Perhaps your train to work this morning was delayed by a ‘body on the track’ or you drove past a car accident on the motorway, and for a little while afterwards perhaps, you drove more slowly? We often spare a thought for the individual and their family at such an awful time but what about their employer?
As tragic as these events are, they are all too common and what if one of these tragedies involved a key employee of yours? Someone who the company has heavily relied on for their corporate memory, skills and experience? What if they had kept all their responsibilities, contacts and procedures in their head and rarely written anything down?
We have all heard of succession planning and its importance and probably think we know what it is and how to follow one. The Wikipedia definition is succint ‘Succession planning is a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.’
Clearly, succession planning is not just about planning for the sudden demise or incapacity of an employee but, in today’s mobile workforce and with a current acute talent shortage, it should be even more of a priority. So, it is baffling to discover that 59% of companies polled in the global workforce study agreed that succession planning is more challenging in today’s economy and yet only 23% of companies make succession planning a high priority. Another reason to focus on it is the changing realities of workplaces and the impending retirement of the baby boomers which is expected to have a major impact on workforce capacity.
According to David Larcker and Scott Saslow who co-directed a study about CEO succession in 2014 by The Rock Center for Corporate Governance at Stanford University and The Institute of Executive Development (IED), only 46% of respondents have a formal process for developing successor candidates for key executive positions, and only 25% of respondents agreed that there was an adequate pool of ready successor candidates for the CEO position at their companies.
The report concludes “Most company directors greatly underestimate the difficulty, time, and cost associated with CEO and C-suite succession planning,” Saslow goes on to add “They fail to recognize the need for a strategy for this critical business process, they haven’t had great exposure to what other organizations are doing, and they haven’t thought through what their own organization should be doing given its unique set of circumstances. This is more than lost upside opportunity; it puts many organizations at risk of having unstable executive leadership.”
A succession plan, is basically a component of good HR planning and management. It acknowledges that staff will not be with an organization indefinitely and provides a plan and process for addressing the changes that will occur when they leave either suddenly or with notice. Even with a normal three month notice period, many companies would struggle to have a replacement in place in that time. Often, if a succession plan is in place, it focuses on the most senior managers, but all key positions should be included in the plan. Key positions that are crucial for the operation of the organization and, for reasons of skill, seniority and/or experience, would be hard to replace.
There are also other significant benefits to having a strong succession plan in place that can often be overlooked. For example, it can ensure a continuous supply of qualified, motivated people, including a process to identify them, who are prepared to take over when current senior staff and other key employees leave the organization. Showing a commitment to developing career paths will attract top-performing employees, and a great succession plan can enhance the external reputation of the company as one that invests in its people and provides opportunities and support for career advancement. This can also greatly improve employee engagement levels.
So, the need and advantages established, how do you achieve a successful succession plan? David Larcker and Scott Saslow concluded from their report, 5 key recommendations:
There are obviously challenges to succession planning depending on the size of an organization. Small companies or charities may have so few employees that they may not have the ability to offer opportunities for advancement; employees with the potential and the desire to advance their careers may move to larger organizations as a result. Also, if a company relies too heavily on temporary staff, there isn’t the talent pool available long enough to include in a succession plan.
Training and development and promotion need to be carefully planned so employees feel prepared for a promotion and not have to wait too long to be moved or they may go elsewhere. Internal communication is also a challenge and vital for the success of the plan so everyone knows what the plan is and feels included at every stage.
One further, perhaps less anticipated challenge can be when senior leaders stay on in their positions when the skills needed for the job may have changed. The successful plan then needs to identify the new skills needed rather than simply plan to replace existing, outdated skills.
Good succession planning can really make the difference between success and failure of an organisation. If a company is undergoing expansion, having a pool of talent developing within the business means you can also be agile and flexible (the latest buzz words) and respond to new business opportunities as they happen, not playing catch up. While it might be obvious to many that a company must have a business plan, so it should follow that a succession plan is just as vital.
At Chapple we specialize in sourcing candidates in external and internal communications, employee engagement, change and business transformation roles.
Contact us on 020 7734 8209 for more information about how we can help you find your next role or indeed find the right people for your business.