Succession planning is an ongoing system of identifying competent employees who are ready to move into key jobs in your organization, as well as those who, with specifically identified development, will be ready to assume key jobs at some stated point in the future.
Succession planning is one of the most complex responsibilities of CEOs and board members. And while it ranks high on the list of priorities of the great majority of companies, it is often written off as part of the executive’s ‘to-do’ list, with very little coherence to both the organization’s long-term objectives and the evolving nature of the role and the business.
At a time when more and more companies need to find ways to do more with less, particularly with respect to hiring, it is imperative to ensure that your succession-planning processes are optimized in order to avoid unnecessary turnover and development costs.
Succession planning: Whose job is it anyway?
Before we discuss how a successful succession plan should be developed and implemented, let’s first determine who should own this process.
Executives may appear to be best suited for the job, given their exposure to the pool of candidates and their understanding of the competencies required to be successful in their role. Yet, tasking executives with finding their own replacements can lead to unintentional yet avoidable turnover costs, and a considerable delay in anticipated profits.
We have indeed noticed that certain executives have a tendency to show bias in their decision to find a successor. Some, to maintain their ‘legacy’ by selecting candidates who can’t outperform them; others, by choosing their right-hand person, with disregard toward the potential of other employees who may be poised (i.e., have the potential) to develop into successful leaders.
Considering the above, many would assume that the board should be granted ownership of the succession planning process, if only to veto the short list of candidates brought forth by executives. But let’s remember that such a decision would be based on documented past performance, a measure that is, on its own, insufficient to assess the true potential of a candidate.
Research also shows that when a board is tasked with selecting successors, it tends to primarily look externally for candidates, rather than considering the company’s existing pool of talent. Yet, internally available and adequately skilled candidates present a much lower risk when compared with hiring an individual who has very little knowledge of the organizational processes and may not be a great fit for both the existing culture and the teams he/she will need to manage.
Conversely, omitting to look externally is a risk of similar consequences. “Having a viable internal candidate doesn’t ever excuse the succession planning process from looking outside to ensure that the best candidates for the job are considered.” Running internal and external searches concurrently is simply good governance.
Finally, there are organizations that leave this decision in the hands of the HR department. According to Workforce magazine, HR can indeed build a great talent development plan but “without active support from leadership, it won’t have the desired impact.” For instance, while HR may be aware of the main responsibilities of a particular job role, it may not have all the information pertaining to the position’s intricacies and the behavioral traits required to manage them successfully.
What HR can do however is “align (the company’s) talent management efforts with strategic plans, and educate executives and managers about the business value of succession planning efforts.”
Succession planning needs to be regarded as an organizational effort, which requires the input, vision and expertise of a diverse group of individuals. At times, it may even involve getting your top talent to the table. Nevertheless, the key is to gather your best experts in order to develop a comprehensive, stress-tested strategy that can then be implemented with ease.
Accuracy, objectivity and flexibility: The makings of a successful succession planning strategy
There are three main obstacles to a successful transition strategy:
- Accuracy: Identifying the most critical competencies for the job
- Objectivity: Knowing how to find and evaluate candidates
- Flexibility: Trusting in the development potential of existing talent
Accuracy: Getting the job done right the first time around
Not taking the time to accurately identify the competencies successors need to possess is by far the most common and the main reason why succession-planning strategies often fail. The Society for Human Resource Management puts this into perspective by saying:
“It is not enough to select people who seem “right” for the job. Not only should the experience and duties be considered, but also the personality, the leadership skills, and the readiness for taking on a key leadership role.”
Competency models serve to determine the skills that your successors must possess to perform to your expectations – and beyond. It is only once you have clearly listed these skills, knowledge and personal characteristics that you can truly evaluate your options. Leaders may seem easy to identify but as businesses change, grow, adapt and evolve, objectives are revised, and skills and competencies must follow course. The success of competency models is that they work to describe emerging and anticipated skill requirements, rather than skills that have been effective in the past.
To achieve the objectives of a succession plan, we believe that the single-job approach is the most effective, as this approach uses extensive and rigorous data collection to ensure that the model contains highly specific behavioral descriptions of what a potential leader needs to do and how in order to achieve the desired results. Because of its complexity, it is also received with great credibility by top management and senior executives.
While this process requires a considerable time investment, your HR department can easily get started using a generic competency dictionary, which can then be passed on to senior management and board members for customization to a specific role within the company. You can also call on competency modeling experts to help you build a sustainable model for your needs.
