Given the strategic value of GCs in today’s business environment, succession planning has become of vital importance for the continued success of any organisation. LACCA speaks to some of Latin America’s top GCs to find out exactly how they find and develop the perfect candidate to fill their shoes.
A gap in any leadership succession plan can lead to problems for departments in an organisation, but it can be particularly problematic for legal teams. Given the crucial role legal departments have in managing a company’s daily operations, protecting it from risk and handling unexpected issues quickly and effectively, having a skilled and well-prepared successor in the pipeline is essential to the running of any business.
The benefits of tipping an eventual successor are ample – not only does it ensure a smooth transition between GCs, it also helps to cement long-term growth and sustainability within the legal department by making sure a new candidate is waiting in the wings to avoid any vacuums left when an experienced lawyer leaves a team. Putting together a plan to identify and develop the right candidate, whether they are within or outside of the company, gives GCs time to develop the contender as much as possible so that the eventual handover is a straightforward one. Continuous training and exposure of candidates to contentious issues that involve the senior executive team can also help businesses to tackle big problems from a new and different point of view.
Undoubtedly, being able to form a road map to identify the right candidate as a company’s next GC is the priority for many businesses, and a strategic succession plan isn’t complete without an assessment of the talent and skills within a department. Nor can GCs go ahead and tip a successor without addressing and overcoming challenges related to identifying, recruiting, training, retaining and advancing high potential successors. “There are so many stages,” says Raul Felix Saul, legal director, ethics officer and corporate secretary at energy multinational Engie Mexico. “At my company, the legal department is only one part of a larger system to tip a replacement for all senior managerial positions. They have to be mature, we evaluate their skills and then make a development programme and timeline for promotion.”
Evaluate your needs
Assessing the specific needs of a company is the first key step to succession planning. Needs can be broken down and categorised into short and long-term priorities, and the perfect candidate must be able to tackle both, anticipating change and staying ahead of the ever-changing market. “Short term is much easier and has to do with workloads, projects and transactional matters,” says one GC from an international bank. “The long-term goal is much more complex and requires an ability to anticipate which skills are needed in future and how to build the legal department to strategically support a business that is in continuous change.”
Staying ahead of market changes and anticipating the short and long-term needs of a business means that an incoming GC needs to be experienced in a wide array of matters, particularly if they are going to work in a multinational. The main skills to look for in a successor are whether they can speak both English and Spanish (with Portuguese as an added bonus if the company functions in Brazil), leadership qualities and an excellent grasp of legal budgeting and finance. “New GCs have to be quite experienced senior lawyers,both in-house in multinationals and in law firms,” says Ana Silvia Haynes, GC and chief compliance officer for Latin America at optics giant Essilor. “They also need to be emotionally stable and capable of building and leading a skilled team that will outperform a company’s objectives. Being able to draft and manage a legal budget is also essential.”
Interviews for potential candidates often centre around the evaluation criteria itself. “Specific questions are asked which target knowledge of compliance, contract negotiation, business general terms, corporate law, people management and development, as well as the overall experience in leading and influencing organisations to grow under sustainable guidelines,” says Haynes. “Other specific skills will also be tested to know that the cultural and educational background are aligned with the company's overall principles and values.”
Knowing when the right time is to look for a successor is also a factor to consider and according to GCs the best time is often when a team is going through a period of stability. At Essilor, the cycle for a GC is around three-to-five years, and when a team is well structured, delivering on the business’ objectives and performing well, that is the time to start looking for a successor. “When I complete my overall objectives (personal and those established and agreed with the company's senior leadership) for the department, the team is well established and the department is independent and stands on its own, then I’ll start looking internally or externally for a successor,” explains Haynes.
Choose the right person
While establishing a company’s needs is the first step, it is also important to consider whether to hire someone internally or externally. Internal candidates are often well-suited to take on leadership roles as they already have an in-depth knowledge of the company, and promoting internally can also provide an extra incentive for staff to work towards a promotion. “I think that we send a very good message if someone from the same team rises to become the GC. The whole team can then recognise that they work in an environment in which merits are the main source of recognition,” explains Javier Oroz Coppel, GC and general secretary at insurance group AXA.
