Succession Planning and the Money Test
Succession Planning
Level 5 leaders:
- Have ambition not for themselves but for their organisations.
- Routinely select superb successors.
- Want to see their organisations become even more successful in the next generation.
- Are comfortable with the idea that most people will not know that the roots of that success trace back to them.
- Want to make clock-builders, not be time-tellers.
- Rather than always having the answer, they help team members solve their own problems.
Level 4 leaders often fail at succession. They may not want the organisation to thrive without them, because the failure of the place after their exit demonstrates how much they mattered.
The Money Test
When it is NOT about the money:
- A Level 5 leader is not concerned about money only.
- Much more concerned with the overall success in the present and in the future.
- Appoints a successor with similar characteristics.
When it IS about the money:
- Probably a Level 4 leader.
- Not concerned with the future of the company after she leaves.
- All about “I”, not about “we”.
- Will not set the successor up for success.
Succession and money are practical tests of whether a leader is at Level 5 or not. Both come up regularly in any leader’s career. Both produce different answers depending on whether the leader’s ambition is for the institution or for herself. A school head can look at her own behaviour on these two and learn something about where she actually sits on the Level 5 hierarchy.
Succession planning
Level 5 leaders have ambition not for themselves but for their organisations. They routinely select superb successors. They want to see their organisations become even more successful in the next generation. Comfortable with the idea that most people won’t even know that the roots of that success trace back to them.
A Level 5 leader thinks about who comes next from the day she arrives. She identifies emerging leaders inside the school. She gives them real responsibility. She stretches them. She gives them visible roles in front of parents and the board. She designs the school’s leadership structure so that her successor can step into a system, not a vacuum.
What good succession planning looks like in a school
- Identify potential successors early. A new principal should be looking at her senior team within the first year, asking who could replace her.
- Give real responsibility. A potential successor needs to lead substantial work, not just shadow.
- Develop a range. Multiple potential successors are better than one. The school is not dependent on one person.
- Make them visible. Parents, board, and external stakeholders should know the successor before they need to know her.
- Time the handoff. A graceful handoff is planned years in advance, not announced one term before retirement.
Clock-builders, not time-tellers
A useful phrase:
These leaders want to make clock-builders, not be time-tellers. Rather than always have the answer, or be quick to solve someone’s problem, Level 5 leadership helps team members solve their own problems or find their own answers. So, build own abilities.
A time-teller is the leader who has the answer. People come to her, ask the question, get the answer, and leave. The leader feels useful. The team does not develop.
A clock-builder is the leader who teaches the team to find answers themselves. People come to her, ask the question, and she asks back: “What have you tried? What do you think?” The team develops the muscle of finding answers. Over time, the team becomes self-sufficient.
A school led by clock-builders survives its leader’s departure. A school led by time-tellers struggles.
Why Level 4 leaders often fail at succession
The handout makes a sharp observation:
Level 4 leaders often fail to set up the organisation for enduring success: what better way to demonstrate your personal greatness than that the place falls apart after you leave.
This is uncomfortable but accurate. A Level 4 leader’s identity is tied to her own results. If the school thrives without her, the evidence suggests her unique contribution was smaller than her ego wants to believe. So Level 4 leaders, sometimes unconsciously, leave the school weaker than they could have.
A Level 5 leader has the opposite identity. Her ambition is for the school, not for her own indispensability. She wants the school to thrive without her. The most important achievement of her tenure is that the next twenty years go even better.
A school head can ask herself: would I be pleased if my school did better under my successor than under me? The honest answer is revealing. A Level 5 principal answers yes immediately. A Level 4 principal hesitates, then qualifies.
The money test
The second test is about pay and personal benefit.
Not always about the money. A Level 5 leader is not concerned about money only. This leader is much more concerned with the overall success of the company in the present as well as in the future when they are gone. They will do everything they can to make sure the company will succeed after them by appointing a successor with their same characteristics.
A Level 5 leader cares about pay (she is not naive), but pay is not the driver. The school’s long-term success matters more. She will accept lower pay than she could get elsewhere if the school’s mission is worth it. She will spend her own time and energy on things that do not benefit her personally.
Compare this with the Level 4 leader:
When it is about the money you are probably talking about a level 4 leader. This is somebody who is not concerned with the future of the company after they are gone, but who just wants to get paid. They are all about the “I” and not about the “We”. This leader will not “set their successor up for success”. In fact they will most likely choose a person who is not ready, or does not have any idea what it takes to be a leader of that magnitude.
A Level 4 leader, near retirement, may even sabotage succession. A weak successor protects her own legacy. The school looks worse after she leaves, which proves how good she was. The school suffers, but her ego is preserved.
This is one of the more cynical observations in Collins’s work. It is also empirically common. A school whose long-serving principal has chosen a weak successor often has a Level 4 leader at the end of her tenure.
What this means in a Pakistani school context
Many Pakistani private schools are founded and run by an owner-principal. The combination of ownership and leadership often produces succession problems. The owner’s identity is tied to the school. Stepping back feels like death. So she stays too long, holds on too tight, and chooses a weak successor.
A Level 5 owner-principal would act differently. She would build the school to outlast her. She would identify and develop a successor years in advance. She would let go gracefully. The school would continue to thrive.
This is rare. Most owner-led schools in Pakistan struggle in the second generation precisely because the founder did not act at Level 5.
How the two tests fit together
Succession and money are tied. A leader who is motivated by personal benefit will not invest in succession because succession means her own departure becomes possible. A leader who is motivated by the institution’s success will invest in succession because the institution’s long-term success requires it.
The two tests are essentially the same test viewed from different angles. Both ask: is your ambition for yourself or for the institution?
A useful exercise for a school principal: write down the answer to this question on a piece of paper, honestly, without anyone reading it. The act of putting it in writing reveals what one actually believes. Many principals discover that their actual ambition is more self-focused than they would like to admit. This is not a moral failing; it is information. Knowing the truth is the start of changing it.
Both reveal whether the leader’s ambition is for the institution or for herself.
Succession planning. A Level 5 leader develops her successor from her first year. A Level 4 leader fails at succession because the institution’s success without her would undermine her own importance.
The money test. A Level 5 leader cares about pay but is not driven by it; institutional success matters more. A Level 4 leader is driven by personal benefit.
The two tests are the same test viewed from different angles: where is the leader’s ambition pointed? The window-and-mirror test (Article 2) gives the same information by another route. All three ask whether the leader is at the centre of her own picture or whether the institution is.
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