Guide to Succession Planning: Organizational Strengths and Weaknesses
Why Should We Have a Succession Plan?
Organizations spend a great deal of time and money on planning resource needs to support their future business plans. Marketing strategies, IT infrastructure and equipment all feature in these scenarios. However, one aspect of strategic business development which is often overlooked or poorly thought-through is succession planning. Organizational strengths and weaknesses must be assessed.
You must ensure that you have the right people in the right roles for the organization’s current and future business requirements. The hiring decisions you make today may not necessarily give you the kind of employees you will need in future years. What about the impact of future product diversification? How will you cope if many of your most talented employees are likely to retire about the same time with no one ready to take on their roles?
A lack of succession planning leaves organizations vulnerable to skills gaps or overlaps, loss of skilled experience if large numbers of employees retire within a short timescale and other changes in demographics. In addition, organizational transformations, whether in size or scope, will call for a systematic review of human capabilities matched against changing business requirements.
This lack of planning is particularly ironic considering that many managers would agree that people are their most important resource. Hiring the wrong people or failing to invest in their talent development are expensive mistakes that managers need to avoid.
So, What Is a Succession Plan?
Essentially, it is a talent pipeline; a way of ensuring that not only do you know who could replace whom (which is known as ‘replacement planning’) but also that you are building a talent pool of people whose current and potential capabilities are being assessed and developed for future career moves and changes in organizational requirements. An accurate and comprehensive evaluation of your human talent pool will give you a detailed picture of the organization’s strengths and weaknesses accessible during succession planning and enable you to plan your investment in training cost effectively.
Examples of Approaches to Succession Planning
Organizations tend to use one or a combination of the following approaches:
Replacement planning: Where the focus is on individual jobs and job-holders, usually planning for emergency scenarios if the current job-holder is suddenly no longer available. This is a narrow view of what succession planning is about.
Senior management team succession plans: Those viewed as possessing the potential capability to work at the highest organizational level are formally assessed, development plans are initiated and ‘names’ are penciled in against each senior job. This is a variation on the ‘replacement planning’ approach. The focus here is still narrow as it looks at only the top tiers of the organization.
Work levels-based succession plans: Here the perspective taken is of the entire organization. Decisions are made about the core skills requirements (fashionably known as competencies), both technical and generic, for each organizational level taking into account the organization’s current and future business strategies, the need for any special expertise and predicted changes in the organization’s external environment. Whilst the focus is often still skewed toward management levels and roles, there is consideration of individual specialist work also, whether at the frontline operations level or higher-level corporate support functions. An organization-wide succession planning strategy is therefore more likely to be able to evaluate organizational strengths and weaknesses in terms of gaps and overlaps in skilled knowledge and specialist expertise.
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Why Do Succession Planning Strategies Sometimes Fail?
The usual causes include:
- Lack of a systematic and validated framework against which to evaluate the talent pool.
- Lack of commitment from the CEO and senior management team.
- Reluctance or inability to maintain succession planning systems.
One of the reasons why some managers fail to plan their talent pool development is that they are unsure about either how to go about it or are overwhelmed at the thought of the effort required to maintain a succession planning system. They may also be concerned that any organizational changes will render the succession plan invalid and may therefore wonder whether it is worth the time and effort in the first place.
How Succession Planning Can Really Work Well
A work-levels-based approach to understanding organizational needs is critical. Whilst some organizations define job and work level requirements through the analysis of core competencies, this approach falls drastically short of what is necessary.
In order to create a meaningful succession plan, we first have to define accurately the work roles in the organization at each level and the capability required to perform the work well. ‘Capability’ includes knowledge and competencies, of course, but also the critical success factor of cognitive capability.
The research of Dr Elliott Jaques and others identified the numbers of levels of work required in organizations by measuring the increasing levels of work complexity and the corresponding levels of cognitive capability required at each level. So, a direct match can be established to answer the eternal question: ‘Is this person ready to cope with the challenges of this role?’
The Requisite Organization Management Model1 created by Jaques also gives managers a robust framework within which to identify employees’ current and future potential capability. Whilst recognizing that skilled knowledge, experience and motivation are all essential to optimal job performance and employee satisfaction, Jaques discovered the critical role played by cognitive capability – he called it Complexity of Information Processing – in handling the complexity of problems to be solved in a work role.
Here is another stunning revelation: Jaques’ research into human capability also discovered that our cognitive capability matures at a measurable and predictable rate throughout our lives, and may still be maturing even when we reach normal retirement age. People’s cognitive capabilities have been found to mature at different rates and speeds.
When organizations use the Requisite Organization framework for succession planning, they are able to identify not only who is capable of performing which role now, but also, based on the measurable predictions of their cognitive capability maturation, for which roles they have future potential capability. Therefore, a highly reliable picture can be created easily to identify where future capability overlaps and gaps may occur. This enables managers to make cost-effective decisions about hiring, promotion and training.
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When Organizational Structure Changes – Is Succession Planning Still Relevant?
The answer to this question is: Yes, very much so. With the Requisite Organization Model the impact on infrastructure and capability requirements of any changes in size or scope can be easily identified. The number of organizational work levels may need to change to reflect changes in work complexity, and the talent pool potential can be matched easily against this framework.
Other Critical Success Factors in a Succession Planning Strategy
What else must be considered in successing planning? Organizational strengths and weaknesses assessments must encompass all of the following:
- CEOs need to understand that succession planning is a critical element of strategic corporate development, not an optional luxury.
- Managers must be held accountable for not only creating the right infrastructure for their business unit but also for creating and maintaining a rolling program of talent evaluation and development. The evaluation and planned development of employees should be integrated into the organization’s performance review system.
- At each organizational level managers should evaluate and develop their own direct reports and also ensure that the same is happening further down the organization.
- Managers need to cooperate in this respect with their peers; talent and success belong to the whole organization, not just their own part of it. This attitude needs to be embedded in the organizational culture and reinforced through managerial accountabilities and performance evaluations.
- The organization needs to invest wisely in its talent pool, looking at on-the-job learning opportunities and secondments as ways to strengthen the succession plan.
- A reliable database needs to be created and maintained, and managers need to take ownership of this data.
Although a succession planning strategy requires an investment in managerial time and commitment, the benefits far outweigh the costs. A good succession planning strategy has been found to:
- Predict and control an organization’s strengths and weaknesses in terms of its talent pool.
- Reduce an organization’s dependence on expensive external recruitment.
- Improve productivity and reduce staff turnover.
- Increase employee motivation and internal career mobility.
- Optimize the organization’s investment in training and development.
- Promote the organization’s image as a first-choice employer.
Requisite Organization Management Model, at Requisite Development Ltd., retrieved at https://www.requisite-development.co.uk