It can also be useful to involve the HR department when looking to promote internally. At e-commerce company MercadoLibre, senior VP, GC for legal and public affairs Jacobo Cohen Imach meets with his HR department twice a year. In the first meeting, Imach meets with HR, leaders of other departments and the senior executive team to tip a successor and other potential candidates for promotion; in the other, he touches base with HR to see if the candidates they picked during the year are still on track for their promotion. “We review every team’s successor on their skills, learning ability, and also review the prior formal evaluations of every person and then we define who the successor is, along with a number of potentials,” he explains.
Having more than one candidate lined up as a successor is also a good way of ensuring continuity, as some may decide to leave the company or be poached by competitors. “In my company three of my former managers have been promoted within the organisation, but they were then recruited by other companies for the GC role,” says Saul. “They were part of our internal succession plan.” To mitigate the risk of this, some companies have a list of potential candidates lined up in all of the company’s jurisdictions. “There is always an experienced replacement lined up at my company, not only in the relevant jurisdiction but in other countries too,” outlines Ali Shakhtur, GC for South America at Enel Green Power.
While it may seem much more convenient to hire internally to ensure business continuity and a replacement with detailed knowledge of the business, there are also many benefits to hiring externally. “Bringing in outside views, ideas and energy may be refreshing for a legal department and inspiring to others,” explains Shakhtur. However, Mariana Paez Robles Martinez, GC at Mexican satellite company Eutelsat Americas, says hiring externally is often more beneficial to smaller companies. “It works for small businesses with less commercial/corporate activity than a multinational, in which an external law firm would charge little just to keep it in order – a GC position wouldn’t require the same skill set as in a larger company,” she says. More generally, hiring externally can also potentially have a negative impact on team morale if not handled in a sensitive way. “The downside is that the internal team can suffer a from lack of motivation and the newcomer can have a difficult time leading a team that doesn’t agree with a decision they make,” says Oroz Coppel.
Regardless of whether a company hires internally or externally, however, one of the most important factors to consider is to make sure a candidate will assimilate well into their role. “It begins from the minute I interview the person. When I interview them, I imagine if that person could be in my chair or the person they will report to. If I don’t see that person in that position, then I don’t hire them,” says Imach.
After the formative stages of assessing a company’s needs and tipping a successor, part of the assimilation process is to also ensure a candidate is properly mentored. However, it’s also essential not to ignore a legal department’s current employees in favour of a new one and giving all employees a chance to share their thoughts and demonstrate their knowledge is an integral part of retaining employees to continue a succession plan. An internal culture of encouragement and competition can also inspire the best candidates for future plans. “Everybody should have the chance to show their abilities and their knowledge – it should be a part of an internal company culture. I try and develop healthy competition, but based on differentiation,” says Shakhtur. “Not everyone has to have the same skills or knowledge, but everyone has to exploit their abilities and bring them to the team.”
Encouraging teamwork is another key factor in stimulating ambition and retaining good employees. When hiring new people for his team at MercadoLibre, Imach made sure each person he hired had the opportunity to grow and develop to encourage a culture of improvement and healthy competition. “I’ve modelled my team by using this tactic – which started with me 20 years ago and now encompasses over 100 people,” he explains. “I encourage them to improve and take on more important roles, give them more exposure and ensure everyone is recognised and takes proper credit for the work they do. We are in a very complex industry, so I always push for competition in an assertive way - we compete with each other but we win as a team.”
Making sure to mentor successors is also important and fostering an open-door policy can help that. “Whether or not someone is new to an organisation, I tell them what I expect from them and then let them work freely,” explains Shakhtur. “However, I always keep my door open for assistance and advice. The company also has induction programmes in place to help them understand all areas of the organisation.” Making sure employees have a clear set of objectives going forward is also important. “Once I hire for a senior position, I ensure they have objectives and goals and that its very clear what it takes to succeed in ML and our legal team,” says Imach.
Finally, while evaluating a company’s needs, hiring internally and fostering a competitive environment are all key to picking the best successor, doing a good job as an incumbent GC is the best motivator for filling the next senior leadership positions. “If you set the right tone at the top level in the organisation, then you empower your counsel,” says Oroz Coppel. “Being a GC is a role in which trust and communication need to be the foundation of the role, and that’s how you build the best teams.”