Succession planning is as important for risk mitigation as it is for talent development. Why then are so many businesses, large and small, ill-prepared when it comes to addressing their future leadership needs? Joanne McAuley from Clarendon Executive looks at some of the considerations for HR professionals in ensuring their organisations have an adequate succession framework in place and are fit for purpose as they grow, change and develop.
Often, and understandably, the succession planning process falls far down a company’s list of priorities, but all businesses need to be ready to respond to a departure of talent, both planned (i.e. retirements) and unplanned (e.g. career changes). No matter the size of your business, it’s important to have a succession plan in place for top performers and business critical roles otherwise the organisation can be left vulnerable, particularly in the wake of a shock departure.
Most Chief Executives, new into a post, will have a key objective to look at their succession plan within the first 18 months of appointment. The reason? Companies that develop strong succession plans are better able to retain their talented staff and mitigate the risk of a hasty and costly hiring mistake in a time of urgency.
What does good succession planning look like?
Succession planning relies on a pool of talented workers ranging from entry-level to senior leadership who have been prepared for key roles. This pool of successors will have had the opportunity to develop the right skills, energy and leadership qualities that will benefit the company across a spectrum of roles, departments and seniority levels.
As well as the well-trodden and traditional training and development pathways, good succession planning will include the provision of practical tailored work experience through projects, secondments, mentoring or coaching, relevant for future senior or key roles.
Where do I start?
Since the government scrapped the default retirement age in 2011, retirement has become an increasingly subjective and sensitive issue, that differs from person to person and business to business. As such the process of succession planning will be unique to each company.
There are however some general guidelines worth considering:
1/ Identify current and future needs based on the company’s vision, strategic plans and business needs.
2/ Identify business critical roles – C-Suite and director-level roles are always critical, but it’s important not to overlook the wider managerial and technical cadre as well. Gather information on when vacancies might occur, for example around a retirement. Be open with employees about what you are doing and don’t make assumptions that people will share your views of what they want from their career. This is very important as Generation X, Millennials and Generation Z or centennials begin to populate the executive ranks in greater numbers.
3/ Assess key talent – Performance reviews, psychometric and personality assessments can all be a source of information around emerging and/or existing key talent.
4/ Plan and invest – Determine who can fill which positions and conduct a gap analysis to identify the difference between current skills and those required in the future. Pay attention to individual learning and development requirements.
5/ Harness your senior workers’ expertise – If you’re considering a business leader or senior manager’s succession, consider asking them to work alongside their successor for 6-12 months and then in a mentor-style capacity to support key decisions.
6/ Review – Succession plans aren’t something that should be filed away to gather dust until they are needed. The process of succession planning is ongoing and subject to change. Review your plan periodically to keep it current.
Succession planning in the family business
Family-run businesses in Northern Ireland contribute more than 40 per cent of Northern Ireland’s wealth and are responsible for around 300,000 jobs.
Globally, the majority of family owned businesses have not survived beyond the third generation. One of the most common reasons for their failure is the lack of adequate succession planning.
Family businesses have an added layer of complexity and sensitivity around succession planning due to the difficulties many families have in letting go of their ‘baby’, and using it as a legacy for their children. There are also situations, for example, where family members and relatives may feel entitled to what is their “due” when employed in the family business. Along with this, some business owners may feel that family members should work doubly hard as compared to regular employees due to “family ties”. In such cases, using an external consultant who can objectively approach issues around delegating and working alongside the successor can be invaluable.
It’s worth acknowledging that while a straight generational handover can represent the ideal succession, it’s rarely that simple. Children may have different career interests and ambitions or may not possess the business experience or aptitude to take the business over. Open, honest conversations as early on as possible are vital.
Ensuring success with your plan
Planning an effective succession strategy can be difficult to balance with more immediate business needs but it should not be delayed.
HR professionals need to build a business case for succession planning and guide business leaders to identify the competencies that future leaders will need. With executives’ input and buy-in, HR professionals can prepare a career development plan for high-potential employees.
Finally, do not just rely on the past to plan for the future but rather try to understand what skills are needed to align with future goals with the understanding that succession planning is an evolving conversation, not a binding document.