prominent subject in recent years – not just for lawyers themselves, but also for Chairpersons, CEOs, CFO and HR Directors. The General Counsel, as well as more senior Chief Compliance Officers and Chief Legal Officers, play an increasingly important role within an organisation, placing major focus on its response to regulatory changes, corporate strategy, governance, and stakeholder management. Therefore, the consistent placement of strong and effective talent in these roles is not just “good housekeeping”, but a crucial part of corporate talent retention, and potentially management of risk in a business.
The search for talent: internal or external?
From our experience, we have noted that approximately half of all General Counsel appointments in Europe make it onto the open market, which means that headhunters or internal talent acquisition teams are approaching potential candidates from outside of the hiring organisation. The other half of vacancies tend to be filled through an internal candidate, for example, a CEO hires someone from his or her network. This method of internal succession planning can be very effective as it can help with the progression of junior lawyers already employed by the business, as well as have a further positive effect on junior staff retention, allowing them to visualise a clear career path within the firm.
However, the risk for any organisation is that internal succession planning becomes an automated process without reviewing whether the homegrown talent possesses the necessary experience and personal attributes to be the next General Counsel or not. In our practice, we have seen occasions where the “heir apparent” has served their way up within the function and proven themselves effective within the current business model, however, their grown skillset may not offer the different experience required to support their business growing in size or offering.
The candidate must have the necessary technical skillset to face challenges, for instance, possessing the wider skills to partake and lead transformational M&A activities, major compliance issues and investigations, hostile take-overs, or life-threatening litigation. Leadership, combined with technical experience is key and sometimes this can be best found in seasoned external talent.
Benchmarking for success
Whilst we accept that sometimes succession is not about change, a simple benchmarking exercise to look at potential internal successors versus outside talent would reassure the Executive Team that they have the right person for the job.
Furthermore, in addition to identifying development areas which then could be addressed, benchmarking provides the internal successor with a clear sign of support from the Executive Team, or that the business needs to acquire outside talent.
Adamson & Partners has a demonstrable track record of not only assessing internal candidates but also recently has conducted a review of the Next Generation of in-house lawyers (the level just below current General Counsels) in some of the larger European companies. It will be interesting to observe which persons in this group will successfully progress to the next generation of senior roles, as their succession can be heavily dependent on internal encouragement and support, as well as their employer’s needs continuing to align with their development.
Whichever route a business may take to find successors to their senior roles, proper assessment of different candidates, as well as current and future business needs is paramount to “getting it right”. Although possible to rectify later, the time and cost implications of having to repeat the hiring process can take away from what could be a seamless transition from leader to leader.
If you are looking to develop your business, we would be delighted to assist. Whether you are looking for your next career opportunity, help expanding your team, or assistance with mergers and acquisitions, contact us today for a confidential discussion.
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