Do you know who will be leading your business in the future? Do you have the people with the capability and potential you need? Or will you leave you leadership succession to chance?
Leadership succession is significant issue for many businesses, as too many do not have a systematic approach to succession planning and effectively leave it to chance. Succession planning is not just a business risk issue. In their research paper ‘Will Succession Planning Increase Shareholder Wealth?’ Shen, Cannella, and Albert, found that there is also evidence that that investors, employees and customers respond positively to companies who invest in planned succession management
Essentially the purpose of succession planning is to ensure that there is a ‘pipeline’ of people with the talent and capability to fulfil key roles and deliver the strategies of the business. Key roles are any role that drives a disproportionate share of the organisation’s performance. While traditionally, these roles are defined in terms of leadership roles, in reality these also include other roles such as technical, product or business development.
Succession planning is not a complex process. It starts with the organisation identifying what’s needed to deliver the strategy. For example:
- What are the ‘key’ roles needed to deliver the organisation’s strategic objectives?
- What capabilities do we need?
- Who might leave or retire?
- What gaps exist?
Once these questions have been answered the organisation can set about preparing specifications for roles and finding suitable people. Finding the right people means measuring and assessing a number of things, such as:
- Current levels of competence and performance.
- Technical skills – does the role require high, medium or low technical skill.
- Experience – for example industry and international experience.
- Cultural fit – personal style.
- Personal motivation.
Evidence to assess the above criteria can be collected from how a candidate has performed in their current/previous roles as well as through independent assessment. The advantage of using an independent assessment process is that decisions about who has/does not have the potential to fulfill a key role can be taken in a consistent manner across the business.
Once the business knows and understands the people it has and their own personal motivations, it can prepare a succession plan However, succession planning does not exist in isolation. For example, any gaps that exist may generate a requirement for recruitment. In addition, the performance of the successors will need to be regularly reviewed as well as appropriate development support provided such as leadership development or coaching to enable successors to reach their potential.
Ultimately, a highly tuned succession planning process cuts the risk to the future success of the business, succession is far too important an issue to leave it to chance.