A Critical Investment: Succession Planning

Planning is imperative to maintaining a thriving business and this is even more true for choosing corporate leaders, as they are critical to organisational success.

Yet many companies are slow to recognise this and, as a result, can fail to invest adequate time and resources into preparing the right pipeline of talent. Business continuity is a core priority when it comes to for ensuring organisational sustainability and, in that context, identifying and selecting future leaders becomes more than just an HR exercise.

When critical individuals leave the organisation unexpectedly, there is often a scramble to decide how to source talent. Should we promote from within or hire an outsider? Should we find someone who exactly fits the vacant role defined by the predecessor, or re-assess our leadership and team needs? Unfortunately, such questions are typically only seriously considered when there is already an empty desk to fill.

The ideal time to ask these questions is long before the need arises. The main question is, how can organisations effectively plan for succession and avoid the trap of doing too-little, too-late?

Succession planning is a multi-step process that must be handled comprehensively and holistically. As with any major decision, it is the responsibility of business leaders to ask the right questions and to ensure that sufficient and appropriate data and insights have been collected.

Understand which roles and key positions your organisation cannot do without. Typically, it is C-suite leaders who are hardest to replace but there may also be directors who are critical. Any senior manager with a significant impact on your organisation should be considered.

Think about how you define success for each role. Do you know what good looks like? Building a competency framework lets you know what to look for, not just in the here and now and day to day, but also in terms of growth aspirations and contingency planning. The global pandemic was a wake-up call for many companies, as outdated operating models failed to meet new challenges. What worked in the past may no longer work in the future, and this requires a forward-looking, multi-faceted perspective.

Business leaders are often asked to name their ‘stars’; employees they believe have the potential to lead the business as their successors. The problem is that potential and performance are often conflated. A high-performing, hardworking employee may already be operating at their best or be unsuited to leadership and therefore lack relative potential. In such cases, promotions backfire because employees have been inadvertently set up to fail.

So, how can your organisation differentiate high potentials from high performers? It’s important to start with an objective benchmark against which individuals can be assessed – and this is where a competency framework and success profile can help to broaden the thinking about suitability. While leaders may instinctively lean toward a focus on ‘in-demand’ skills or characteristics, this approach can lead to appropriate candidates who excel in critical areas being overlooked because they don’t currently have specific skills.

When it comes to creating future leaders, the first step is to identify gaps. The next step is to close the gaps. Large organisations tend to offer plenty of resources and learning opportunities, but the journey is typically unstructured and unguided, based on individual initiative. Challenges with self-awareness abound as the Dunning-Kruger effect is common, where people with limited knowledge or competence in a particular domain greatly overestimate their own abilities relative to others. Putting in place objective criteria is therefore critical to ensure genuine improvement and personal development.

In a data-driven world, decisions need to be backed by supporting information. Just as business success is measured on more than just “gut feel”, it is neither appropriate nor sufficient to consider talent decisions successful without having the data to demonstrate it, which, in this case, is a set of benchmarks against which individuals can be evaluated.

Business leaders should view succession planning as a critical part of overall business planning, and as part of their growth strategy - and they should invest accordingly. It is worth taking the time to plan and evaluate talent decisions to optimise return on investment.