How we are finding our future leaders: it is common in organizations for leadership skills not to be recognized. Here is how one company is sidestepping that trap by building a cutting-edge succession process.

• Author: Zwell, Michael
• Position: SUCCESSION PLANNING

SUCCESSION PLANNING is one of the most important responsibilities of boards, yet it is often one of the most problematic. Few organizations have an abundance of strong leaders or leaders in development--even fewer have a planning process in place to assess, identify, and develop future leaders.

Given that reality, succession planning is not a "nice to have." From a board perspective, succession planning lies at the very heart of a board's obligation to shareholders to sustain the organization over the long term. Accordingly, the planning required to identify and develop leaders is a critical component of any enterprise risk management strategy. The boards of every public company, large and small, must increase their focus and resources on this critical human resources issue.

The risk is heightened by the pending retirement of baby boomers, past organizational flattening, and the increased competition faced by organizations of all sizes. The problem is particularly evident in organizations that rely on technical expertise for their competitive advantage, such as technology, engineering, and finance-oriented firms.

This article shows how a technically oriented public insurance company, MI Corp., successfully enhanced its succession and leadership development process to identify its next generation of leaders earlier and tailor growth and development plans to their specific, individual strengths and weaknesses.

About RLI

NYSE-traded RLI, founded in the 1960s, operates nationwide and mainly offers surety bonds and specialty property/casualty coverage for niche markets, focusing on risks that are difficult to place in the standard market. RLI has been built on the idea that its success is based on hiring outstanding underwriters and rewarding them for successfully underwriting complex risks. The company operates through autonomous business units focusing on highly specialized markets that require technical knowledge to run profitably.

Executives traditionally have been rewarded for technical expertise, not leadership expertise. This strategic approach has helped make RLI one of the most consistently profitable insurance companies. Given how tightly focused the company is, however, it is critical to ensure appropriate successors are identified, developed, and prepared to continue to build on their past success.

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The LEAD program

To accomplish this, RLI developed and implemented a strategic imperative embraced by both management and the board. The program is called LEAD: Leadership Evaluation And Development. LEAD primarily addresses the assessment and development of the people directly reporting to the executives at the vice president level and above, including the C-level executive leadership. For the purposes of this article, we call these direct reports "participants," of whom there are over 100, about 10% of the workforce.

The program was designed to accomplish several objectives:

* Communicate to current leaders and participants the importance of leadership development.

* Provide a means to evaluate and measure leadership capability, potential, and readiness that includes both objective and subjective aspects.

* Provide feedback to participants.

* Develop a robust succession plan, identifying successors and succession gaps and including plans to develop training and...