Succession planning is key to smooth transitions.
However, according to a recent survey of 783 directors conducted by PricewaterhouseCoopers, only 48% of executives feel their board is spending sufficient time on CEO succession, and just 27% of directors surveyed felt confident their company has adequate bench strength in its CEO pipeline.
Succession management is the process through which organizations identify and groom leaders to assume key leadership roles within the company. With a wave of retirements expected within the coming years, succession planning is critical – however research indicates only 13% of companies with a defined succession plan actually adhere to it, according to a Hewitt Associates’ survey.
Qualities of a Winning Succession Management Strategy
In terms of succession planning, attempting to clone existing leaders does not generate as much long-term value as developing high-potential candidates who possess skills that will be required in the future. A truly successful succession management program is one that does not simply provide a process to fill a key position – but one that focuses on developing, managing and investing in talent.
With that in mind, the best succession management systems have the following qualities:
Succession management programs should be designed specifically for each organization. Many industry-standard succession plans represent a generic, one-size-fits all approach. However, nothing could be worse for companies aiming to differentiate themselves and ensure their continued success. For companies that seek off-the-shelf solutions, a long journey of uncertainty awaits them prior to ending at the precipice of failure.
Succession management focuses on future leadership requirements by preparing high-potential candidates for obstacles and challenges they will encounter when stepping into the role.
High-level support isn’t just advisable in succession plans; it’s critical. Without far-reaching support from the CEO and other senior leaders, the chances of a succession plan yielding optimum results are slim.
Though succession plans have historically been discussed in private settings, a greater number of businesses are now informing potential successors of their candidacy and discussing succession openly.
Flexibility is key in succession planning. As business environments changes, so do the skills that are required in an effective leader. In this sense, inflexible plans are ineffective plans.
Objective assessments offer at least three tangible benefits beyond employee nominations. First, using objective assessments is an excellent way to identify high-potential candidates earlier in their careers. Nominations may not begin to emerge until after several years of service, which could significantly delay the development cycle. Second, objective assessments can help minimize bias. By applying the same standard to each candidate, the succession process will develop a reputation as being fair and not subject to whims of the CEO or senior leaders. Finally, research indicates that objective assessments are better predictors of performance than are people. Companies that use well-validated assessments will make better decisions than companies using intuition and personal judgment.
A succession plan provides organizations the opportunity to create built-in development programs to ensure high-potential candidates get the attention, training, and guidance they need to focus on skill and knowledge development and become effective leaders.
Without a healthy number of candidates, a succession management program will not be successful. Organizations must take care to ensure they don’t simply have one or two qualified candidates in line, but several potential leaders who fit the bill.
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