Open Sesame – Alibaba and the secrets of succession planning

Alibaba co-founder Jack Ma provides a role model for entrepreneurs managing their own exit, says employment lawyer Sarah Taylor

Jack Ma, co-founder of Alibaba, the world’s largest e-commerce platform, recently announced that he will be stepping down as executive chairman next year. Ma will now oversee what is expected to be a smooth and successful leadership transition to current CEO Daniel Zhang, the result of focused succession planning.

Ma identified 10 years ago that Alibaba needed a sustainable plan that did not rely solely on its founders, and that the business needed to develop a culture of consistent talent development.

Unlike Alibaba, many organisations shy aware from succession planning. It often involves awkward conversations about the departure of key members of staff and difficult decisions about who demonstrates the skills and competencies needed to step into their shoes. Such conversations are also avoided for fear of offending. However, effective succession planning can have a positive impact on an organisation’s culture, retention and motivation, and can be essential in ensuring a sustainable future for the business after the departure of a key personality.

Lessons learnt from ‘Teacher Ma’

Ma was an English teacher before co-founding Alibaba. He identifies parallels with his former career as a teacher; taking pride in encouraging a new generation of talent to exceed him and take over leadership roles.

Clearly, those identified as potential future leaders are likely to feel valued by the business and be encouraged to remain; however, inevitably, succession planning will identify those who do not meet the necessary requirements of future leadership. Conversations with this latter group need to be handled carefully to avoid them feeling demotivated and disengaged. Businesses that have regular and effective appraisals and career development programmes are best placed to manage those individuals not selected for the leadership pipeline, but for whom other opportunities exist. An open dialogue can equip managers with the information necessary to motivate, develop and retain individuals not selected for future leadership. Through regular assessment and feedback, such individuals will have a good understanding of the organisation’s plans for the future and how their skills and competencies fit within these. Regular and open conversations with their line manager will also identify what motivates such individuals and in which direction they want their careers to develop.

Successfully managing people out

Once a pool of future talent is identified, care should be taken in developing these individuals to prepare them for the challenges ahead. Employers should push individuals to undertake work that stretches them beyond their existing roles, perhaps by having them take on a senior role on an “acting” basis to cover temporary absence. Effective supervisory and mentoring schemes will provide the necessary support and also identify where an individual is possibly being stretched too far. Capable managers should be alert to signs of stress and take prompt and appropriate action if necessary.

Having regular appraisals and feedback, and an open dialogue between employees and their line manager, will also identify those individuals for whom there is no future in the business as it moves forward. Consider if there is a genuine redundancy situation in respect of the individual’s role, or is it simply the individual is no longer the right fit for the business? Perhaps the requirements of the role changed as the business has grown and developed? Even if the role is genuinely no longer required, if they are eligible to pursue an unfair dismissal claim, employers must still follow a fair process and consult with individuals about ways to avoid their redundancy, including alternative employment elsewhere in the organisation.

Succession planning does not happen overnight

As Alibaba has demonstrated, successful succession planning takes place over a number of years, with a focus on developing a culture of consistent talent development. A business should continuously evaluate its talent pool against the changing needs of the business, and adapt succession plans accordingly. An effective succession plan should be evolving and under constant review, and applied to every stage of the employee lifecycle: from initial recruitment, the on-boarding process, training and career development, performance management, workforce planning, to exit.

Sarah Taylor is an employment lawyer with law firm Stevens & Bolton