Business Catharsis through Succession Planning
Replace yourself – depending on your mindset that can be either “too difficult to imagine” or just cathartic! As with a lot of leadership skills, comprehensive succession planning is easier to talk about than to put in place. For CEOs and business leaders everywhere, growing a business can be an exciting ride. It is hard to have a firm plan three to five years out when things are going so well.
Succession planning is the process of identifying and developing “future leader” talent pools in an organisation. It is a key part of any comprehensive talent development program. It contributes to the sustainability of a business, provides a career path to key members, reduces the attrition of top talent and increase business profit.
Succession planning should be done for two main reasons. Firstly, having a clear career path and identified group of leaders who are in various stages of development sends a strong message to all employees that the company takes their professional development seriously. It is a tangible demonstration that skill, hard work and commitment will be rewarded.
Secondly, if there is a plan to replace the existing leaders in the business in the near future (3 to 5 years) then developing the talent internally is the best for the business. The culture and the company IP can more easily be perpetuated.
In many of the M&A deals I have been involved in, one of the biggest barriers to the transaction proceeding is the degree to which the succession planning has been thought out and implemented. This is particularly true in service businesses where the people are key assets and hold a lot of critical IP for the business.
For small to medium size businesses most CEOs and/or founders have a tight grip on the business and have not relinquished the controls to anyone of significance in the organisation.
Succession planning takes time. Identifying and developing people at all levels of the organisation is not simple and requires the support of the leadership team, the board of directors and other key stakeholders. Therefore, the sooner a serious succession plan is implemented then the sooner your business catharsis can be experienced.
Here are six critical steps in implementing a successful succession planning program.
At the very beginning the CEO has to own the succession planning program. If it is owned by HR or Talent development, then it will not be as successful. Of course the day to day running of the program needs to be HR or Talent Development but the authority must come from the top.
Before selecting the leaders for the future be sure to understand and be committed to the company vision and values for the future organisation. Many times leaders who are suitable for a particular stage in the organisation’s development are not suitable for the future organisation. The future leaders that enter the succession planning program need to match the values and skills required for where the organisation is going, not where it has come from.
This needs to be done at a few levels in the organisation. It could be individual contributors who are getting ready for their first management challenge. On another level it could be leaders who are being prepared for a CEO or COO role. Remember that moving someone up a level in the organisation provides an opportunity for another to back fill that position.
Advise each individual that they have been identified for the succession planning process. Clarify with them their individual career goals and aspirations. A key part of this should be the personal and private aspirations for themselves and significant others in their life.
Provide challenging and rewarding programs which develop skills and business acumen. For each level and type of individual these will be different. Some companies use an individual development portfolio which has been developed for an individual. The development of the portfolio can use a combination of objective and subjective input. It will be based on a broad analysis of the current level of skill and talent. Development will focus on closing the critical gaps. A combination of self-study, classroom work and specific project assignments will be used.
Be sure the investment aligns with the individual’s personal aspirations. Be sure to make the programs unique and targeted.
6. Communicate and Execute
As part of any succession planning process there will be expectations set.
“In two years we want you to be a team manager...”
“In four years we expect you can be running this business unit.”
The reality and time line eventuates quicker than most expect. Whatever the promises and assurances that are given it is imperative that the reality and the outcomes are constantly reviewed and the expectations on both sides are reaffirmed. Too often assurances that are made are then put in the “hard basket” and avoided or not answered directly. This is a mistake. One thing that is certain is that the cost for hiring smart and energetic people is an open and honest internal communication process.
Running a modern business is a hectic life. However, running a modern business with a three to five-year outlook can be cathartic if you have built in a succession planning program. Invest in the necessary human resource management and talent development and you will be rewarded with low levels of attrition, a steadily growing profitable top line and a sustainable business. Most importunately, you will give yourself choices for what you want to do in the future.
Some critical objectives and steps in Succession Planning are: (Wikipedia)
· Identify those with the potential to assume greater responsibility in the organization
· Provide critical development experiences to those that can move into key roles
· Engage the leadership in supporting the development of high-potential leaders
· Build a data base that can be used to make better staffing decisions for key jobs
· Improve employee commitment and retention
· Meet the career development expectations of existing employees