Family businesses are advised ad nauseam to have a succession plan. Mostly, they fail. Mid-size businesses should have a succession plan. Mostly, they fail too. Large businesses must have a succession plan. Unfortunately, they tend to fail as well.
Succession planning is not a ?nice to have?. It is a necessary part of any organisation’s ability to reduce risk, create a proven leadership model, preserve organisational memories, smooth business continuity and improve staff morale. The only readily identifiable reason for an organisation to fail to plan for succession is a lack of appreciation of the risks that not planning brings.
An indication of how many organisations fail to plan for succession comes from the simple measurement of the level of outside recruitment in senior positions. Human resource firms report that sixty percent of the Fortune 250 firms in the United States go outside to hire people at the executive management team level. It is probable that organisations below the Fortune 250 have even higher levels of outside recruitment.
Organisations that do have effective succession planning systems have common characteristics.
They have smooth transitions. Having someone to step into an important vacancy is a critical measure of the effectiveness of succession management. However, helping that person transition in a positive manner with all the necessary skills and knowledge is as important and often more challenging to execute.
They are able to identify the right developmental assignments. A successful process includes job assignments that properly prepare candidates for their new positions, as compared to a sink-or-swim approach.
They provide meaningful appraisals and feedback. Often, three hundred and sixty degree feedback is used. Objective assessments are essential in order for management to specify what’s required for a successful promotion.
They use appropriate selection criteria. A successful succession management system depends on the identification of competencies for each job, giving everyone involved a clear picture of the behaviour, skills and knowledge required to succeed. Individuals are given a personal development plan to help them acquire the desired competency.
They have a range of good choices for each position. A working succession system results in having more than one good person available for a key job. Real success requires choices between two or more qualified people. From my experience, three people identified for each key position is what organisations should strive for.
Development of a succession planning system is not difficult but does require executive leadership and commitment. Despite the low level of difficulty, errors in developing succession planning systems are common. For example, many organisations often concentrate on a succession plan for their leadership team only. This is insufficient. A succession plan should, at a minimum, determine which positions in an organisation, if not successfully filled, increase the risk to the organisation to an unacceptable level. Many technical roles where an incumbent tends to have a long tenure should be included in a succession plan.
Another failure often encountered is the desire to clone the incumbent. If the organisation needs to move in a different direction because of changes in their operating or competitive environment, clones will not work. Another frequent mistake in succession planning is making the assumption that good performance at one level will guarantee good performance at the next level. Organisations need to understand the competencies and personality characteristics required of job roles at each level and plan succession accordingly. Succession planning systems are often cumbersome and not consistently applied within an organisation. A good succession planning system is easy to use. It is a non-bureaucratic, uncomplicated process; a unified approach ensuring consistency and maintaining objectivity across business units, organisational levels and geographic areas. However, perhaps the biggest mistake to make is to view a succession plan as merely a replacement programme. That is, to identify a few people for a position in the future and allow nature to take its course. Succession planning systems must be developmental in nature. A variety of developmental activities including mentoring, coaching, job rotation, traditional educational programs and formalised feedback processes should be used.
The most important developmental activities are job assignments or work experience. Organisations need to spend considerable time balancing the organisation’s need to fill vacant positions with assignments that will help key people grow and develop their potential.
Succession planning is a necessary leadership team activity. Leaders need to be actively involved in the development, monitoring and measurement of the system. Once developed, the system needs to be evaluated for its ability to provide succession into key roles. The system must be objective and the evaluation of its effectiveness must be objective. Paying lip service to succession planning is potentially worse than not having it.
It is said that organisations that fail to plan, plan to fail. Leaders of organisations that fail to have a succession plan, plan to have failure succeed them.