In business, as in life, there is generally a hierarchy and structure for how things run. Leaders are identified. Departments are established. Managers are appointed. Processes are set. And, if all is as it should be, all of the cogs fit together and run like a well-oiled machine. The best organizations even create redundancies to ensure that when key personnel are out sick or on vacation for a few days, there are other knowledgeable individuals who can step in temporarily to ensure that operations continue smoothly.
However, many companies fall short of actually creating a full Succession Plan in case a vital cog in the machinery breaks and must be replaced. Most organizations do not have any preparations in place that will go into effect if a vital member of the team is suddenly gone either by choice or chance. For example, Business Week magazine featured an article questioning why Herb Kelleher, CEO of Southwest Airlines, had not designated and groomed a successor. This exposed a weakness that exists in many companies’ strategic thinking. Indeed, many companies lack ‘bench strength’ or sufficient ‘ready now candidates’ to replace planned and unplanned losses of key leaders and staff. As a result, the future continuity and performance of the business is at risk. While it may seem grim and cold, a Succession Plan is actually one of the most responsible and considerate things any business can do for the good of the company. Here’s how.
What is a Succession Plan?
First, it helps to understand exactly what a Succession Plan is and does. Succession planning is a systematic approach that allows a company to:
- Build a leadership pipeline or talent pool that ensures leadership continuity
- Develop potential successors in ways that best fit their strengths
- Identify the best candidates for categories or positions
- Concentrate resources on the talent development process that will bring maximum return on investment.
Succession planning recognizes that some jobs are the lifeblood of the organization and are too critical to be left vacant or filled by any but the best qualified persons. When done effectively, succession planning is a critical part of an organization’s success and future. It creates an effective process for recognizing, developing, and – if needed — replacing top talent.
Here is what succession planning is not. It is not about having “a name in an envelope” to replace only the CEO or President. True succession planning is more about leadership development and having two or more qualified replacements for any key management or staff position. It is a process, but it’s a career-long process for many people within an organization. Considering CEO succession without considering the leadership, executive and management pipeline is like worrying about the best kind of roof tiles and putting it on a house in which the foundation is shaky. The strength of leadership development programs at companies like GE, Proctor and Gamble, Pepsico, and Colgate Palmolive is that they produce great leaders developed over a career.
Succession Planning Steps
There are actually software programs, such as Halogen, Intelladon and Peoplefluent, that help mid-sized to large companies develop a Succession Plan. But for smaller companies, it can be done in-house. Here are some of the steps.
Step 1: Link Strategic and Workforce Planning Decisions
A company should connect its future strategic planning to its human resources
- Identify the long-term vision and direction
- Analyze future requirements for products and services
- Use data already collected
- Connect succession planning to the values of the organization
- Connect succession planning to the needs and interests of the senior leaders.
Step 2: Analyze Gaps
A company should determine what kinds of skills employees need to have in order to achieve the vision for the company
- Identify core competency and technical competency requirements
- Determine current supply and anticipated demand
- Determine talents needed for the long term
- Identify “real” continuity issues
- Develop a business plan based on long-term talent needs, not on position replacement.
Step 3: Identify Talent Pools
A company should identify the current skill sets of its employees and as well as sources for new talent when needed
- Use pools of candidates vs. development of positions
- Assess competency and skill levels of current workforce using an assessment instrument
- Identify talent with critical competencies at multiple levels–early and often in careers
- Using 360° feedback for development purposes
- Analyze external sources of talent
Step 4: Develop and Implement Succession Strategies
A company should ensure it keeps top talent and cross-trains/develops others to move up the chain.
- Identify recruitment strategies such as recruitment and relocation bonuses and special programs
- Identify retention strategies such as retention bonuses and quality of work life programs
- Identify development/learning strategies such as planned job assignments, formal management development, coaching, mentoring, shadowing, and assessment feedback
- Develop a communication plan
- Determine and apply measures of success
- Link succession planning to HR processes including compensation, recognition, and promotion processes
- Implement strategies for maintaining senior level commitment
Step 5: Monitor and Evaluate
A company should gather information on how the succession plan is going.
- Track selections from talent pools
- Listen to leader feedback on success of internal talent and internal hires
- Analyze satisfaction surveys from customers, employees, and stakeholders
- Assess response to changing requirements and needs
Through attrition, changes in circumstances or divine intervention, companies – all companies – are likely to lose key personnel. It could be the loss of a great leader. Consider the loss of Steve Jobs at Apple. It could be a department manager. Or it could simply be someone who is an integral part of a key process in the organization. Whichever the case or cause, it is important for an organization to be prepared on how to handle such a loss. Otherwise, the loss of one person could have serious consequences to an entire organization. With proper planning, no company ever need crumble because one key person has gone. With 2013 on the horizon, this may be an ideal time to begin planning for any eventuality.
Quote of the Week
“A person who does not worry about the future will shortly have worries about the present.”Ancient Chinese Proverb
© 2012, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.