The reality of business today is that many key executives and talented professionals are coming up to their retirement. In addition, because of the recent economic pressures many organisations have had to reorganise and re-size themselves, the consequences of which mean that the talent pool that would have been ready to step up into key roles are either not ready or no longer there. All of this represents serious implications for the business.
This issue doesn't just affect large organisations either. A survey conducted by the Association of Chartered Certified Accountants (ACCA), found that 30 per cent of small-business closures take place because of the lack of an effective succession plan, as many owners do not make sufficient arrangements in the event of their retirement.
To address this issue, companies need to integrate succession planning with their strategic business plans and view it as a long-term, continuous process.
The following highlights the key steps to successful succession planning.
1. Think strategically
Succession planning requires a strategic perspective. What are the things that might impact your organisation in the future? Will it grow and acquire other businesses, or is the market shrinking and therefore a different leadership approach may be needed? What 'type' of managers and business leaders will be needed in the future?
2. Understand key roles
Which roles in the organisation drive the majority of the business's value? Think broadly, and not just about traditional leadership roles, but consider specialist technical roles such as product or service development as they may be as equally important. Once this is complete it is a straightforward task to examine the age profiles of those currently in the key roles. How many of these will be retiring in the next 5 years? How many roles have 'ready now' successors? Answering these questions will give a view to the size of the task ahead.
3. Identify the requirements of the key roles
The requirements for the key roles need to be agreed. What are the key skills and capabilities needed for the roles? What specific experience will be needed, such as international or project experience. All key roles should have the necessary components for success clearly defined. These requirements can then be used to assess people into the role. either internally via a promotion or perhaps externally via recruitment.
4. Identify who your talent and potentials are
The mechanisms to identify and determine talent can range from subjective views of managers to objective means of assessment where candidates are assessed against the clearly defined criteria identified above. Whichever method is chosen it is important to understand who your potential business leaders of the future are.
5. Agree your succession strategy
Once the organisation knows:
- who is planned to retire when
- who are 'at risk' and may potentially leave the business and...
- who the potential talent is
Objective decisions can be made about how the key roles will be filled in the future. For example, does the business need to actively recruit and bring in new blood or can all the key roles be filled from within? Should the strategy be a balance of recruiting externally as well as promoting internally?
6. Define career paths for internal promotions
Once your succession strategy is clear, establishing career paths and the ability to describe the requirements for pursuing the path becomes easier. Creating effective career paths requires two components, knowing the requirements for the next level and creating clear plan of how to gain the necessary skills, behaviours and experience.
7. Manage successors through the performance management process
Succession planning should become a part of the organisation's performance management and career development processes. Regular performance discussions are important to collect evidence of how potential successors have demonstrated the performance expectations needed by the key positions. These discussions also provide the opportunity for managers to coach talent to ensure ongoing development and readiness.
8. Provide ongoing development
Managers should identify the development outcomes and actions that potential successors need. What are the specific learning expectations, new skills or behaviours that will be demonstrated as a result of their development? What actions need to be taken? Should the individual attend a course, undertake an assignment or new role or be coached? Focusing on developing specific skills can help shorten the learning curve necessary for success.
9. Monitor readiness and prepare the plan
Senior managers should meet at least annually to initially agree who the potential successors are for the key roles and to subsequently monitor their progress. Who is ready now to move to their next role? Is their evidence to suggest that any of the successors will not 'make the grade'? If not what needs to be done?
10. Ensure proper ownership
Succession planning needs to be owned by line managers and needs to be actively led by the Chief Executive or owner of the business for it to be successful. However, HR has a vital role in raising awareness, supporting and facilitating the process. This can range from compiling all the relevant information on potential candidates, keeping records of development and career progression and providing independent assessment techniques to identify potential.
None of the above steps needs to be made overly complex and most can be integrated across existing Human Resource systems. If your business does not focus on succession planning then the availability of talent for your key roles will be left to the fickle finger of fate. Surely the future success of your organisation is too important for that?
Developing People have played an instrumental part in helping many companies assess their succession planning strategies over the years. If you feel that your company is not equipped to manage staff turnover in the most effective way, contact Developing People for advice.