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The Right Approach to Succession Planning

The Right Approach to Succession Planning

Most organisations have long recognised the need to recruit, retain and develop their leadership talent. As we have explained before in our blogs, promotion on “craft skills” rarely leads to the best outcome.

It is surprising, therefore, that relatively few organisations have a robust succession plan in place for their leadership talent despite the strong business case for having one.

Research by Deloitte shows that succession planning is most effective when objective human-centric approaches are taken. Moreover, a consistent approach has to be in place if succession plans are to be robust and meaningful.

Why Succession Planning Matters

The business case for succession planning is based on how effective leadership – having the right leaders in the right role and the right time – is positively correlated with firm-wide performance.

Conversely, having the wrong people in the wrong leadership positions is often destructive and costly in terms of leadership behaviour and performance.

However, there are other benefits that research has identified:

  • A more diverse leadership structure from unbiased and objective succession planning
  • An impartial and objective data set from which to make decisions around capability and, just as importantly, potential
  • Data which can guide investment in leaders and leadership. Effective leaders are a human capital resource that can be optimised through the effective direction of learning and development resources
  • Internally developed leaders are often better culturally aligned to the organisation. Some 30% of new leadership hires fail because of poor cultural fit in the first 18 months
  • Better stability in the organisation which leads to better market confidence

Why Do Organisations Fail at Succession Planning?

Often succession planning is left to informal and intuitive processes with small groups of executives basing decisions on gut feel or subjective past performance data alone. Internal politics often leads to poor decision making and poor resource allocation as a result.

Many organisations lack the longer-term focus needed for effective succession planning. They tend to be reactive and have little strategic focus in terms of organisational and human capital development.

An Objective and Human Centered Approach

We believe that objectivity and a focus on human capital is the most appropriate approach to succession planning.

Such approaches are based on:

  • Assessment of behavioural characteristics of leaders to determine future leadership fit
  • Engaging and inclusive approach which takes into account a wide range of data sets and stakeholder involvement
  • Succession planning criteria aligned with corporate strategy

Avoid the Tick Box Mentality

Many organisations treat succession planning as a tick box exercise rather than taking a methodical and objective approach that considers the business context and needs of the organisation in the future as well as past and present.

Relying on the 9 box grid model alone is not enough when real-life data can be harnessed.

Types of Data to Gather

  • Assessment of behavioural and cognitive abilities such as 360 degree feedback and/or psychometric data
  • Data from feedback discussions with leaders to understand the context of the assessment and the views of the leader
  • An objective appraisal of current and past performance using ongoing performance management data rather than outdated annual appraisals

Make it Worthwhile for All Participants as well as the Organisation

Most people will engage with succession planning if something is in it for them. We recommend that the leader is given their own development plan and is encouraged through feedback and coaching to ‘buy in’ to the process.

This way succession planning can also be a part of a leader’s development process and build self-awareness and help facilitate personal development. By making the succession planning process participative rather than passive, real traction can be gained around the process as all stakeholders feel involved and engaged.

Taking Ownership

Research also shows that many organisations have no one individual or team which is responsible for succession planning and that top-level sponsorship is often missing in terms of driving succession planning.

The debate is often whether succession planning is a board, CHRO or senior management responsibility.

Avoid Reactive Succession Planning

Often succession planning is seen as a reaction to an impending planned departure of a leader or as a result of an internal emergency. This is not strategic or long term focused.

Conclusion

  • Take a long term strategic approach to succession planning and avoid short term reactive planning
  • Utilise objective assessment as well as real-life performance data. Past attainment is not always a guide to future organisational fit and success
  • Make succession planning a part of your learning & development activities which involve as many stakeholders as possible. 360 degree feedback being a good example of how to be inclusive and objective
  • Ensure accountability for implementing succession planning is clear and well defined
  • Get support from the top to embed succession planning into the organisation
  • Use the data to grow talent and reduce the reliance on external hiring. This way the risks of poor hiring are reduced and internal sustainability is improved

If you’d like to find out more about our work in succession planning simply click here to get in touch.

Matthew Davis
Director

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