TEI Roundtable No. 44: Leadership Development and Succession Planning
One critical factor is finding high-potential candidates on the team

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As we’ve learned from the fabulous TV series Succession, leadership development and succession planning can often get a little, shall we say, dicey. Fortunately, in the tax realm, it doesn’t get quite as chaotic as in the Roy family. To find out more about best practices in our profession, we convened a roundtable with these participants: Teri Wielenga, former TEI international president and vice president, global head of tax policy, at Gilead Sciences; Rich Wireman, vice president, tax, at Principal Financial Group; and Tony Santiago, president of TaxSearch, TaxTalent, and TaxForce, three entities supporting the tax profession. Tax Executive’s senior editor, Michael Levin-Epstein, moderated the discussion in June.

Michael Levin-Epstein: We’re going to be covering leadership development and succession planning today. I’d like to begin by asking each of you what you think are the essential elements of developing a world-class leadership development program.

Teri Wielenga: One essential element is that you have to make time for it. You have to prioritize it. It doesn’t just magically happen. You have to have a plan. I think succession planning sits in the center of that plan. As you think about succession planning, you’re looking at people within your organization at all levels. But, ultimately, the goal, what you’re trying to do with people, is to develop them as future leaders. An essential ingredient in a leadership development program is to have high-potential people on the team, which is based on good recruiting, good training, good planning, thinking about what roles you have in your department and what type of person you want filling those roles, evaluating the group as a whole. You need to identify where there are gaps so that you bring in a wide variety of people and then grow them into those future leaders. There are many ways to develop leaders. I don’t know that we want to get into all the nitty-gritty things that go into leadership development, but I do think one of the most essential elements, in my opinion, is prioritizing it and making time.

Rich Wireman: I think it starts with an expectation from day one, when you have an employee join your team—whether it’s an entry- or experienced-level [person]—they need to be willing to invest in themselves. Ultimately, if they’re not looking out for their own self-development, we can’t help. So, most of the responsibility falls with them, and then it’s up to us to observe, find opportunities to develop them, and prepare them for future roles. We speak with every individual, no matter what level, about their being ready to step into the next-level position at any point in time. Industry positions are not generally known, considering the longevity of someone in their role, as to when there will be an opening for our staff to advance. Therefore, there is an expectation that they start those more advanced functions, and then after the fact, when an opportunity presents itself, they’ll be ready to step in and smoothly transition into that next level. We describe this as making the position [above] you, your leader’s or other team leaders’, as easy as possible by taking their work away from them over time. Basically, just taking the lead to do their job for them, with an expectation that the leader is doing the same for their own leader. I think it’s really providing an autonomy in each position to allow them to apply and build or grow their judgment skills as they grow their technical skills over an advancing career. We also acknowledge one must grow every year in order to maintain the skills necessary to remain in their current position, so to advance one must do even more.

Tony Santiago: We sit down annually with our clients and have a strategic meeting with them on their staff. During that meeting, we audit their internal team and where their needs are three levels deep from the top. So, second reports, third reports. We’re looking for what the specific needs will be, either based upon people retiring, people we think will be wanting more than we can offer them in essence, they have outgrown us and [are] therefore potentially high-risk, [and,] lastly, those underperforming. We also make sure that our clients plan to spend time with those they view as potential succession candidates to talk about what they want to do in their careers. In other words, stop for a minute. Don’t try to sell them on the next role; try to understand them personally and professionally and know their goals. What are their needs and wants? We might have a candidate that isn’t viable for a succession-planning role, but you won’t know that because you don’t know them. They call people like us up because they think they will be asked to take a job they don’t want. Believe it or not, that happens a lot. So, align the understanding with the internal team and target where your roles are, and target what opportunities you want and need to focus on. It’s eighty–twenty. Twenty percent of the roles are critical. Those are where you need to focus, and you need that succession planning in place. We usually get involved at levels one, two, and three. At those levels, it’s usually the EQ [emotional intelligence] skill sets that we’re dealing with, that is, judgment. As Rich mentioned, business acumen, communication, or strategic thinking. I just got off the phone with a CFO, and he hit me over the head with a two-by-four: “Do not bring me anyone who makes things more complex. They must make them simpler, or my board will go crazy.” We see the same things over and over again. When I’m interviewing a candidate—and you know when you have people that go down the rabbit hole, can’t stay on target, and go off on tangents—the earlier you can develop them out of those habits, the better, because it’s like cement the longer it sets in. It’s very difficult to do it at year ten-plus. It’s challenging. Ours is a very structured approach with our clients. We look at it on an annual basis. We map it out. We know who we’re looking for; we’re thinking maybe we need to do an external search, maybe we don’t—we hope we don’t; we want to develop from within. What if we can’t get them there? We also set time frames. How long will we give this person to be able to develop to that level? We put structure to all of it, and I usually find that that’s what’s lacking with my tax functions that we aren’t working with.

