Succession Planning Best Practices
Robust succession plans protect your organization from disruption, help you to retain key talent, and ensure your leadership pipeline is ready for the future. At PCI, we help clients implement succession planning best practices built around three core areas: Preparation, People, and Process. When these elements work together, your organization can anticipate change rather than react to it.
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Succession Planning PREPARATION Best Practices
Identify Business Impacts
Avoid disruptions caused by the sudden loss of key talent. Identify operational, tactical, and strategic risks you want to prevent, and define which outcomes would cause the greatest harm. Build a business case for why you need succession plans becuase you'll need the support of a variety of internal stakeholders.
Priortize Critical Roles
Use your org chart to identify the roles that pose serious risks if left vacant. Drawing on a sports analogy, you couldn’t play a baseball game without a pitcher. Those are the mission critical roles. Circle these in red ink. Next, identify the “feeder positions” that lead into the those roles. If any potential successors to the mission critical roles occupy those positions, you should have succession plans for those as well. Finally, think about future roles that don't exist today but will in the next 3 to 5 years. Think about what current positions could feed into those. You'll need a pool of potential successors at different levels of readiness for each of these priority roles.
Define Success Factors
"Start with the what, not the who." - strategy+business
This succession planning best practice is often overlooked by Boards because their attention is often drawn to who will replace the current CEO. And this is a big mistake. Instead, this conversation should be geared toward what the next CEO needs to be able to do well to succeed.
Hold meetings with key leaders to define success factors in 4 buckets. Core Values apply to all employees. Leadership Competencies apply to leaders at all levels. Future-ready Competencies are skills and abilities that will be required for leaders as your business evolves in response to macro-level demands. Finally, define the functional KSAs for each role on your succession plan. Read more about building a competency model.
Establish Metrics
Use metrics like executive turnover rate, high-potential attrition, number of key roles filled internally, and number of potential successors with a written development plan. Be sure to get a baseline before you start the process so you can track your progress.
Succession Planning PEOPLE Best Practices
Bring together cross-functional leaders from HR and the business. Look for leaders who have taken the initiative to groom their successors, develop their direct reports, and mentor others. Also, invite stakeholders who think differently from each other to encourage the exchange of diverse perspectives.
Assemble Diverse Committees
As the saying goes, 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.
Don't Make Assumptions
One of the most common mistakes we see people make is assuming that everyone wants to be successor to a higher level role. While most people will see being nominated as a compliment, it may not be the right time for some. And, some may not want the additional pressure, responsibility, or work involvement required at the next level. Before putting someone on a succession list, ask them about their career goals. Make sure they know that saying no won't have negative consequences. For those who aren’t interested, find ways to enrich their work so they can continue to learn, grow, and add value.
Proctively Recruit
When the bench is shallow, you'll need to consider external talent. So, hire with advancement potential in mind. Also, promote your succession planning process during recruiting, as this will attract ambitious leaders. Finally, consider if you can make a business case for creating a new feeder role into a mission-critical role that has a thin internal pipeline.
Succession Planning PROCESS Best Practices
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. It ensures that everyone is given “air time” (not just those who are favored by their supervisor). The cornerstone of this process is that it brings multiple people together who have observed the individual and can offer their input, insights, and ideas. And, discussions center around not only what the person has done, but what they could likely do in the future, with proper development. So, your list of potential successors will be a natural outcome of your talent reviews.
Communicate Transparently
There's a lot of discussion around this succession planning best practice. But there shouldn't be a debate - failure to talk about it openly breeds distrust. Also, ambitious people want to know that there is a path to advancement. Not surprisingly, research shows that being open and honest about succession plans results in increased retention of high-potential talent. And, it's easier to communicate transparently if you intertwine succession planning with talent reviews.
Use Objective Assessments
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. These assessments should measure things that become more important in higher-level roles like stress tolerance, cognitive abilities, and influencing.
Debrief
Communicate outcomes of talent reviews and succession planning committee discussions in 1-on-1 debriefs. Be candid and compassionate with those who aren't put on a succession plan. Explain why they were not identified as a potential successor at this time and how you will continue to support their growth. And, for those that are put on a succession plan, 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 when the seat needs to be filled.
Develop All
Your goal should be to have development plans in place for all leaders at the levels you decide to start with. Invest more deeply in high-potential individuals and those on succession plans through mentoring, coaching, and executive education.
Remember - these are best practices, not minimum requirements. Don’t wait for perfection. Start where you are and improve over time.
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