Three Strategies for Addressing Succession Planning
Year after year, one of the top five concerns of business leaders and their Human Resources professionals is making sure there is top quality talent available to fill key roles in the event of incumbent departure, i.e. Succession Planning.
Companies tend to adopt one of three strategies as their primary way of addressing this need. Each has pro’s and con’s.
1. Plan to do external search when an opening occurs.
This approach is attractive because it requires little infrastructure or internal process and attention to use, and it assures a steady flow of new perspectives and backgrounds into the leadership team. However, there are a few costs associated with this approach:
- There is often considerable time the position remains open while the search is undertaken
- The search itself can be expensive
- It takes considerable effort to get an outside hire oriented and fully contributing It can create a perceived lack of opportunity for internal talent such practice promotes
- There is a better than 50/50 chance you will have to do it again within two years based on the industry-wide failure rate of external hires into key positions
This approach is attractive for many reasons:
- It provides excellent continuity of leadership and minimal time when a position is open
- There is no search cost
- This approach creates a “brand” for providing opportunity and developing good leaders
- The success rate of internal candidates is significantly greater than for external hires
The downside to this approach is that it takes considerable management attention and discipline to manage an effective succession planning and talent development pipeline in an organization. There is also fear, though generally not supported in fact, that this approach leads to less diversity of thought and ideas in an organization.
3. Develop a disciplined internal succession planning and development process, but use external search when and where significant talent gaps appear or a major change of direction is used.
For example, use internal promotion to fill the vast majority of roles, but go outside for key leaders when a business or function needs to be “shaken up;” where the culture and results need to be significantly changed. This approach has the same infrastructure and discipline cost as strategy 2, but addresses the concern about diversity of thought, and it sets the stage for more effective use of external talent than is generally the case in strategy 1. Strategy 3 does this by setting the expectation that the external hire is strategically selected in order to create discomfort and change in the organization.
There is less expectation of the external hire “fitting in” and more of a charter for them to leverage their unique experience and expertise.
Regardless of which strategy is employed, the basic steps of a successful planning process need to be undertaken (we do not acknowledge “do nothing until an opening suddenly occurs” as a strategy). These basic steps will be explained further later, but include the following actions which should be done with good rigor and periodically reviewed and refreshed.
- Define the roles which require succession planning. [You can use the Critical-Roles-Lists.xls template to facilitate this process.]
- For each role, define 3 – 5 key experiences a candidate would need to be viewed as “Ready Now.” [You can use the Critical-Experiences-Nomination-Template.xls to facilitate this process.]
- For each role, define 3 – 5 high level competencies that experience shows differentiate this position from others at this level or the ones below. [You can use the ThinkWise Competency Modeler to facilitate this process.]
- Cluster the roles with similar experience and competency requirements into families to make it easier to link candidates to multiple roles.
Once you have done these steps, the major difference in the three strategies is how you source candidates.
For succession planning to be most effective, regardless of the strategy adopted, we have found a few guiding principles to be key.
- Both the selection of roles and the competencies required to fill them should be Future Focused and driven by the organizations Vision and Strategy.
- Candidate selection should be based on a balanced view of Competencies (indicative of potential) and actual Results.
- Actual work experience is the principle driver of development for succession candidates and is the litmus test for whether a candidate is indeed Ready.
- Future Leaders should be managed as a Corporate Asset and their tracking and development a shared concern across management. Hoarding of talent or allowing development to occur within silos should be driven out of the organization.
- Succession Planning and management of the Future Leader (High Potential) process should be sponsored by the CEO and owned at the next level. It can be facilitated by HR, but should be owned by top line management.
One of the reasons Succession Planning is a perennial member of the top-five-concerns is that it is conceptually simple, but requires considerable oversight and discipline to do well. Typical barriers that must be candidly assessed and addressed are these:
- Doing it at all well takes leadership time and energy.
- Trying to initiate the process for too many roles at once results in the process collapsing of its own weight.
- Concern about morale issues of key performers who are not identified as succession candidates or are passed over for external hires.
- Development and grooming of high potential candidates requires treating them as a Corporate Asset, not a protégé.
- Requires open, candid discussion about candidates, their experience, competencies, and actual results.
At ThinkWise, our goal is to provide you with the necessary resources to make smart Employee Development decisions. Below is a link to the comprehensive guide: Succession Planning Process Overview. The report has several links to additional planning resources and is a great resource, whether you are considering a new Succession Planning system or want to improve your existing processes.