A few weeks ago, we distributed our Succession Readiness Assessment to pool executives.
This survey — the first engagement of the year in our ongoing residency — was designed to help each top pool executive self-assess their pool’s readiness for their own planned or unplanned departures. Respondents were asked to (a) tell us about their existing succession plans, (b) share their expectations for the future, and (c) report on their staff team’s preparedness to take on executive duties across core pool functions.
The responses we’ve gotten so far have shed valuable light on pools’ readiness for executive succession. Here are some selected insights that might help you consider how prepared your own pool is for such a transition:
- Only a third of pools anticipating executive succession within two years have a succession plan in place (35 percent). Pools expecting transition within two to five years or not expecting transition soon are somewhat more likely to have plans (58 and 47 percent, respectively).
Troublingly, this suggests that a number of pools may be facing impending executive succession without a clear roadmap to navigate the transition.
- Even though it’s important to assign someone to develop/maintain your pool’s succession plan, many pools have no such designee.
- Among pools expecting no or minimal disruption upon executive-level transition, more than 30 percent have no designee.
- One third of pools expecting transition within two to five years have no designee.
- Even worse: Half of pools expecting transition within the next two years have no designee.
This could be a problem — if you dust off your pool’s succession plan only when it’s needed, you might find it’s out of date. Succession plans require ongoing consideration of changing pool circumstances, relationships and vulnerabilities so as to help pools weather leadership transitions at any time. Engaging with the offerings in this residency could help you identify a designee to take on this crucial task.
- Pools tend to be somewhat unprepared to hand off particular executive-level duties. Staff teams are least prepared to take on executive-level duties relating to these core pool functions:
- Political and regulatory relationships
- Business development or growth
- Underwriting strategy
- Pool strategy
- Reinsurance structure, relationships and placement
- Strategic financial oversight
- Even pools with existing succession plans still have some gaps in expected knowledge transfer from the current executive. Pools with a succession plan in place report no significant improvement in staff preparedness for:
- Regulatory compliance
- Understanding of underlying public entity member issues and needs
- Political and regulatory relationships
- Member relations
- Marketing and communications
- Claims strategy
- Understanding of lines of coverage offered
- Some pools are relying on executive search firms to find new executives. However, though AGRiP maintains a list of executive search firms, an executive search firm doesn’t stand in for a succession plan. Succession planning is about more than identifying a successor — it’s about transferring knowledge from one leader to another without a hitch.
Here’s what this means for your pool: Regardless of your perceived level of preparedness, you may have succession planning gaps that could create unexpected problems — especially if your executive leaves sooner than anticipated.
Our 2021 residency can help your pool prepare for executive transition. In April, we’re distributing the Big Picture Project, a tool that will help executives articulate their strategic visions for their pools to their staff teams and governing bodies. Making sure everyone in your pool understands your big picture vision is key to a smooth executive transition, whenever it happens.
You can also visit our website for more resources — e.g., webinars, publications — that can help drive conversations within your pool about succession planning. You’ll also find a summary of other residency engagements you can expect this year.
And, if you are a pool executive and haven’t done so yet, take the Succession Readiness Assessment. (It takes the average respondent only ten minutes to complete.) Not only will it help you reflect on your pool’s readiness, but it will also help us get a better understanding of the overall needs of the pooling community on this issue.
March 30, 2021 Pooling Perspective - Steve Keller is AGRiP’s incoming director of programs.