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Forecasting Future Needs
While many companies understand the importance of succession planning they fail to grasp the true essence of what is succession planning. Such companies tend to identify a successor to the incumbent and equip the successor with the knowledge, skills, abilities, and competencies of the incumbent. This is when only rarely will future challenges require the same skills that worked in the past.
A good succession planning exercise requires understanding the critical challenges the company and the industry will face in the short to medium term, and the skills and competencies that the companie's key personnel require to lead the company through such challenges. The succession planning exercise then strives to equip the identified successor with such skills and competencies besides the incumbent’s skills and knowledge.
Image Credit: flickr.com/Wouter Kiel
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One common dilemma faced by many companies face is whether to consider internal candidates or external candidates as successors. Both approaches have their share of benefits and risks, but the risks with external candidates are higher owing to the unfamiliarity of such candidates. Many companies however go in for an external candidate by default as they fail to identify a successor or initiate the succession planning exercise for internal candidates well in advance for a successor to become ready to take over.
Succession planning best practices require both starting the succession planning process early to ensure internal candidates become ready when the transition time approaches, and keeping the screening for external candidates updated simultaneously. The best selection practice involves inviting the internal candidates for the recruitment screening first to ascertain whether they have developed sufficiently to take over, and considering external candidates when there remains no suitable internal candidates.
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The process of succession planning comprises many methods such as rotations in different functional areas for hands on experience, cross training in different functional areas to develop skills and competencies, and the like.
One key method of succession planning is mentoring. Many mentors however make the mistake of merely passing on knowledge. While transferring knowledge from the incumbent to the successor remains a key requirement of the succession planning exercise, effective mentoring for succession planning requires focus on equipping the successor to achieve performance goals by building on recognized strengths, and to improve their proficiency and competence.
Another best practice regarding development includes developing electronic repositories of key information including functions, processes, and resources
A good succession-planning program involves periodic evaluation of its effectiveness and making necessary changes to the resources and programs applied.
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A crucial aspect of succession planning is to get the timing right. Getting the identified candidate ready at the exact time the incumbent leaves the organization is impossible. The succession planning exercise however needs pacing neither too slow nor too fast. Delaying the start of the exercise or phasing in too slowly might mean that the candidate will not being ready in time and overlooked in favor of an external candidate.
Accelerating the succession planning ensures that the successor becomes ready to take over before the incumbent leaves.This causes many problems such as:
- the candidates leaving on their own for better prospects or becoming targets for headhunters
- the candidates waiting for the successor to leave creating an uneasy and tense situation, causing organizational dysfunction
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Research by Heidrick & Struggles and the Rock Center for Corporate Governance at Stanford University suggests that more than 50 percent of companies cannot immediately name a successor to their CEO should the need arise. Adoption of succession planning best practices can help companies implement an effective succession planning strategy to avoid such critical lapses and make themselves a resilient organization immune to dependencies on any specific individual.
The transition of key personnel such as the CEO is very often tricky and a time of great vulnerability for the company. Adopting succession planning best practices minimizes the uncertainty and allows for not just a smooth transition, but also equips the company to leverage its strategic advantages.
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- UC San Diego. Blink. “Succession Planning: Examples of Best Practices." Retrieved from http://blink.ucsd.edu/HR/supervising/succession/best-practices.html%20on%2008%20November%202010
- Heidrick & Struggles. "CEO Succession Planning Lags Badly Research Finds." Retrieved from http://www.gsb.stanford.edu/news/headlines/2010-succession-planning.html%20on%2008%20November%202010.
- Miles, Stephen A. & Bennett, Nathan. "Succession Planning Best Practices." Retrieved from http://www.forbes.com/2007/11/07/succession-ceos-governance-lead-cx_sm_1107planning.html%20on%2008%20November%202010.