If your Finance Director has to be hospitalised, do you know who could take over now? Your top sales person just resigned, who in your organisation could to fill this role?
The departure of a key employee can leave an organisation in a state of uncertainty. Succession planning is the answer to reduce such interruptions and provides stability.
What is succession planning?
Succession planning more than a mere replacement planning. It takes a comprehensive and integrated approach to identifying and growing the talent pipeline to “fill business-critical positions in the future”. It identifies the next generation of leaders and has also become a common tool to tackle skills shortages.
As both small and large businesses need to ensure business continuity, succession planning can be seen as a form of risk mitigation. Preparing and developing existing employees for their next internal move can reduce potential disruptions to the daily operations and reduce the financial loss caused by an employee’s departure or unavailability of talent.
Lay the foundation
It’s all about the role. Dave Ulrich reminds us that succession planning doesn’t start with people. “It starts with the requirements of the position.” While some companies focus solely on the top of their house, others go down deeper in their organisation and cover every role. A third approach is to address only business-critical positions. Any organisation will therefore need to decide its very own approach to success planning.
High potential employees vs. all employees. Focusing on high potential employees for succession purposes allows companies to provide very targeted development opportunities. In times where budgets may be limited, this may appear as the appropriate way of making the most of such constraints.
To not be restricted to a small group of employees, most companies consider all employees for their succession planning. This sets the basis for a fair review of previous performance.
Companies need to keep in mind that not all high performing employees also have the potential and/or aspiration for a higher level role. They may, however, be a potential candidate for a lateral move.
Internal vs. external candidates. For some companies, succession planning is closely linked to talent management and only internal candidates will be considered for senior roles. Existing employees are already living the organisation’s culture and values and technical expertise can be taught.
While an external candidate may bring a fresh perspective and new skills, they may not fit into the team, potentially taking the company back to square one.
The individual’s readiness. Organisations need to differentiate the employee’s readiness to take on a new role. This review illustrates the organisation’s internal talent pool and simultaneously the training and preparation requirements for each role.
The immediate readiness would be for emergency covers on a temporary basis or for a start in the new role today. Medium-term readiness could be around 12-18 months while a long-term successor, e.g. for a senior role, may require 3-5 years. It’s been reported that the former CEO of McDonald’s, Jim Skinner, coached and prepared his successor Don Thompson for almost 7 years. The preparation for GE’s current CEO, John L. Flannery, who took over in August 2017, was started in 2012.
Top management support. In a crisis, decision making often concentrates on immediate needs rather than strategic and sustainable solutions. To benefit the most from succession planning, top management needs to own this process and align it to the long-term objectives of the company. Their expertise will also need to be shared as part of the internal coaching and mentoring.
Not having the right talent in house can substantially influence the organisation’s competitiveness, potentially to the point of not being able to stay in business at all. Which company can afford this?
Integrate succession planning with core HR programmes
Insights from the performance discussions. Moving away from the dreaded performance reviews, line managers are urged to give more timely feedback. The continuous conversions provide an opportunity to review an employee’s behaviour, attitude, skills, knowledge, experience and talent (BASKET).
They can further learn about the individual’s career aspirations, although not every employee may have the trust in their line manager to honestly share their ambition.
The more an organisation understands their employees’ BASKET and career goals, the more can this be reflected in the succession planning. Under the traditional approach, an employee may not have been considered for a position while the additional insights also highlighted transferable skills of the individual, making them a suitable candidate.
Identify gaps. Reviewing the requirements for the identified future roles, an employee may have certain BASKET gaps. The regular feedback and the structured performance discussions can be used to reveal these while constructive 360-degree-sessions can be utilised for a more holistic assessment. After all, an employee will not only work with their line manager but a variety of individuals. Based on these gaps, HR can prepare a customised development plan for the employee.
Provide development opportunities. Whether this is by coaching, mentoring, training and special assignments, companies should utilise all development channels and can apply the 70-20-10 model. Here, 70% is linked to experience, for example gained from stretch goals or working on certain assignments or taking the lead for a particular project. 20% of the individual’s development comes from coaching, mentoring and knowledge sharing with others and the remaining 10% from formal training programmes or webinars.
The training and development initiatives for the future role should be integrated into the regular learning activities as arranged by HR and the current department.
If no central training system is used, the company needs to ensure the effective usage of resources. Communication between HR and the current department needs to be smooth to avoid booking the same training course twice.
Regular succession reviews. For smaller organisations, succession planning and performance management may be done on post-it notes stuck on a white board. This works for some.
However, for an organisation that wants to be more efficient, agile and/or grows, a home grown succession and skills database, tied together with performance and training elements, may be more appropriate.
Depending on the organisation’s industry, an annual succession planning meeting will not suffice. Review meetings on every 3-6 months may be more appropriate.
Start your succession planning today
Succession planning reinforces an organisation’s commitment to their employees. It shows the company’s investment in employee development and creates career paths upwards and sideways.
Hiring from within the organisation can be a cost-effective recruitment tool. Internal candidates have already proven their cultural fit and can be acquire the missing skills and knowledge through a personalised development plan.
Overall, succession planning prepares an organisation for the unexpected and gives the company stability and sustainability required during disruptive times.
Can your company afford not to implement succession planning? We prepare organisations for the unforeseen by creating customised HR solutions fit for their business now and in the future. Contact us and find out how we can support your company.