Objectivity: More than intuition
Companies often overlook the importance of objective competency models in the succession planning process. After all, they know what leadership looks like, and will be able to recognize successors without having to rely on a list of descriptors. But this subjective way of identifying leaders can deter change and stump future growth, as it is human nature to tend to seek people who are like us. In other words, foregoing objectivity is a great strategy to maintain status quo and preserve current leaders’ shortcomings.
On the other hand, relying on the board to make that decision means short-listing replacements based on past performance – in a different role, no less. Considering that board members rarely have a chance to interact with entry or mid-level employees, they often find themselves in a position where they must bank on employees’ track records to make a decision. This backdated assessment of candidates’ future potential may appear as objective as can be, but it provides very little insight as to how these individuals will perform in the future, in a different role, especially given the right development tools. We discuss this some more in a recent article on the cost-effectiveness of combining workforce management processes.
Flexibility: Providing a roadmap to excellence
Another great flaw of many succession plans is that the successor has to be ready now. Truth is, there is no way of knowing if a candidate is ready for the job, unless he/she gets a fair chance at proving that they possess the right competencies. At the very best, the candidate has demonstrated certain skills in his/her current job, under that role’s scope of constraints and responsibilities. But a true, viable successor is developed with this very purpose in mind.
“In order to prepare potential leaders, the gap between what they are ready for now and the preparation they need to be ready for the job when it is available needs to be determined.”
This advice from SHRM is critical. Companies cannot wait until they need a successor before beginning the ‘grooming’ process. With a competency model in place, aspiring leaders can develop their skills over time, preferably with the help of mentors, i.e., your best executives. Once employees understand the competency requirements for higher jobs and the gaps between their competencies and those required by the jobs they want, they ask for training or other developmental activities to close the gap. Similarly, once an organization is aware of the competencies it needs to be successful and the gaps between these needs and the capabilities of its existing or projected staff, it seeks selection or developmental programs to close these gaps.
You may even want to complement this professional development path with an annual assessment, by senior management, of your current talent pool, including performance and potential of direct reports and other high potential people within other groups.
Remember that the degree of readiness of a candidate depends on your reality, the risks you are willing to take, and the underlying job roles.
Building your succession plan using competency models
Understanding that the objective of succession planning is not only to provide you with a system for identifying a pool of replacements, but also to provide your candidates with a clearly defined career path to their advancement is half the battle; the other half entails finding and implementing a solution.
To develop a customized competency-based succession planning system, begin by listing the core competencies that are required to take over your key roles. Use competency dictionaries to save you time and effort; these are a highly effective starting point to customization.
Another great tool to help you find potential successors are behavioral event interviews (BEIs). In a BEI, the candidate is asked to describe how he/she approached a specific past experience of a particular type. The interviewer then uses a probing strategy to elicit detailed descriptions of behavior, and to keep the interview focused on what the candidate thought, did, and said at key points during the sequence of the event. Each “event” question is selected to elicit evidence for one or more of the competencies being assessed. BEIs may take from 30 minutes to two hours or more. To save you time, you may want to consider using competency interview guides; these help you interpret positive and negative behavioral indicators via key questions and answers.
Once you have identified a few potential replacements, don’t just sit back expecting them to become the person you want them to be. Rather, coach, develop and work to improve their competencies. Our development workbook provides instructions on setting competency development goals, along with specific suggestions for developing 35 competencies. The guide contains a variety of worksheets and information for each competency, including definitions, behaviors and general considerations in developing and practicing specific competencies, obtaining feedback for development, coaching suggestions for managers, and other similar resources.
The final step: Evaluating your succession plan
Once you have developed your succession plan, it is important to test it. Begin by asking yourself if your current system…
- Presents the job requirements in a structured, focused and precise manner?
- Explicitly describes the competencies a candidate should possess?
- Accounts for a way to test your selection process?
- Plans competency development actions with potential successors?
- Identifies the most important competencies and requirements on your list?
These are, of course, just a few of the key elements that a successful succession plan entails. Simply put, you need to know 1) what you need 2) what you have access to and 3) what you can develop. Without this information, it will be incredibly difficult, if not impossible, to identify the right leaders to ensure your future success.
Read more on what it takes to build and implement a competency-based succession plan, or contact us for more information on the tools available to assist you in the process.