Recalibrating the succession plan to win and retain talent
All senior leaders will inevitably leave their post at some point. In fact, headlines are currently buzzing with news of new CEO appointments and departures across industries. Just in the last month, Expedia looked within to fill its newly vacant top role, naming former CFO Mark Okerstrom as CEO, while its former CEO Dara Khosrowshahi moved over to the top spot at Uber.
These two examples of high-profile shuffling are nothing out of the ordinary. According to Strategy&, the global strategy consulting team at PwC, about 10% to 15% of corporations must appoint a new CEO each year, whether because of executives’ retirement, resignation, dismissal or poor health.
Despite inevitable transitions, research shows most organisations are not always well prepared to replace members of their leadership team, let alone deal with the ripple effect. Succession planning is also routinely cited as one of the greatest challenges facing HR departments today.
Heeding the warnings
Despite an abundance of cautionary tales, warning of the dangers when companies brush succession planning to the side, there are many who see it as a waste of time when jobs and people are changing all the time. This is in spite of the fact that failure to plan for CEO transitions has a high cost – and not only in terms of money.
Businesses without a strong leadership development strategy risk losing valuable employees to talent flight, which in turn can limit the pool of talent able to step up in the event of an unexpected vacancy.
Succession planning therefore is a critical part of a broader talent management programme and a powerful tool when it comes to future proofing an organisation.
A successful strategy around leadership changes should then aim to attract the best talent, retain strong individuals, and develop both new and existing employees through well-targeted development efforts. It is essentially about bolstering a bench of talent, ensuring the long-term health, growth and stability of an organisation.
Seeing the bigger picture
So how does a company go about developing a succession plan that will develop a rich talent pipeline?
One challenge associated with succession planning is the pre-determined notion that it is merely about replacing a senior leader, should they depart. That’s just false. Important as the person at the top is, succession is not solely about finding the single replacement to fill the shoes of a leader on their way out.
Rather, succession planning is more broadly about also recognising competency gaps across levels – from individuals, to teams, to the business in its entirety. A first step to planning is about taking inventory.
Ask employees what they want, and what they need more of and less of. This insight can be just as important as what the business needs, and both perspectives should be considered so that everyone is aligned.
Operating in transparency
Along a similar vein, the importance of transparency during planning and execution of a succession plan is not to be diminished. Consider this, succession planning is about continuing to foster a partnership between the business and employee. It’s not a one-sided approach.
It is essential to recognise what a company’s people want to achieve, and they too need to understand the business goals. This requires two-way, visible communication.
Even the best training programme may not always supply or groom the talent needed to run an organisation or assume new roles at peak efficiency.
This can be especially critical when considering whether to promote a new leader from within or to hire externally. The latter poses risks of demotivating employees when it is stranger taking up the reigns, while the former choice may lack the benefit of fresh eyes and new, positive thinking.
The benefits of promoting within is assurance of an implicit level of commitment and legacy investment. They know the culture and will serve as testament to what people can achieve by progressing loyally through the company during their career.
Regardless of an internal or external appointment, however, clear and consistent communication is key. Current employees should be assured of their own trajectory, and provided with the opportunity to revisit their personal roadmap as needed.
Educating and empowering leadership
Going hand in hand with the concept of transparency is that of empowerment. Even, and especially, amid transition periods, mid-level management should feel they have the support and resources necessary to both their own and their team’s growth. This goes beyond annual reviews and is about continually ensuring a culture that breeds the best possible outcome of individuals.
From a succession planning perspective, this can fall on the HR department to educate and inspire managers. If managers are inspired, employees will be inspired, which creates a thriving culture that will naturally become infectious. This cycle can manifest formally within a mentorship scheme, which takes a long-term position on fostering talent for greatness.
The converse, an absence of regular, enthusiastic encouragement, can be a detrimental downhill slope. While the investment in a company’s people reinforces that there is opportunity for every role and skillset.
Talent roadmap and skill gaps
Cheerleading talent is one thing, but purposefully working with people to groom their strengths and tackle growth areas is an entirely separate level of investment. And it’s one of critical importance during succession planning.
Rather than having one appraisal a year, managers and HR teams must provide employees with regular, comprehensive feedback to guide their professional development. These weekly or quarterly meetings are critical check-in’s to identify performance gaps, training opportunities, role changes and timelines for meeting goals and objectives.
Just as important as holding employees accountable, these routine meets are to hold the company accountable for its investment in people.
Succession planning is an ongoing and dynamic process that ensures an enterprise can keep pace with changes to the business, industry and overall marketplace. This becomes even more critical in an increasingly globally competitive environment.
However, even the best training programme may not always supply or groom the talent needed to run an organisation or assume new roles at peak efficiency. That rings especially true of rapidly growing companies. Sometimes, it is essential to find talent from the outside – or internationally (gaining experience outside of the individual’s home country).
Succession planning is the trailer, not the movie.
Global organisations should consider their scale and scope when forming a succession plan and connect with colleagues around the world when relevant. For example, while one location may not have talent suitable for a newly vacant role, an office in another country may have been grooming just the right person.
International work is also a valuable resource in succession planning, as it offers the opportunity to enrich an employee’s professional life, adds to their depth of experience and can teach them new skills that can be applied as they move up the company ladder.
Similarly, opening up the talent pool to employees in international offices increases the diversity of potential management and leadership teams, improving the chances of finding the perfect person to fill a position and the strength of the company overall.
High potential development programmes are not an automatic path to a promotion. It should be intrinsically rewarding. If you don’t set the right expectations then you could do more harm than good. Furthermore, it is important to set expectations correctly throughout all stages of succession planning.
Succession planning is the trailer, not the movie.
Create success stories across levels
While a CEO shift may grab the headlines, smart succession planning from a broader outlook can help a company snag and keep top talent.
If smart steps are taken, succession planning can ensure existing employees across levels and around the globe are developed and groomed in a way that allows them to scale up to fill newly available positions within the company as the need arises.