Published: October 14, 2019
TMI talks to Christof Nelischer, about the importance of succession planning in treasury.
CN: I firmly believe that, in general, every organisation should aim to draw on and develop its existing talent, and promote from within. All too often I see corporates hiring staff as and when they need them. My belief is that this seemingly pragmatic approach ignores the fact that while people have a specific role in an organisation, they also have a career path in their minds that they wish to follow. Developing talent from within is a less risky approach, as you are promoting people you already know and who have spent time in the organisation. Taking on new external staff always carries a natural element of risk as to how they will ultimately fit in. Formal succession planning not only helps the organisation to be prepared for future staff fluctuations and its own developments, it also heightens individual employee participation.
CN: Treasury requires a particular skill set that people either do or do not have. A treasury team in a corporate is typically small, and all too often there is real key-person risk. In treasury it takes time to acquire certain skill sets; it takes time to get to know a number of internal and external stakeholders. Careful planning and preparation take you there. In the treasury profession it is often the case that good people leave their employers for opportunities elsewhere, as and when they are ready to make the next move. I believe that it is a loss for the organisation when such people leave for that reason, and as Group Treasurer I place great emphasis on retaining and developing talent.
CN: A good starting point, in my experience, is business continuity planning. The argument for business continuity planning is intuitively accepted by most managers, making it more than a low-priority task. Indeed, I once came across a situation where the absence of the succession plan for critical roles in treasury was commented upon during an internal audit of the treasury function. Business continuity planning starts with individuals in critical roles being given the task of identifying one or more successors who could be developed to cover for them in their absence. Again, I found that this argument is usually well received.
CN: It impacts both the manager (whom I call the ‘target role’), who finds a successor, as well as the employee who is being developed to potentially cover, and/or ultimately step up to the position. Both individuals have a joint task to develop and agree upon a formal succession plan. It is then up to the incumbent manager to guide and develop the colleague into what it takes to carry out the role, and it is up to the chosen employee to endeavour to achieve that objective. I would argue in favour of involving the target role’s manager to supervise the process, and ultimately approve the conclusion of the succession plan. The duration of such a plan varies and naturally depends on the profile and skill set of the potential successor. As a guide, I have carried out a succession plan within two years, but it could take longer than that.
CN: Think of a mid-level, front-office treasury manager, who prepares to cover for, and eventually succeed, the head of the desk. That individual is likely to have all the skills relating to financial markets, but has, perhaps, always been an individual contributor and therefore lacks experience in leading a team. The succession plan can address that development need. Or, think of the head of a treasury desk, preparing to become assistant treasurer, but finding that he or she lacks experience in capital management. Again, this is another development point that the succession plan could address.
CN: Look at the job description and other requirements of the target role, and compare them with the profile of the potential succession candidate. Identify the skill sets, competencies and other requirements for the target role that the potential successor needs to acquire. Then, both the incumbent manager and the potential successor agree on a step plan as to how the potential successor could pick up those skills. It naturally depends on the individual situation, and it may include formal, external training, personal involvement in relevant tasks and introduction and relationship building with stakeholders, be it internally or externally, with whom the individual would be working in the target role. The succession plan and the required action can be incorporated in the formal objectives for both the incumbent manager and the potential successor. Doing so would, in my opinion, encourage formal staff development and shift career development away from non-committal talk towards a very real process, in which the individual concerned has an active role. I have found it to be a great motivator to my colleagues when they can see not only their immediate, next move but possibly also their career path for the long-term future.
CN: Bear in mind the starting point of business continuity planning. I believe this is a good way of structuring the process and at the same time making it clear that this must not be misunderstood as a promise of future promotion. From my experience, I advise everybody who considers such a succession plan to make it very clear - and document this in writing - that the succession plan is not a promise of promotion in the future, nor is it an indicator of superior performance in itself. Rather, the stated objective of the succession plan should be twofold: First, to enable the successor to step in and cover for the incumbent manager in his absence. And second, to develop the successor into a credible internal candidate for the target role should it ever be vacant.
CN: I believe that succession planning is a strong way of showing appreciation to my staff. It demonstrates that I am working alongside them to help them grow and develop new skills. Managing a set of succession plans in treasury evidences the strategic mind running the treasury function.
Christof Nelischer
Christof is chair of The Complex Countries Insurance Forum and a member of the advisory board. He was the Global Group Treasurer at Willis Towers Watson plc based in London from 2010 – December 2018. In his role, Christof led treasury as well as the insurance function. Earlier positions include Head of Treasury at Fiberweb plc, leading corporate treasury as well as risk management, Group Treasury Manager at Novar plc, where he re-engineered the treasury function, and European Treasurer at Kellogg’s, having set up the European Treasury Centre. Christof holds a dual degree in European Finance and Accounting, and an MBA from Manchester Business School. He qualified with the Association of Corporate Treasurers.
Willis Towers Watson plc was the winner of TMI’s 2017 Corporate Finance and Funding Award under Christof’s leadership, and was shortlisted in the 2018 Treasurer’s Deals of the Year Awards in the category of Large EMEA Treasury Team of the Year.
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