How to Develop a Good Succession Plan

by Paul Lanham

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.

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Bringing Out the Best in Your Organisation’s Top Assets by Developing People Ltd

Any organisation that wishes to be successful must master the art of nurturing their talent – the people who will make a long term difference to the organisation’s performance.

Talented people are likely to have a low boredom threshold, and therefore need constant variety and challenge. To keep up momentum, development programmes need to be highly impactful, spread over a limited time span (eg 9 – 12 months), and balance learning modules with challenging assignments and projects. Support also needs to be provided in terms of executive coaching or mentoring to give appropriate guidance and support. This can help talent explore their own understanding of themselves and the wider aspects of their role, such as leading in a responsible way.

Whatever talent nurturing method you choose, it is also important to measure its effectiveness. Dave Marchant at Developing People suggests that organisations use several criteria:

• The successful application of knowledge and skills on the job
• The impact of the employee’s performance
• Acceleration of the organisation’s “talent pipeline”

“In this way, your organisation can be sure that it is nurturing the right talent in the right way”, suggests Marchant, who has helped organisations such as IBM to make the most of their talent.

Planning for Empowerment

In a previous article we considered the rationale and benefits of empowering staff. However, it’s important to recognise that successful empowerment, requires careful preparation and planning, it not simply a case of giving someone a series of tasks and letting them get on with it. So what do we need to consider?

Use the following guidelines to help you plan your approach to empowerment.

Challenge yourself. The biggest barrier to successful empowerment is your own personal assumptions. For example, many managers do not empower their staff because they wrongly believe that they are not capable of taking on the responsibility, or because they personally will do a better job. In the short term these assumptions may be correct, what if you provided appropriate team training and support and enabled them to gain the skills and experience they need?

Be clear about what you expect. Remember, you are empowering your staff to deliver results not tasks. Therefore it is important to be clear what the desired results will be. In other words, what you will expect from them in terms of quality and quantity, budget, timing etc. Recognise that you will hold them accountable for the results and let the individual determine most appropriate means of how to achieve this.

Identify the guidelines that need to be set. People work best when they understand the boundaries that they have. Therefore what policies, principles, and procedures are considered essential to get the desired results? What do you expect them not to do? Also what levels of authority are you willing you empower the individual with?

Ensure that resources will be available. Clearly giving responsibility to your staff for specific outcomes without giving them the resources to achieve them is setting them up to fail. Therefore what financial, human, technical resources are available to them to deliver? What skills do they need? What other support is available to them?

Hold staff accountable for results. If you empower your staff, how will you hold them accountable? For example, what are the standards of acceptable performance? How will results/performance be measured and evaluated? How will progress reports be made and accountability sessions held?

Consider consequences. If you are going to hold people accountable, you must also consider what will happen when the desired results are achieved or not achieved. For example, positive consequences could include financial, recognition, appreciation, advancement, new assignments, enlarged responsibilities, and possibly promotion. Negative consequences could range from reprimand to retraining or termination of employment.

Empowerment is all about gain. It is about the gain of your time and improving your impact. It is also about gaining access to the skills, knowledge and initiative of your staff. However, it’s important to recognise that successful empowerment, requires careful preparation and planning, it not simply a case of giving someone a series of tasks and letting them get on with it. Doing this will only end in failure and disappointment.

Being a Leader in tough times

Over the next few months, many organisations may face difficult times, but as a leader within your organisation what can you do to ensure your firm remains successful? The following are a number of tips that will help.

1. Don’t be fearful. To often individuals and organisations become paralysed by merchants of “gloom and doom”. However, the reality is that life still goes on; people and businesses still have needs. So its time to focus on your organisations uniqueness and adapt your offering to outsmart your competitors.

2. Focus on cash flow. The liquidity crisis has highlighted the importance of cash – if you have it you won’t go bust, so as a leader it’s vital that you are really on top of your cash position.

3. Avoid simply slashing costs. While it is prudent to review costs during difficult times, indiscriminate cutting of costs across the business are more likely to damage customer relationships and ultimately damage the business in the long term.

