Succession planning isn't easy.
But it's not rocket science. Learn the basics in this guide.
Table of Contents
Strategic Considerations
Identify Business Impacts. One major reason to engage in succession planning is to avoid negative business impacts when a key role is vacated unexpectedly. Business impacts can be operational, tactical, or strategic in nature. Think about what risks you want to AVOID at all costs. What metrics or outcomes would cause the most disruption to your business, either immediately or longer term?
Prioritize Critical Roles. Use your org chart to identify the roles that, if left vacant, pose serious risks to the business. Drawing on a sports analogy, you couldn’t win (or even play) a baseball game without a pitcher. Those are the mission critical roles. Circle these in red ink. If there are still too many roles to deal with at one time, then discuss who could do parts of those jobs temporarily, until the role was filled. If there is no one with both the time and expertise to do so, make these your top priority. Next, identify the “feeder positions” that lead into the mission critical positions. Finally, think about whether there are roles that do not yet exist but will (or should) within the next 5 years. All of these positions should have a pool of successors at varying levels of readiness.
Identify Critical Competencies. Facilitate a visioning meeting with senior leaders of the business units of the mission critical roles. Clearly define the technical competencies that will be required for success in specific roles. Additionally, identify core non-technical competencies that are transferrable across roles. These should align with your strategy, vision, and values. Read about how to develop a competency model here. Once you’ve defined the transferable non-technical core competencies, evaluate your internal L&D capabilities for developing them. Where gaps exist, create a plan to fill them. This may include in-house instructional design, engaging consultants, or utilizing external resources.
Track Metrics & Continuously Improve. Succession planning works when it is treated as a cyclical process. Depending on the size of your company, the number of roles you’re dealing with, and your retention and turnover rates, conducting a review every 1 to 2 years is best practice. Throughout each cycle, you should be gathering and analyzing metrics to evaluate how it is working.
- What is your executive turnover rate? This metric allows you to more accurately anticipate how many people you need in your successor pool and how frequently you need to engage in the succession planning process. If the rate is high, you will need to do more digging to get to the root cause of the frequent churn and address it. The last thing you want to do is invest a lot of time and money in preparing successors (or hiring from the outside) only to have replacements leave before you get a return on your investment.
- What percentage of high potentials have left your organization? If the number is high, find out why. Do exit interviews to determine why people are leaving. Is it because they didn’t have a clear career path, mentor, or development? Are your high-potentials leaving at a higher or lower rate than your average or low performers? If you are lucky enough to have most of your high-potentials stay, find out why by doing stay interviews. The information you gather can be used as a selling point for recruiting and retention.
- What is the average amount of time before people in the successor pool leave or get promoted Once you have a baseline, this can tell you how well your organization is preparing successors and keeping them engaged and motivated. If the time is short, it may not be enough to prepare them for success. If too long, people could become frustrated and leave
People Considerations
- Assemble Succession Planning Committees. Succession Planning isn’t an “HR activity.” (Yes, we said it again!) So, you need to find a diverse group of senior leaders from HR and across the business who understand the importance of succession planning. Look for leaders who have taken the initiative to groom their successor, develop their direct reports, and mentor others. Also, be purposeful in inviting leaders who represent diverse groups, advocate for inclusion, and bring different perspectives.
- Identify Multiple Potential Successors. Don’t put all your eggs in one basket. If a sole successor leaves, you are back to square one. Have at least 2, and possibly 3 people in the pipeline for each critical role. Keep in mind that they can be at different levels of readiness (i.e., < 1 year, 1-2 years, and 3-5 years), so you should be looking 2 (or even 3) levels down, depending on the role.
- Talk to Your People. Don’t assume that everyone wants to be a successor. Talk to each person about what they enjoy doing, what they find fulfilling, and what they don’t want to do in the future. Ask about their career goals and let them know that they are valued and their job is safe, even if they don’t want to advance. For those who aren’t interested, find ways to enrich their work so they can continue to learn, grow, and add value.
