The Advantages of Holding a Horse Race for the Top Job
Many directors are concerned that a protracted succession horse race will stifle the momentum of the business. However, the best companies create a culture of competition and promote an environment where the best leader emerges. In this way, the process can actually produce better leaders than a traditional succession plan. It’s important to have realistic expectations and to avoid being too excited by the prospect of winning the race.
While the idea of holding a horse race for the top job may sound like a fun way to select the next CEO, the practice can actually be disruptive if not managed effectively. The prolonged duration of a horse race can create a culture of uncertainty and fear, which could ultimately lead to retrenchment and reduced performance. A good horse race also signals to employees that they have a stake in the company’s performance. It also helps to nurture a culture of leadership development. By identifying and grooming future stars early, managers can ensure that they develop the necessary competencies to run the company.
For a horse race to be profitable, a casual bettor must first establish a net loss, and an advanced bettor must show a profit. In addition, advanced bettors have a strong incentive to conceal information that other people can use to bet. As a result, they sometimes bet on the wrong horse and withdraw their bets later.
Media scholars have long observed and studied the effects of horse race coverage on elections. They found that the strategy relies heavily on public opinion polls, and that it emphasizes the frontrunners, while giving the underdogs little attention. This strategy is common in news coverage, both in the U.S. and internationally.