4. Don’t become internally focussed. As a leader it is easy to become distracted by internal issues such as restructuring, reorganisations and cost reductions. However, it is vital that you also give time to your key customers, their needs and generating as much revenue as possible.

5. Remember – you need people! Try to avoid making redundant people that are vital to the future success of your organisation. In addition, simply putting a freeze on all recruitment can lead to a shortage of good people in the future.

6. Keep people motivated. While employees are less likely to leave their jobs during difficult times, it doesn’t mean that they will be any more motivated. Identify ways that your staff can be more empowered, take greater responsibility and use their initiative more.

7. Support your customers. Understand what difficulties your customers may have. How can you help them? For example, what innovative pricing or payment terms can you agree on? Support will breed customer loyalty for the future.

Finally, it is also important to recognise that not all areas of the economy will be hit in the same way. Clearly anything related to domestic property and banking have been hit hard, but there will be other areas in both private and public sectors that will not be affected in the same way.

When Performance Appraisals Don’t Work

For many people the performance appraisal ranks as one of the most unpleasant aspects of their job, as well as the most pointless. A recent study by Investors in People found that around a third of employees think that appraisals are a complete waste of time.

The same study found that half of those appraised believed that their bosses were being dishonest during the process, a quarter thought that it was just a tick box exercise and a fifth thought that their manager did not put any preparation in before their appraisal.

So why do these issues arise? There are several fundamental reasons why performance appraisals do not work. For example:

· Many organisations dictate that appraisals must be undertaken/completed within a specific time frame, for example, during the month of December. The problem with this is that a manager may have 10 or more staff that he/she has to appraise. This becomes too much of a burden in the time available and so the manager cuts corners to get them completed. More enlightened organisations use other approaches such as the date an employee joined as the appraisal anniversary date. In this way the manager’s task becomes spread across the year.

· Often managers think that performance appraisal is simply an annual event, when clearly it is not. Staff need continual feedback and support to ensure that that they perform to the best of their ability. Formally sitting down with each member of staff on a six weekly basis enables both the manager and employee to have full and frank discussion about progress and performance and nip any issues in the bud before they become a serious problem. The added benefit of this approach is that the annual appraisal essentially becomes a summary of all the discussions that have taken place during the year.

· Finally, too often managers do not have the skills necessary to manage the performance of their staff effectively. Performance management training should be an integral part of a manager’s recruitment or promotion. The training should include the principles of performance management as well as providing the opportunity for the participants to practice their interview and feedback skills in a safe environment.

The study by Investors in People highlights a number of important issues that need to be addressed if performance appraisals are to be seen as valuable to employees and not simply a tick box exercise.

The 3 P's in Business & Management

There is an acronym that all businesses and organisations should remember – the 3P’s. People before Product (or service) before Profit (or performance). In other words, if you ensure your that your people are skilled, capable and motivated, they will in turn produce a sound product (or service), which will lead to a successful, high performing and ultimately profitable business. But how many businesses and organisations think in this way? Many have too much ‘top down’ thinking, they strive for profit and performance without thinking about whether they have the right people engaged doing the right things. Some organisations pay huge salaries and big bonuses to focus staff on what needs to be achieved, and while bonuses can act as an ‘extrinsic motivator’, in reality they only provide a short term ‘Hawthorn’ effect and are soon forgotten. Others organise staff parties, off site team building events and regular social gatherings to reward their staff but for those that already work long hours they can take them further way from their family and home life. So what does putting your People before Product and Profit mean? Organisations who truly put their people first have a number of characteristics. For example, they: · Support their managers and staff to develop skills that will make them more effective as well as enable them to be more transferable. · Are clear about what they expect from their managers and staff. · Trust their people to do their job and give them the freedom to make their own decisions (within guidelines). · Involve their staff in decisions that affect them. · Listen and pay attention to what their staff say, their concerns, and ideas for improvement, and ACT on them. · Respond flexibly to the needs of their staff. In addition, they recognise that the organisations culture is dictated by the behaviour of their leaders and managers, and work hard to support them to develop the necessary behaviours to enable them to act as excellent role models. Any organisation that really wishes to improve their performance must start with their people, their skills, capabilities and motivation. After all, no one ever won the football Premiership with a team of players from League One.