Succession planning is typically defined as “a process for identifying and developing new leaders to replace old leaders when they leave, retire or die.” As stated, this process sounds logical and forward thinking, from a business perspective. Assuring smooth leadership transition is vital to a company’s continued prosperity, especially in a time of complexity and uncertainty in the business environment. And yet, despite the overwhelming agreement among executives that leadership issues are of the highest priority, a very low percentage of companies (about 14%) have enacted a strong succession planning process for their businesses. Furthermore, among those companies that do claim to pursue a succession plan, the failure rate of newly assigned leadership is very high.
Why this discrepancy, and why these discordant results?
The reasons, as expected, are complex and multifaceted. Given the usual culprits — labor shortage made more severe by baby boomers leaving their careers, critical skill gaps widening as technology and work culture continue to evolve — this challenge will continue to become more difficult to overcome.
Upon examining the processes that make up the strategies that businesses employ to address succession planning, we discover that a significant number of the failures in the process can be attributed to the process itself. Traditional approaches to succession planning that embrace narrow and inflexible strategies can’t be expected to succeed in a business environment that’s broken all conventional rules of operation. Companies that do succeed in this enterprise have understood that succession planning is more than just maintaining and updating lists of candidates. This process will never reveal and correct critical skill gaps that can lead to inefficiencies, higher costs and even derail the company’s very strategy for success.
Overcoming the Setbacks in Succession Planning
The Integration of Human Resources (HR)
One of the more significant weaknesses that industry research has brought to light has been the relative isolation and independent operation of the HR department. Historically, it functioned as the major arbitrator over the talent that was brought into the company. This left other departments with little to no influence over new hires, consequently leaving them with little control over managing skill gaps and proactively providing for future skill requirements.
The needs and goals of an organization must be aligned with talent throughout all areas. Leaders must be aware and understand the roles of all key employees and their teams, because this is the critical pipeline that must be nurtured with the talent and skills that will one day fill leadership roles. To accomplish this, the HR group must not operate as a separate entity, but instead must integrate with the rest of the organization. They must be intimately involved with the prime business strategy of the organization, working directly in achieving this strategy and in solving the gap in competency that may stand in the way.
This challenge, in fact, is foundational to the structure of a sound succession planning process. If all units of a business are working in tandem, their individual efforts will harmonize with the business’ ultimate goal.
Future Leaders and the Need for Leadership Development
The importance of future leadership goes without saying. A strong leader is vital to a company’s long-term prosperity. But the qualities that are essential for this role have been evolving, along with all facets of business stewardship in this new era of economic uncertainty and global focus.
It’s no longer sufficient to be skilled in only one area of the business, or to have been a loyal employee for many years. Future leaders need to have developed a wide array of skills, such as people management, finance and strategy, to name a few. Skills such as these need to be developed early on in the succession process — not on the job. This level of development calls for early and targeted training, such as pairing classroom training with real-life experience on a number of jobs.
This can be accomplished when succession planning is conceived of together with leadership development. These two tasks belong together, as the successful transition in leadership relies on a candidate that has honed all the skills necessary for this critical position.
Keep it Open, Flexible & Transparent
The idea that leaders can only come from a select few positions at the very top is dated and counter-productive. Talent development, especially leadership development, is as relevant to candidates in middle management as for those at the top. Succession planning should be open to developing talent in all areas and levels of the organization.
Succession planning can also become a tool for filling lower level positions, like a general manager position. The idea is that the process should be ongoing and flexible enough to reach all levels and positions within the company. Only then will all employees feel empowered and motivated to track their own course for development and potential career moves. Succession planning that’s opaque and secret speaks to a much earlier, paternalistic era where most employees were in the dark about their own position with respect to promotion.
This approach fails to engage with employees, and doesn’t reflect the fact that most employee contracts are now based on performance rather than seniority or loyalty. An employee will work towards his/her own development more conscientiously if they know where they stand in the succession system, and what’s required to move to a higher level. This level of transparency isn’t simple to achieve, but many more companies will see the logic in moving in this direction, for the good of their business accomplishments and for the employees themselves.
The Shift Toward Enlightened Succession Planning
Underlying this business move toward succession planning is strong evidence that organizational performance is directly linked to the quality of leadership talent in all the key areas of an organization. The risk of losing key employees and the importance of acquiring new talent will continue to play a key role in a company’s strategic planning, as competition for the best leaders will grow exponentially.
Succession planning must embrace the intentional development of potential leaders, but must simultaneously ensure that emerging pivotal roles in a company are being proactively nurtured and attended to. Without this foresight, the emerging pressure points in a company’s infrastructure could be significantly weakened, exposing the company to potential failure.
What’s the best way to secure these outcomes? Work towards creating an organizational culture that values progressive leadership, openness and transparency. Also, promote both an internal and external educational environment that directly supports a wide array of skills development. This skills development shouldn’t be exclusively geared to the upper echelons, but also made available to personnel at all levels of an organization. Only in this way will individuals feel motivated and empowered to chart their own course to career development and, in so doing, improve the odds for the company’s growth and success.