Wendy Hirsh - Succession Planning Demystified

So, why is there such discrepancy between those organizations that view succession planning as vital, and those who decide not to develop formal procedures? The arguments for and against succession planning may account for the discrepancies:

The Advantages of Succession Planning:

• Having a ready selection of high-quality candidates means that organizations can quickly shortlist candidates when vacancies arise in key positions.
• As high-potential candidates follow specific development programs, the organization will be able to make better and more informed decisions when it comes to filling key positions. The importance of this becomes clear through studies that show that two out of every five new CEOs fail in their first 18 months.[4] Such failures in key positions can directly impact on corporate performance and stability.
• The organization doesn’t have to worry about whether the candidate will ‘fit’ the culture and working practices. Internal candidates are already familiar with the organization and will be aware of any issues. They will be able to build on existing working relationships and take less time to settle into the role.
• Through targeted development, the skills and competencies of successors are better aligned to the business needs, leading to more efficient practices and effective outcomes.
• Organizations will have a better feel for the skills and talents of those in the organization. This can be beneficial when redesigning or developing new roles during times of change.
• Individualized development programs and stimulating career opportunities can help to attract and retain the best talent.

Arguments Against Formal Succession Planning:

• Hiring from outside the organization can bring in new talent, skills and experience. If successors are developed just to behave like current leaders, present practices may stagnate and opportunities for progression can be neglected.
• There is often uncertainty around what jobs the organization will need in the future and what skills will be important. Time and effort may be wasted planning to fill roles that may not exist in the future.
• A great deal of effort is put into identifying and developing potential successors. But, there are no guarantees that they will accept the position once it has been offered.
• Succession planning can be seen as a secretive ‘old boys’ network’. Organizations may look as though they are showing favoritism and inadvertently demoralize those who are not selected as successors.
• A 2004 survey by the Corporate Leadership Council found that, out of 276 large companies, 45% thought succession planning would take too long or be too expensive to be viable.[5]
• Many organizations are moving responsibility for recruitment and people management from centralized HR functions to line managers. Centralized succession planning could be seen to diminish this responsibility.
• Centralized succession planning also seems to be at odds with an increasing impetus on individuals managing their own careers.

Who’s Right?

It may be understandable when looking at the arguments against succession planning why some organizations choose not to adopt formal procedures. However, it is unfortunate that many of these arguments are based on traditional views of succession planning, not succession planning as advocated by Hirsh.

Today’s succession planning is not all about home-grown talent – it is about achieving the right balance between hiring from the inside and outside the organization to get the best of both worlds. Most advocate a ratio of 60:40 for inside and outside talent.

It is inevitable that succession planning will need to accommodate uncertainty. It cannot always be guaranteed that predicted roles and skills will be needed in the future. Hirsh suggests that planning for ‘pools’ can overcome some of this uncertainty. This is where more generalized succession plans are made for small groups of posts or for typical job roles, either in addition to or instead of planning for specific posts.

Today’s succession planning incorporates the personal drivers of potential successors as part of their personal development planning. This can reduce the uncertainty of whether they will accept the job if it is offered to them.

As secrets foster distrust, many organizations now encourage more openness in succession planning. For example, they let employees know where they are in the process, or allow them to access their succession plan online. However, very few organizations have complete transparency, as it can be demotivational if employees find out they are not being considered for development into a key position.[6]

Succession planning doesn’t have to be elaborate or expensive. Tracking a manageable number of positions using simple forms, keeping them up-to-date and revisiting the process regularly can give an organization all the information they need.

Succession Success

Hirsh argues that succession planning can be very successful, but organizations should take into account key factors for success:

The right people need to be involved:

• The board and senior team should have a lead role in the process – from taking a long-term view of the organization to identifying, tracking, and deciding on potential successors.
• HR must be able to monitor the succession planning process and report back to senior management.
• The CEO and line managers must work to fulfill people development plans.

The scope of succession plans should be manageable:

• This includes the number of positions and the number of potential successors to be managed.
• The succession planning process should be regularly reviewed to keep it useful and relevant.
• Any succession planning systems put in place should be simple and easy to use.

Potential successors for senior positions need exposure to a variety of jobs:

• This could include job rotation, special assignments and action learning (where a group of candidates get together to work on a project for the organization).

Today’s succession planning allows organizations to make good recruitment decisions that are aligned to organizational strategy. When the future success of the organization is at stake, it seems risky not to plan for key positions.