The horse race is one of the oldest sports in the world. It has been practiced in civilisations worldwide for centuries. Although it is not used as widely as today, it has become a popular form of entertainment. Some believe it is a great way to establish a culture of leadership development. While a horse race may not be a good choice for every company, many companies use it to determine the next senior executive.
Generally speaking, a successful company has a succession culture in place. This allows high achievers to develop the skills and capabilities needed to take on more challenging roles in the future. Successful organizations cultivate a competition between internal and external candidates for the top job. They also adopt a number of other practices to prepare these individuals to take on more demanding roles.
In a classic succession “horse race,” two or three senior executives are pitted against each other. In this scenario, the winner becomes the next chief executive officer. But this approach has been criticized for several reasons. First, some directors are uncomfortable with the notion of a race that can last for years. Second, a protracted race could detract from business momentum. Third, choosing a winner could leave other senior executives in the rearview mirror.
However, a horse race can provide a range of benefits for an organization. For example, it signals to employees that they are responsible for the performance of the company. Also, a horse race can be a stimulant for those who are interested in betting. Another benefit is that it can help establish an organizational culture of leadership development.
In this sense, the horse race is a metaphor for a more complex and meaningful process. Developing a succession culture involves aligning the skill set of the next senior executive with the vision of the company. Throughout the process, the board should assess the organizational structure and leadership potential of the next senior executive. If the board decides that the next executive is the best choice, they should take steps to ensure that there are no disruptions in the operation of the business.
The horse race concept has not changed much over the centuries. Despite its age, it is an important part of mythology. Even today, there are notable exceptions to the rules. Often, a company with a succession culture will produce a series of exceptional leaders, such as those who have led General Electric.
Having a competition for the top job is an overt signal that the board believes in its leadership development process. Those who win will be rewarded with a huge purse. Additionally, an overt competition for the top position is an effective motivator for other employees.
Choosing the next senior executive can be an exciting event for both the board and employees. But it’s also important to remember that the board must assess whether the winner is a fit for the organization. One of the most common concerns about a succession horse race is that a winner will take other senior level executives with him or her. To avoid this, the board should consider the organization’s culture and strategies to limit disruptions.