Most if not all businesses have at some point considered succession planning … after all it is critical when attempting to establish business sustainability. Yet, many fail to implement their plans fully or just lose interest. This surprises me considering it should be one of the most important agenda items for business owners, Boards, and NEDs. As a reminder, here are some of the obvious reasons why succession planning is critical to businesses of all shapes and sizes:
- Unplanned changes: A senior leader leaving unexpectedly can hurt an organisation, big or small.
- Planned changes: Resignations and/or terminations are obvious ones, but it’s not uncommon for a critical member of staff to give three, six or even twelve months’ notice of their intention to leave yet a poorly managed, often late, recruitment process is put in place. This leaves the business in a position of desperation, reactively filling an empty seat with the earliest available candidate rather than holding out for the most suitable long-term hire.
- Retirement: Time is on your side in many cases, so this should be an easy one.
- Change of ownership or strategy: A more difficult event to plan for in most cases, however a broad and proactive approach to succession planning should put the business in a stronger position for such an unplanned event.
- Adapting leadership to new market requirements: Although we cannot predict all external factors, proactive business leaders should develop a reasonable view of the future direction of the organisation, feeding into the long-term talent plan.
- Providing assurance to owners/shareholders and the Board: A business should not be reliant on a small cohort of executive leaders which can change at short notice. A robust succession planning strategy can set the company up to protect “business as usual” should changes occur at the top table, and in theory, provide strong internal candidates for future openings amongst senior management.
As a rule, the succession plan should focus on two core areas:
- Critical business functions: Depending on your business, this could cover areas such as IT/software engineering, operations, project management, finance, supply chain etc. Naturally, you would prioritise according to your business-critical requirements.
- Senior leadership roles: Create an individual succession strategy for each executive position across the top layers of management in the business.
Other factors to consider when forward planning include:
- In collaboration with internal line managers (assessing capability through performance reviews) and the use of external consultants (independently assessing your leaders and developing Talent Pipelines*), it is important to obtain a “live” status on current capability of internal talent vs what is available in the external market. Use this information to feed your future succession plan. *Example link here – operations management in nuclear manufacturing
- Maintaining a focus on Inclusivity & Diversity regardless of function. I&D is an important topic and can be integrated effectively in any succession plan thus killing two birds with one stone.
- Matching roles with key long-term criteria to ensure the succession plan is bespoke for each function. This might go without saying but putting some thought into the types of employees you might need in the future should form the basis of your current view on internal capability and how to attract the most suitable external talent.
- Understanding where vacancies may arise. Engage with your HR and/or internal Talent Managers to identify which areas of the business are the most difficult when reactively recruiting. This will help prioritise where your allocated succession budget might be most valuable.
- Bridge the gap with interim management. You may not be aware that there is a strong market for comfortably over-qualified interim executives who can join your business on a short-term project basis and help “hold the fort” through transition periods, allowing you to invest the appropriate level of time and resource into a long-term hiring decision or internal development process.
- Use this as an opportunity to gather additional market intelligence at the same time e.g. compensation, brand perception, competitor analysis etc. This information should then be integrated into your talent attraction and employee retention strategies.
- Plan ahead and communicate! Succession planning takes time and there are no short-cuts. Acting now will add value in the future hence educate your budget holders and internal resource managers to ensure they understand the value of investing now thus moving away from reactive recruitment processes in future. Furthermore, involving the Board and broader employee community helps to demonstrate the forward-thinking strategy of the business, improves employee engagement and demonstrates to the external market that you’re an employer who invests in long-term strategies around their people.
Succession planning is a broad topic and there isn’t a “one size fits all” approach. However, many of the general concepts and challenges are similar across a wide range of organisations. For more advice and ideas around how to implement successful succession plans across your business, please contact Chris Smith – Director, Energy & Utilities – Norman Broadbent Group.