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Who is your next leader?

curranrecruit
Oct 15, 2014
3 min read

What would happen if a key leader/manager/CEO were to step down tomorrow with or without notice? How would it affect your organisation? Would your organisation be ready? Do you have the next generation of leaders ready to fill these roles? These are the questions that succession planning tackles and what this week’s blog post aims to explore further.

What is succession planning?

Planning. It acknowledges that staff will not be with an organisation indefinitely and provides a plan and process for addressing the changes that will occur when they leave. Without new leaders ready to take over for those who resign, retire or are let go, business performance can suffer.

Awareness. It aims to identify the key positions in an organisation and have at least one employee immediately available when a critical position becomes vacant. This helps to ensure smooth transitions and minimal disruption to business. (Critical positions are those that are crucial for the operations of your organisation and, because of skill, seniority and/or experience, will be hard to replace).

Grooming. It is the development of internal people with the potential to fill key business leadership positions in the company. When the time for selecting a successor arrives, the company should be well prepared and confident in the candidate they have groomed. At the same time, the next in line should have a clear understanding of the company’s vision and its expectations of them as the next appointed leader.

Why is it important?

According to CIPD, the absence of a succession plan can undermine an organisation's effectiveness and its sustainability. Without a succession planning process, an organisation may not have the means of ensuring that the programs and services that are crucial to its operation are sustained beyond the tenure of the individual currently responsible for them.

To illustrate the importance of why succession planning is important, let’s use two recent examples in the corporate world:

The share price of insurance giant Legal and General plummeted in 2012 after chief executive Tim Breedon announced he was leaving, but appeared to have no idea who would be succeeding him. Without clear communication of what is to come next and who will take over, it breeds doubt and discontent among stakeholders such as customers.

US retailer Home Depot and the ill-judged appointment of ex-GE star Bob Nardelli (someone with no previous retail experience) led to a series of poor decisions, a serious fall in market share and Nardelli's eventual replacement by an internal candidate who showed a deep understanding of the market and company culture.

Tips for succession planning:

1) Must be aligned to the medium and long-term business strategy, thus ensuring an organisation is creating sufficient talent to manage its business growth objectives. Leaders should establish the goals and targets that the company wants to achieve in the forthcoming years. This has to be very clear and definite, as it will be key to finding the right candidate to take over the helm.

2) Needs to be supported and driven by senior management. HR leaders can't force executives to support their efforts but they can align talent management efforts with strategic plans and educate executives and managers about the business value of succession planning efforts.

3) Look inside as well as outside the organisation to identify and maximise your talent. Internal candidates are also not always the best choice. If a company wants to move in a dramatically different direction, or its current leaders leave before the next generation is ready, companies need to be open to bringing in someone from the outside.