Wireman: I think to Tony’s point, those touch bases are very important; immediate feedback as well as periodic feedback is extremely important. Yes, we also have to provide an environment where it’s safe to fail, but we need to fail fast. Then, it’s really their character—how they address that failure and what they do to move forward—that becomes very important over time.

Santiago: Yep. Absolutely.

Wielenga: I really liked what you said, too, Rich, about when you think about leadership. Obviously, development is important. When you have a whole team of people and you’re thinking about development, it needs to be a two-way street. The employee has to really drive it; the company has to support it. I think it is always a two-way conversation. And I think a lot of people sit back and think, “Well, I’m not being developed.” They need to take that action to help develop the development plan, and then share it—both parties have a responsibility in it.

Wireman: I start out with our interns when they first join us, and this leads to a lot of the interns being hired. They are reminded right away that you’re in the education mode right now, but you must be a lifetime learner. You must be willing to invest in yourself, recreate yourself over your career; otherwise, you will not be successful.


Levin-Epstein: Let’s look at things from an expectations point of view. They’re two kinds of related questions here. One of them is, Do you think that your bosses have an expectation that you’re going to be very proactive in your leadership development and succession planning, that you have a direct responsibility to do that? Second, is there ever a situation where you feel that someone who is coming to you and wants to be developed and wants to be considered in the succession planning is being too ambitious?

Wireman: I’ll jump in, because I’d like to say that almost sixteen years ago, my predecessor was asked by the CFO of my organization, “Do you have a successor in mind for you?” as she was approaching retirement, and she said no. He said, “Well, I’ll find one.” I was very fortunate that he found me. From that standpoint, with that understanding, when I started my position some fifteen years ago, from day one my goal was to not have a CFO ask me if I had a successor. I started as soon as I entered my position, working with people to help them to eventually replace me. I’ve ended up with two internally—one moved out of the department—but ultimately those two are going through the interview process right now. I have four interviews next month for my successor. One of the two internal candidates is currently in my department and the one formerly in my department, who transferred into our capital markets, or our M&A group, then became a CFO in our Hong Kong office. We have two outside candidates, one of which was a former employee of our department interested in coming back. Emphasis should start on day one on finding potential successors, and over time you evaluate their skills, and you have frank conversations with them to your point of whether or not they have the skill sets. I think people can learn over time, and you shouldn’t eliminate opportunities too soon, because there’s a time when it’s right for people to learn and to understand. Everyone develops at their own pace and falls into themselves whether [with] their technical skills, comfort level, leadership style, etc. I am not trying to develop another Rich, as my replacement should do it their own way with the synergy of the team around them to complement their skills. Therefore, over time making a commitment to every individual on your team to help them reach their full potential is where it’s very important for us to focus. This requires having an individual relationship, knowing each individual and helping them to reach their own full potential. Not everybody is going to have the potential to be the leader and/or successor, but you can find them over time and you can help everybody else know that you’re doing everything you can to help them to achieve the best that they can.

Wielenga: Just so I’m clear on the question, I think you said, “Do our bosses expect us to lead our own leadership development?” Is that essentially what you were asking?

Levin-Epstein: Yes.

