Succession planning is not just about having someone lined up to take over your job when you move on (either internally or externally). It is far more than that.
No matter whether your business is a FTSE 100 conglomerate or a local SME, succession planning can significantly reduce your time and money spent on recruitment, giving you more focus on the core elements of your day job.
What is succession planning?
The broad definition of succession planning is the identification of talented individuals who can take on key positions in the future as leaders or lynch pins of the business.
Succession planning must be looked at in two ways – short term and long term. It is not about having a quick fix in place in case someone leaves, it is about building long term loyalty, learning and growth into the workforce and business.
- Short term succession is ensuring an appropriate individual is fairly ready to do a job immediately.
- Long term is about recognising those with potential and helping them develop.
- Short term planning is usually focused on senior management, particularly in a larger business (as only focussing on the top tier reduces the number of employees involved and is therefore more manageable), but there may be also be vital roles in the business at a more junior level that need a successor in place.
- Long term planning has traditionally focussed on tiers of staff lower down the business in order to maximise their potential over time and line them up for key roles well in advance. However, there is no reason why a Chief Exec retiring in 8yrs can’t have a successor being developed to take over at that point.
Where to start:
In terms of implementing succession planning into your business, there is no hard and fast methodology that you can use because every company is unique in its own way – size, structure, culture, skills, industry etc.
However, there are some important areas of your business to think about in order to ensure you have the succession planning in the right places.
1. Key positions
Analyse your business and pinpoint the key positions that are most important in keeping the business moving forward. Try not to look at individuals, but think about the responsibilities of each role – a sole IT role in the business may be more junior but produce more vital work than anything that the Ops Director does!
2. Business Direction
Where will the business be in 5-10yrs time? What will be the most important skills needed in the business then?
These two points will produce a list of positions and skills that you need to think about very carefully. ’Do you have anyone who is adequately skilled to do these now if the current incumbents left?’ Short term planning.
Also, ‘Do you have anyone who could be capable of doing these roles or have these skills in 5-10yrs times?’ Long term planning.
Assess the individuals in your workforce either confidentially or through testing (depending how open you wish to be about the succession planning). Grade these people as short term and/ or long term achievers. Try not to rate them solely on the performance in their current role as this is about potential to do other roles as well. If you don’t have many that you rate highly, maybe you don’t have enough potential to drive the business forward in the future.
This will produce a list of individuals whom you need to provide a development program of some kind (the scale of which will vary hugely depending on whether you are a FTSE 100 or SME business.) This program is essential to grow these individuals’ skills and to ensure they remain challenged and inspired enough to stay within your business long term.
Combine these two lists – is there any cross-functional movement you could facilitate that you hadn’t foreseen? Could one of your potential leaders move from their current position/ function to learn about a different part of the business where you are short of any successors? This would plug a potential succession hole for you whilst fulfilling an exciting career path for the individual.
e.g. Could a high achieving finance person move into an operational role? (after all, CFOs become Chief Execs regularly!)
It is important to realise this planning process is not about trying to find one successor for each key role in your business. It is about identifying a pool of people for a collection of positions thus offering more flexibility for everyone in the future.
- Regular discussions and reviews with all individuals on the succession planning program will ensure you are continuously evaluating and updating the succession plans. Not only does this keep you in touch with each individual and their skills as they develop them but it also ensures each individual regularly has a chance to discuss their career path – significantly reducing the likelihood of them feeling undervalued and leaving your business.
- Look at the succession planning process alongside the external recruitment process that your business conducts. If your business has strictly used pre-determined competencies when hiring external staff, and you find a lack of successors when running the succession planning process, you may want to look at changing the interview/ selection process. Remember, competency based interviews only test for suitability based on past performance, it doesn’t look for future potential to learn.
See our advice on ‘Interview Management’ for any assistance on interview structures and techniques.
External: Internal hires:
There is no ‘golden ratio’ as to how many internal to external hires you should try to achieve when recruiting. This will depend on a huge a number of factors specific to your business at that time.
What do we mean by internal hire?
This is where a business moves someone internally to fill a vacancy and then has to back fill that person’s job. Although still resulting in an external hire, it sends a hugely significant message to the workforce – we look after our staff by continually trying to develop their career and by rewarding good performance.
Therefore try to keep the majority of appointments internal, particularly higher up the business, as you can’t put a price on the extra productivity you will see from a happy and motivated workforce.
However, every business needs new skills and ideas, particularly when growing or entering new markets, so some external hires are essential. Also, if a business needs a sudden change of direction or large impact, an external hire at a senior level may be essential.
As a result, try to work on an internal: external hiring ratio of 75:25 and you should achieve a good balance of both short term and long term loyalty and succession planning.
Finally, there is no reason why succession planning shouldn’t be seen as anything other than positive in a business. In the past there was a train of thought that people not seen as a ‘future successor’ would become disillusioned/ unmotivated and leave or become a disrupting influence. Research has shown than this isn’t the case and that open succession planning actually drives the majority of people to perform better as they either want to get into this elite group of people or are inspired that their business is actually thinking about the future careers of its staff.