- Proactively Recruit. You will not always have three, two, or even one strong potential successor for every critical role. So, when the bench is shallow, take action. First, identify the roles that serve as a steppingstone into the mission-critical roles. If there are vacancies, assess for advancement potential in the hiring process. And, let it be known that your organization has a formal succession planning process, as this will draw in high potentials. Second, consider if you can make a business case for creating a new role that would lead into a mission-critical role. This can often be done during an organizational or departmental restructuring, or when new business goals are established for the year.
Process Considerations
- Communicate Transparently. Succession Planning shouldn’t be kept a secret. Ambitious people want to know that there is a path to advancement. Not surprisingly, research shows that being open and transparent about it results in increased retention of high potential talent. Of all the succession planning best practices, this one may matter the most. Without trust, your efforts will fail.
- Conduct Talent Reviews. If you already have a talent review process in place, you are one step ahead. If you don’t, there’s no time like the present to start them. This annual process puts structure around discussing talent, to ensure that everyone is given “air time” (not just those who are favored by their supervisor). It brings multiple people together who have observed the individual and can offer their input, insights, and ideas. Discussions center around not only what the person has done, but what they could likely do in the future, with proper development. Your list of potential successors will be a natural outcome of your talent reviews. If you don’t have talent review data to work with, the succession planning committee can still gather input from multiple sources to determine a list of potential successors.
- Assess Potential Successors. Past performance is not the best predictor of success in the next level up role. In fact, it’s common for top performers to struggle once promoted. That’s because it’s hard for people to distinguish performance from potential. So, performance is used as a proxy for potential and that’s a big problem. Fortunately, there are reliable and accurate ways to measure potential. Specifically, the best way to measure potential is with objective assessments that are grounded in psychometric testing and conducted by psychologists.
- Objective measures of cognitive ability, the Big Five/Five-Factor Model of personality, and Leadership Style should be included, as each of these is predictive of critical outcomes and performance in leadership roles.
- The outputs of the assessment should include ratings on the critical competencies that you identified for each role. This will allow you to determine which areas are in need of development.
- Using objective assessments also helps to break down barriers of entry for people who have historically been under-represented in leadership roles. And, organizations that have more diversity in leadership roles are more innovative and have stronger business results.
- Still, the objective assessment should not be the only factor you consider. Past performance, 360-degree feedback, self-awareness, a continuous learning orientation, and receptivity to feedback and coaching should also be part of the equation.
- Objective measures of cognitive ability, the Big Five/Five-Factor Model of personality, and Leadership Style should be included, as each of these is predictive of critical outcomes and performance in leadership roles.
- Debrief with Everyone Assessed. Telling someone that they are not going to be groomed as a successor is the most difficult part of the process. But it needs to be done in a timely, candid, and compassionate way. Be honest about the inputs that were considered and explain why they were not identified as a potential successor at this time. Be sure to convey that they are still a highly valued team member and that you are committed to supporting their growth and development. Follow through on providing that support and find ways to keep the person engaged. When debriefing with those who are being groomed for succession, do not promise that the role is theirs. Convey confidence in them, but also be clear that progress toward their developmental goals will be a key factor that will be considered when the seat needs to be filled.
- Develop Everyone Assessed. Remember, the assessment results do not negate what the person has accomplished or can continue to do well to serve your organization. So, it’s important to find appropriate and meaningful opportunities for everyone you assessed to grow and contribute. One of the deliverables from the objective assessment should be a developmental report that is given to the individual. This will help them to uncover hidden strengths and reveal blind spots that can be addressed through development. The report also provides practical tips and a structured process that will help them continue to grow. Thus, it can serve as a powerful tool to support their success and show that you are invested in their career development. Of course, you will probably want to invest more in people with higher potential. These individuals may be given a mentor, an external coach, stretch assignments, and a more detailed development plan with short, mid, and long-range goals.
Remember – these are Succession Planning best practices. If you’re just starting out, don’t think of these as must haves for your first run. Over time, you’ll learn what you need, what works, and what doesn’t work for your organization. And every year, you will get to make improvements based on those lessons learned. For now, you just need to do one thing – get started!
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Contact Dr. Al Schnur, President and CEO of PCI at [email protected]. Or click below to connect with him on LinkedIn.
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