Wielenga: I would say absolutely yes. We expect everybody in the company to do that. We put a lot of focus on development plans for people, and we do have a structured program where development planning conversations are supposed to be occurring between all employees and their supervisors. But it is very much expected that the employee take the lead. How can the company support development if they don’t know what the employee wants to do? I have worked at this particular company now for a little over six years, and I have just been amazed at how much support I’ve gotten on my leadership and career development, even in the situation of approaching my retirement. They have continued to support my development in helping me really to look at “what do you want to do after you retire?” There’s always that question, Is retirement really retirement, or are you going to do some things after that? The company really encouraged me to do some board readiness training. I took several board readiness training courses. Very interesting. I’ll be retiring from this company sometime in the next six to nine months, and I’m now thinking about what I’m going to do beyond that. Much of that came from the developmental discussions that have gone on in this environment. It’s structured so that it occurs, but when it occurs, you never know where the conversation might lead you. I think development discussions are a place and a space where you can be very creative with what you want to do going forward.

Santiago: Michael, to your first question, things have changed dramatically. CFOs, fifteen years ago, did not ever want to ask, “What do you want to do to upgrade on the new hire?” Whether the person left or was terminated, very rarely was talent acquisition ever discussed—at all—from the CFO level. Now it’s every single time, and I think it’s across the board because of the boomer generation. We all know we’ll have a lot of knowledge transfer going out the door. We have to address it. So, the CFOs and HR are all over it. When I ask heads of tax what they think leadership thinks of their team, usually they don’t have a straightforward answer. So, they might be developing succession planning people internally, as Rich did. Rich might have done an excellent job getting feedback from the financial leaders on whether they view these people that way. But I think that’s an area I would highlight and encourage more current chief tax officers to follow up on so they don’t get surprised when their internal people are not picked. It should not be a surprise, and it is too many times. I think that’s on us in tax to help get that information and bring it back. Without it, you don’t know how to develop your people. I had one young lady and she said, “Mea culpa, I feel terrible. I left the company not long ago, and neither of the people I put up as my succession planning candidates got it. In hindsight, I looked at it. I made a mistake. I didn’t promote them enough, partially because I tried to promote two simultaneously. I should have picked one of them who I thought was right and focused my efforts there. I will tell everybody that from now on.” I said, “Well, it’s a personal judgment, but I can understand why you feel bad now that you didn’t hone in on one.” I encourage my clients to have one primary succession planning candidate and not try to convince management that they have two that are equal. It’s a hard argument to make. As a leader, you have to decide who is the primary. You should bring that primary person to them. Other people differ from me on that, but I’ve seen that work quite well. Regarding your second question, can tax professionals be too aggressive in getting themselves promoted? Michael, was that your question on that second point?

Levin-Epstein: Yes, it was.

Santiago: As to that, no. I want them to be as aggressive as they want to be. I want to hear it, because then I can tone them down. They might be unrealistic; that’s not uncommon. But if I don’t hear it, and they go around thinking it but don’t communicate it, they could make crazy decisions later on. They take a job and are in way over their head; they fail those types of things. So yes, there are those people that will do that. I don’t think you should discourage it. You should listen to them and then walk them off the ledge if they’re trying to be too aggressive in the acceleration of their careers.

Internal vs. External Candidates 

Levin-Epstein: At what stage is the decision made to go outside and not pursue further internal candidates? Do you always exhaust the internal possibilities first, or do you sometimes look at both inside and outside candidates at the same time?

Santiago: Rich, you got that? [laughter]

Wireman: Yeah, let me jump in, because I’m sure Tony will share his thoughts and Teri as well. I’m going through that right now. I’m six months and a day away from retiring. When I talked to my boss about “we need to find somebody so we can have a little bit of overlap, and here’s my two internal candidates,” he said, “Rich, your job is far too important for us to not go outside.” Being an SEC registrant company, obviously, the board is requiring that we look outside to validate whether the internal candidate is the best to fill the role. Part of my success, if you will, may be the selection of my internal candidates, but we’re having some outside candidates for comparison being evaluated, too. All candidates have an equal opportunity as we enter the first-round interviews. Hopefully, I’m not going to be biased, which may be somewhat difficult. Nonetheless, I think that it’s very important that one be prepared. I’m trying to avoid me not having been successful in building a replacement, assuming an outside candidate is found to be better. It’s important for a public company to make sure that they’re bringing the best person or best candidate in to fill an important role. Although in tax, we don’t necessarily crave the limelight nor get it, all taxes represent a very important impact on the financial statements and the amount of tax that an organization pays. This elevates the importance of getting the right person.

