There are several reasons why you might need to replace key members of leadership, management or other especially skilled people in your organization. Think of potential disasters, for example, such as fraud or another type of scandal that leads to numerous resignations, or a plane crash that takes out some top officers. However, there are also more mundane reasons—such as the looming retirements of your most-needed leaders, or even the founder. In family-owned businesses, the succession plan is even more critical to ensure the future success of the organization over time.
If an organization designs its succession plan properly, it will not only be prepared to fill unexpected leadership gaps, it will also reap such extra rewards as greater motivation and retention. So where does one start?
According to research conducted by Business and Legal Reports, a succession-planning program begins in HR and then spreads out across the organization. A good first step is to align hoped-for leadership characteristics with business goals. Whether current leaders have those qualities is less important than what the organization envisions it will need in the future.
HR and top management should decide which of three basic models is the most appropriate plan for them:
- Role-based, in which key positions and hard-to-find skills are identified;
- Individual-based, in which particular employees with high potential for advancement are identified; or
- Pool-based, in which a broader group of performers who could fill any of several higher-level positions is identified. In larger companies, it would be wise to identify more than one candidate for each key position, while less redundancy will be needed in small organizations. You have now established your objectives and the size of your program.
Populate, groom for and monitor the plan. At this stage, the effort spreads out to capture extensive input from managers throughout the organization. Not only do they need to buy into the planning process, but they are also crucial to identifying the people who are best suited to be the firm’s future leaders. They should first populate the spots in the plan, be they many or few, according to the guidelines initially established.
When the choices are final, managers should create a profile of each of the individuals identified. The profile includes not just each employee’s experience and skills, but also which one or more positions he or she is being groomed for and what additional training is needed to prepare him or her to assume the higher-level spots. Near the top of the organization, such as a case where a CEO wants to prepare the president or chief operating officer for succession, individual executive coaching may be effective in developing particular skills.
Next, bring on the chief executive officer. It’s time to lay out the plan for the top officer of the organization and gather his or her suggestions as well as buy-in. The goal, of course, is to ensure that enough support and resources are made available for effective plan implementation. The process is then ready to begin, but it is by no means over.
Ongoing review of the progress of high-potential people is needed, along with removing individuals who leave the company and monitoring new hires to see if any are qualified to join the ranks. It’s also a good idea to give the employees in the program extra money, such as 10 percent more than their salary grade would dictate, as well as the leadership development needed for their grooming.
Each candidate will require a customized development plan, although some general training in management theory and skills may be useful for groups of those in the program. In a parallel effort, the organization can conduct a gap analysis—an assessment of where there is not enough bench strength to backfill key or technical positions. That evaluation will provide good input to future recruitment strategies.
What can go wrong? One big pitfall is designing a plan so complex and time-consuming that managers can’t follow through. It may help to invest in an HR information system to track succession-planning data. Effective employee assessments already include much of the information needed for the succession effort, such as new skills acquired or special projects assigned and completed. iBi