Successful Succession Planning Strategies

Whether you run an SME or a global corporation, succession planning is a critical component of business planning that many organisations struggle to manage effectively. To continue to succeed, teams need the right people, not only for today, but also to carry the organisation forward in the future. In the 20th century, companies were successful because of the products they made or the services they provided. Today and moving forward, competitive advantage is also contingent upon talent.

With an aging population and a large number of baby boomers approaching retirement, succession planning is increasing in importance in management and HR circles. Doing it effectively requires strategic planning and the right mixture of short, medium and long-term vision. A common mistake occurs when organisations evaluate their existing talent according to the current environment, rather than the projected future conditions. A succession plan needs to address the development of leaders to fill the necessary roles in the future.

Businesses can be required to change within periods as short as two years, in particular with new technologies continuously evolving, which can alter industry segments very quickly. Hence, it is necessary to maintain an awareness of the horizon, but also focus on the short term. If some roles may not be required in two years, then there can be a gap between what leaders are doing today and what they will need to do in the future. A plan that looks further out than the next 24 months is not a succession plan; it is a talent pool.

If you observe how long it takes some organisations to appoint a new CEO after the incumbent leaves (often with little notice), it is clear that many boards grapple with the issue of succession planning. Further down the organisational tree, the picture is sometimes even worse. Many companies find it difficult to identify and prioritise the key roles within their organisation – it is a matter of perspective as to which roles are the most significant; to the shareholders, it is usually the CEO, but to the customers, the Customer Service Manager is arguably the most important.

Within the global community, organisations are now more open to where an employee can live and how they are attracted, compensated and retained. In the last ten years, companies have been asked to do more with less, and challenged to reduce the cost impact of senior roles. These roles are starting to be contracted out, so that organisations don’t have to wear the high ongoing costs and all the extra benefits of permanent senior executives.

HR’s role should be to assist an organisation to assess and calibrate talent accurately through talent reviews, by defining leadership competencies, and assessing attributes that a truly successful individual displays at that particular company. Examples include high-level strategic thinkers, great team builders, people comfortable with taking change, or even just someone who gets things done. A succession plan is not a process, but a solution and its effectiveness can only be judged by the outcomes: after an individual who was targeted for a role is actually promoted into the position.

One of the keys to a successful succession planning strategy is to put efficient processes, structure and workflows in place. The shape and nature of the plan depends entirely on the type and structure of the business. A multi-national has distinct structures from a national franchising business, which is different again from an SME or localised family business. But the common thread is the importance of identifying the future needs of the business. Once the gaps have been identified, the process can be customised to target the right people to meet the future needs of the organisation.

So how can businesses improve their succession planning process? The first elements to identify are:

•    How do we integrate short, medium and long-term strategies into our planning process?

•    How can we work with existing people to assist their development?

•    How do we identify the right people, both in our recruitment process and among existing staff, for our succession planning?

•    How can we incorporate successful succession planning into our ongoing business planning process?

If your organisation is grappling with these questions, Nesso can work with you to develop initiatives in all these areas. Whether it is business coaching with management and/or teams, business and strategic planning or utilising our Integrity and Values Profiling (IVP) system, we can tailor strategies to suit your business environment. IVP can help organisations to develop character portraits of team members to assist with succession planning. By assessing a candidate’s accountability, loyalty, responsibility, trustworthiness and self-awareness, your senior management can equip themselves with the tools and information necessary to ensure successful succession planning.

Footnote:  This article has been published in the February March edition of Inclean Magazine.