Fail to prepare, prepare to fail – as the saying goes. In business, you need a risk management process which maps out your sucession planning strategy for replacing staff, CEO’s, outsource firms and even sometimes replacing yourself.
Let’s face it, we’ve all been there. You’re in a job when the boss, work colleague or team member jumps ship and leaves a mound of work behind for others. And you’ll usually find that nobody knows where to pick up the reins and where the bodies are buried (so to speak)!
Planning successors within teams and roles is fundamental risk management for any large or small scale industries and businesses.
Fail to do it and you’ll find your just courting disaster. Read on for my take on the best practices and planning you should consider.
What Is Succession Planning?
Simply put, succession planning is the process by which the leaders of an organization identify potential successors to their roles from within the organization, and then prepare them to take on those roles.
In larger companies it falls under the heading of strategic human resource management (something I’ve written about previously) and requires careful planning by team leaders & management in close corporation with your human resource department. The goal being to reduce the risk of losing key staff and looking to the future at what employee skill sets will be needed in coming years.
There is a wide variation among companies, both as to how they define what is succession planning, and how far they see the succession planning process as a priority. Among those who do see it as a priority, there is an even greater variation as to what they see as succession planning best practices.
Although business succession planning is not carried out in all organizations, you’ll find there is an increasing recognition of its importance. One reason I’ve seen for this is the changing demographics of most developed countries, with younger people rapidly decreasing as a proportion of the population as a whole. At the same time, business is seeing competition for talent becoming more acute, meaning that staff retention is of increasing concern.
Replacing leaders by recruiting from other companies is becoming less and less viable as an option. This means you’ll find there is an overwhelming case for business succession planning to be adopted in a methodical way at all levels of the organization… from the board-room to the mail-room.
Business Succession Planning Basics: What You Need To Get By
#1. Be proactive – Any plan is better than none at all!
There is general agreement that the planning needs to be proactive. I’ve found some folk suggest that planners need to look three or four years ahead, others believe they should be thinking in terms of decades. Your firm, its industry and your product space should dictate this.
For example, a bleeding-edge software dev business with short release cycles may choose shorter timeframes whereas staff succession planning in the mining industry (long release cycles) would take a longer view.
#2. Pinpoint the successors desired skillset
In any case, before selecting individuals, the succession planning process needs to start by identifying what skills the organization will be needing in three, five, ten or twenty years’ time. This can go along with your leaders and managers identifying the competencies and skills that will be required by replacements for their own specific positions.
#3. Match desired skills to current employee profiles (Your HR team are key to doing this)
The next step is to identify your high performing individuals who have the potential to fill these positions, according to the competencies identified. This identification should be based on thorough assessments, evaluating not only your staff abilities, but personality and behavioral characteristics.
Your HR department should be clearly involved in this. moreover, if you do regular 360 degree performance appraisals or annual reviews then staff skill sets data should be close to hand, indexed and searchable.
Once these people have been selected, development programs should be put in place, to prepare them for those specific roles. These programs should involve a variety of methods, including projects, assignments, and job rotations.
Each individual should also be provided with a mentor, preferably the manager they are replacing, to provide feedback and encouragement.
Dealing With CEO Succession Planning
Although the succession planning process should be carried out at all levels, it is especially critical at CEO level. This is often seen as the responsibility of your CEO themselves, rather than that of the organization as a whole. However, CEOs are often reluctant to consider a scenario when they will not be there.
#4. Senior management, not the outgoing CEO, should define the successor
A mistake often made in CEO succession planning is for current incumbents to identify individuals similar to themselves, or whom they find personally congenial.
However, they should rather be starting with a strategic analysis of where they want the company to be in the future, and recognize that this may require different competencies or a different style from their own.
Perceiving where your business is heading will help to identify a forward thinking leadership style inventory you need to consider, the specific leadership talents required, such as skills in financial analysis and strategic thinking, as well as a particular leadership style.
#5. Great leaders need great teams around them
At the same time as choosing a successor for the CEO position itself, a major aspect of your firm’s CEO succession planning is the development of a team around that individual, for support and back up. The CEO does not operate simply as an individual, but as part of a leadership team.
Without that team’s support, the succession is likely to fail. Bear in mind thought that your new CEO may wish to ‘clear the decks’ by bringing in their own team of advisers.
Succession Planning Tools and Templates
Okey. So by now I think I’ve established the ‘need’ for having a well-formed succession planning process. Thankfully, their is a raft of tools, software & templates to help standardize the process.
Many companies do recognize the need for a succession planning process, but still put it off because it seems so complex and nobody knows exactly where to start. For this reason, you’ll find a number of succession planning tools have been developed to facilitate the process.
I won’t mention any one tool here since I’ve found the main contenders tend to change quarterly and anyhow you’re better off finding one to suit your own industry/context is an attempt to shoehorn in a bespoke tool to fit your needs.
#6. Use software/templates if available that suit your industry & staff profiling requirements (optionsal but recommended).
These apps/template have the advantage of making the selection more objective and based on data, rather than subjective and dependent on personal preferences. To be sure of finding the best people, selectors need to have up-to-date employee information readily available, not rely on personal impressions.
Using succession planning software packages can also make it easier to integrate succession planning with other human resource processes, such as compensation and process management. Most packages include a succession planning template, which will ensure the processes are systematic and thorough.
For instance the template can make it possible to enter the skills required for a large number of named positions, and the competencies of several candidates for each position, to match the right candidate for each position.
For all organizations, the main reason succession planning is important is continuity. If there is a hiatus when a key leader leaves for whatever reason, including unexpected reasons such as ill health, the organization will both lose its way, and lose out to the competition. Whatever specific methods are adopted, establishing your own succession planning best practices will ensure the organization keeps its vision and mission alive for the future.