There’s no way around it: Succession planning must be a priority for company leaders. What does your succession plan look like? Do you even have one?
Many companies avoid succession planning altogether, fearing it will be a painful process with hard conversations that result in hurt feelings among leaders. Other organizations consider a succession plan completed when they’ve identified who the next CEO will be, or the person who could potentially step into the position several years down the line—and then they set the plan aside, figuring the question has been answered.
In reality, succession planning doesn’t have to be unpleasant. It should consist of a process that’s revisited often by company leaders, tweaked occasionally to align with the overall direction of the company and carefully researched to provide guidance for leaders and potential leaders beyond the C-suite.
A succession plan should do more than simply determine the path to replace only one person. It must provide a framework for developing capabilities of potential leaders to move into new positions, as well as developing the people and positions that advance the company. Rather than simply replacing the people you lose today, succession plans help stack your personnel in a way that moves the organization strategically toward the future.
The Importance of Succession Planning
At its heart, succession planning consists of assessing the capabilities of prospective leaders and determining how they’ll need to be developed to meet the current and future challenges the organization faces. A holistic approach that identifies, assesses, develops and transitions potential successors helps mitigate risk and establishes a pipeline of possibilities that can ensure the company’s sustainability.
In many cases, organizations delay succession planning until they are compelled to start thinking about it. Pressure for creating a succession plan may come from:
- Boards looking for ways to put something together to reassure analysts before the next quarterly call.
- A visionary CEO who understands the stakes involved with succession planning and must create buy-in with the rest of the organization’s leadership.
- Analysts who are asking questions about the company’s plans for the future, particularly in times of change.
- Regulators, who in financial services, health care and other industries with strict oversight tend to emphasize risk management actions. In these industries, succession plans will need to focus on positions beyond operational leadership and may address plans for financial leaders, information officers, and strategic HR leaders who understand that talent capabilities and pipelines are key to succession in the future.
Succession Planning: What’s In It For Me?
Succession planning can bring several advantages to any organization:
- Provides a better understanding of the talent pipeline and highlights areas for development.
- Ensures critical positions have people who are ready to fulfill them on different timelines.
- Manages the risk of human capital with the same rigorous standards organizations use to manage financial or business strategies, by managing change proactively rather than reactively.
- Gives a competitive advantage as company leaders focus strategically on the future rather than only the next few quarters.
- Keeps your organization ahead of the curve—if your Board or regulators haven’t demanded a succession plan, chances are they will soon.
- Creates a process that quickly drives itself and requires much less input from company leaders as time goes on, and in fact saves time in the long run.
A strong succession plan is all about the future and is informed by the organization’s values and reflects its culture in its implementation. Additionally, it’s aligned with ongoing business needs and helps prepare the organization for future changes by developing leaders.
Learn More
Putting together a succession plan doesn't have to be complicated. In fact, keeping a succession plan simple will help ensure that reviewing and updating it becomes a routine process performed every quarter, or at least once a year, rather than every several years when it's remembered.
Want more information about succession program planning? On Thursday, December 8th, experts from Aon Hewitt will:
- Discuss the importance of succession planning
- Examine what a good succession plan looks like
- Outline the steps of putting together a succession plan
- Consider how succession planning is likely to change as millennials develop into leadership roles
- Offer suggestions on how to manage the barriers you may encounter when incorporating a succession plan at your organization.
To register for this webinar, click here.