Wielenga: To add on a little bit to what Rich said there, I think there’s always that push-pull: Are you going to do internal or external? I always have bias for internal, if you have good people. We work hard to bring our people in and develop them and work with them, and it feels disappointing when the internal candidate doesn’t succeed. In my situation, we did something a little different here, because I knew that my retirement was coming up. A few years ago, we had a CFO change, and so at that time the new CFO and I sat down to discuss succession planning. And I said, “Yes, we have a candidate here. I have somebody here that I consider to be my successor who’s very, very strong, and he’s very ready. We’ve really got to think about that,” and that’s when we started to think creatively. Long story short, we put that person in the role. I thought it was important for that person to build the long-term working relationship directly with the new CFO. I took a sidestep, and we created a whole new job for me, which has been really fantastic. I’ve been getting to work on some interesting projects that I previously didn’t have time to do when I was running the team, and yet I still get to be part of the team, and I still get to be here to help and support the person who took over the top job and mentor others. I think it’s been a great model for how to do successful succession planning, because it really, for us in this particular scenario, has been a win-win. I know it doesn’t probably work in every scenario, but it’s worked very, very well here. As somebody who spent a lot of time developing the successor, it’s been really rewarding to me to get to be here and see the success of that person in the role. It’s definitely going to be a good feeling when I do retire to know that everything is in very good hands.

Wireman: I think that’s a great model for a smooth succession, too. That really is a great story.

Wielenga: It does require company commitment, because there is added cost involved, but it really has in this case worked very well.

Santiago: In my experience, you will see three basic scenarios. First, the company wants to keep the status quo. They’ve got a great internal candidate, and there’s no reason to go external. I’ve had to argue with clients and say, “Why would you want to go external? You’re not looking to change the situation. The company hasn’t gone to hyper-growth internationally, and this person isn’t technically a fit; there isn’t a new CFO who wants a different personality or culture change. So there’s no reason to.” That’s the first one: you’re going to go internal and stay status quo.

Second, the candidates are external only. This can happen for multiple reasons. The person could have failed at their job. They could have actually done damage. We came and cleaned up a major material weakness, and the succession planner was going to be the tax ops leader. Well, that’s not going to work; that game’s over. We’ve got to go in a completely different direction. It could be because of a new CFO; they want to bring somebody they know and like and want to integrate in. It could be because the tax department needs to shift in direction; they’re going to go extremely more aggressive and acquisitive, and they’re going to have to grow that way, not organically, and they need more technical skill sets in that area. There could be many reasons, but if it’s external, there are no viable internal candidates. We pound them on that because there’s no reason to do a search if there is somebody. I agree—if all things are equal, you should stay internal.

The third one is a little more difficult. It can be like Rich ran into—there are pressures from the board to see comparative candidates. Sometimes we do that; it’s called “talent mapping.” It’s not a full search, but we give them a slate of comparables to put them at ease that they’ve got some decent people. Other times, the internal candidates are low probabilities. They haven’t gained the internal leadership’s confidence, and they want to go external, but they want to integrate. So you got an A-B on this one. This is where they’ll integrate internal candidates. Sometimes they will not be a fit, but they want to do damage control. Trust me; I’ve been asked to integrate internal candidates that were never going to be hired, but you got to do damage control and see how they’re going to handle it. Other times, there’s a serious contender. So there’s an A-B on the third one. They’re seriously considered, but they want to have some evaluations. They’re not happy with just doing talent mapping. They want to do a full search, and you take them through it. One of those [three] scenarios is always what they fall into. So, that’s your blueprint. You just got to figure out where the C-suite and HR are coming from. Once you do, you can put your game plan in place.

Levin-Epstein: We have time for one more quick question. If you were deciding between two candidates who were very equal, except that one was a better leader and the other had more substantive knowledge in tax, which one would you choose?

Wielenga: And this is for the top job?

Levin-Epstein: Yeah.

Wielenga: I would go with the leadership skill.

Wireman: I would as well.

Santiago: Unanimous.

Levin-Epstein: OK, that’s a good way to end it. Thank you very much.

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