Monday, 21 July 2014

How to set up a great succession planning strategy

Imagine being a parent (or if you already are just continue reading) struggling to pass on knowledge you've gained throughout your life to your kids. You want them to be at least as successful as you are with good prospects of exceeding your imprint on the surface of the world. How would you do that? Meet them in a cosy living room, show them numbers, charts, flip boards, presentations... and tell them to write down notes, otherwise they won't pass a test? I hardly think so. And what if they're not gifted enough and aren’t able to perform at a level of quality as you did. In fact, this issue of knowledge -passing and building a solid foundation for successful professional and personal growth - seems to have a lot of pitfalls right from the outset.

Be prepared for losses

Whether you strive or struggle- in personal life as well as in regard to a company's management lifecycle - depends on considered planning. Yet many executives don't perceive this as a crucial part of an organization's success. The bottom line here is to put a candidate in place who is instantly able to fill the boots of his predecessor, regardless of the nature of the loss of manpower – either expected or unexpected - in order to minimize the risk of creating a huge gap between current senior level employees and employees who are supposed to, based on their performance, reach that level. And there are facts to prove such logic. A study that was conducted a few years ago indicates that a CEO appointed from within a company tends to outperform candidates from outside the company. So why not maximize your succession planning efforts when it's obvious that your people are those most suitable for leading positions after all.

Not that companies don't know. They're not confident in it

It's a rather general perception that a person from outside a company's inner environment has the potential to bring completely new insight and inject a unique momentum into the whole business. In his study, Matthew Bidwell from the Wharton School of the University of Pennsylvania pointed out that “external hires are 61 percent more likely to be laid off or fired, and 21 percent more likely than internal hires to leave a job on their accord. They also get paid more, but get lower marks in performance reviews during their first two years on the job.” The truth, however, seems to be contradictory to this statement. Board members are far too often afraid of not being able to find a viable successor inside the company. This can be a consequence of unfamiliarity with internal candidates – board representatives are simply not aware of what candidates are capable of. That is a clear sign that something has to be changed in order to prop up confidence.

Steps to build upon

Despite having succession planning materials within every single company, there are particular differences which transform them into either brilliant or poor internal strategies. Nevertheless, there are several areas which they have in common and which can make the desired impact. The thing that has to be changed here is the approach towards them.
  1. A successor is not ready now. Long-term mentoring is the key!
How ready a candidate is depends on the path he went donwn prior to overtaking the role of his predecessor. His work has to be recognised by the rest of the management, otherwise acceptance will be much tougher.
  1. The past is not always a benchmark
There's great risk connected to replacement strategies – limiting the process by having in mind the phrase what worked in the past will work in the future. The company of today needs can be completely different from that of the future; therefore required skills and expertise based on a company's previous performance can limit more than contribute in the end.
  1. Support from the top
Though you might have a great succession plan, without one hundred percent support from the top management it will count for nothing. The HR department has to develop and align the company's strategies according to business goals - based on that, HR executives have to be clear about the business value of succession planning initiatives.
  1. Exclusive search among external candidates vs. exclusive search within internal pool
Are external candidates more appealing to the Board than internal ones? Should you focus exclusively on an internal promotion process, or should you abandon candidates who have been working hard to climb higher on the corporate ladder and go for external hiring? Here arises the problem of neglecting these two options. Therefore, monitoring and mentoring inside the company, mixed with searching outside the company seems like the best possible way of doing things.

Succession planning issues differ from industry to industry, but one question is common for each of them – Do you know who will replace your manager when he/she leaves?

1 comment:

  1. Your article is very informative and thanks for your valuable information...please do share more posts...


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