A poor succession plan or no succession plan at all can deal a serious blow to shareholder value and negatively affect your organization’s ability to retain other key employees and attract new talent. It also creates an opening for competitors to win over your customers or pilfer your talent base. Recently, some high-profile local executives exited companies without succession plans, and the effect on everything from stock price to manager retention was negative.
Additionally, despite what current economic conditions may lead us to believe, an impending talent war looms. A much smaller pool of available talent from which to choose future leadership exists, and current numbers are expected to shrink well beyond 2020.
Proper succession planning begins with recognizing that the process is not always cut-and-dry; it is tied to human emotions (including those of the exiting executive, co-workers and customers). When creating succession plans for your company’s top executives, consider:
1. The Big Picture. An executive’s succession does not happen in a vacuum. More than simply getting the right leader in the job, it involves a complementary team working together toward a communicated and understood goal. Adding a few words to a job description is NOT succession planning – you need to assess your culture, your strategic plan and the competitive landscape to better understand what might be needed. Planning now for the eventuality is a must; you cannot do this effectively when your company is in crisis mode.
Your plan also cannot be contingent upon just one person; you need to have several alternatives and sets of expectations, as well as the support, training and development plans necessary to create a viable succession pool. Give these potential leaders opportunities to take on additional responsibilities, be challenged in new ways and work with new teams or departments. When feasible, the exiting executive needs to have regular and consistent exposure to these future leaders and work with them on new opportunities.
2. The Bridges. Individual responsibilities for succession planning need to be understood and delineated clearly. What will be the role of human resources? For what will the CEO, the board, the functional area head, etc., be responsible? Who oversees the plan, who is assessing, who is doing the analytical work? Are the candidates getting appropriate face time with the right people? Collaborating on the mechanics of execution early will ensure the effectiveness of your succession plan.
3. The View. Never lose sight of the fact that when it comes to succession planning, business decisions can become muddled easily by emotions. You must build in objectivity, metrics and analytics to ensure your plan is in the best interest of the organization. Personal preferences and friendships cannot affect measureable, predetermined criteria. Ensure that you don’t create an environment where potential successors are undermining each other or “running for office.” The damage done in that type of situation can be irreparable. Additionally, do not forget that giving up the reins can be difficult for the exiting executive as well.
A thoughtfully crafted and well-executed succession plan can help ensure a seamless transition upon the departure of a key executive. In the rush of everyday business, this important element of your company’s strategic plan can be easily overlooked. However, putting in the time and effort can yield significant benefits in the long term.
Adam Berman can be reached at Email or 215.441.4600.