Succession planning is crucial for any organization – in good economic times and bad.
Companies must have strategic steps in place if they want a smooth succession process in the event of a precipitating development – whether it’s the current global pandemic, an economic downturn, an executive’s illness or death, or irreconcilable differences with the board. In addition, plans should reside not only in an executive’s head, but on paper in a well-documented strategy.
Here’s what organizations should know about effective succession planning.
Succession Planning is More Than Just Grooming the Next CEO
CEO turnover is at a record-high level and many companies are losing key employees to retirement, particularly given the aging of the baby boomer generation. Additionally, uncertainty and disruption can add to a leadership team’s instability. So it’s fair to say that the need for succession planning is greater now than any other time in recent memory.
But, succession planning isn’t just about the top of the org chart. When done right, it’s about recruiting and developing talent to build the next generation of leaders at multiple levels. That was the thinking behind a global restaurant chain’s effort to refresh its longstanding leadership program for high-potential employees.
Over the course of a year, the company redesigned its cohort-based program for general manager succession, identifying 12 individuals in the U.S., Canada, Europe, and the Middle East as the next generation of global leaders. The redesign included input from senior executives, internal program leaders and past participants; blended engagement of external thought leaders with organizational design and best practices; and revised program content, format, and delivery.
After twelve months, half of the individuals were promoted to general manager and all participants made progress in achieving their goals, leading to a stronger leadership pipeline for greater succession planning.
Succession Planning Starts by Identifying the Right People
The previous example begs the question: How should a company identify the next generation of leaders for succession planning?
First, you should look for employees who excel at creating teams and painting a broader vision. This type of employee is usually able to stir collective excitement among co-workers – a skillset that can be leveraged in multiple positions across an organization.
Then, as the example above shows, opportunities should be offered to those up-and-coming individuals. No one is ever totally ready for the next career step, but through concentrated guidance and support, they will inevitably gain confidence in even the most challenging roles.
In this regard, some companies take big risks with big payoffs, promoting promising employees to stretch assignments or even roles in entirely different geographies or areas of expertise. Examples include appointing someone from finance to lead HR, or sending an exceptional product line leader overseas to run another part of the business. We had a client do the latter, eventually bringing that individual back to the U.S. as a successor to the CEO.
This approach echoes throughout an organization, even reaching individuals who haven’t (yet) been tapped as future leaders. Just knowing that their employer prioritizes the identification and development of future young leaders can encourage employees to perform better and think bigger.
Make Sure Succession Plans are Documented & Backed by Data
Executives probably think they know what to do when a key person departs. But their succession plans, including the nitty-gritty specifics, are not always documented. Written plans and strategy are crucial. Sometimes, they must be accessed and shared at a moment’s notice when a sudden departure occurs.
Succession plans must be regularly updated and reviewed, in part to identify deficiencies or holes. The evaluations should be built around data to remove as much bias as possible. Plans built solely on emotional factors or personality-based intuitions are problematic.
Assessment tools can help evaluate employee performance and success in their roles, and also track what employees seek in their own career development. It can also assess their level of readiness for the next step. Such tools emphasize development as well as potential and are an integral element of any best-practice succession plan.
It Pays to Be Ready
The degree of transparency surrounding succession planning depends on the situation and the organization. Some companies opt for a transparent process where most employees are informed of what’s to come in the event of a leadership transition. Some prefer a more tightly controlled process – where even employees who are a part of the succession plan may not be aware of all the details.
Regardless of who’s clued in about succession plans, it should go without saying that plans must be ready well ahead of when they’re needed. No matter what spurs the transition, the absence of a succession plan could result in people promoted to roles for which they aren’t prepared, causing a whole host of issues.
Succession planning can be an intimidating undertaking, but it is also increasingly vital. With the right tools, team, and resources, succession planning can be an opportunity — and not just a challenge – with results that pay off in spades.
For more information, contact Mary Herrmann at firstname.lastname@example.org.