What happens when your leaders inevitably exit the company? It’s unpleasant to think about, but if you don’t have a plan, choices are made in a hurry and under duress — not exactly a recipe for success. Demographic trends are reinforcing the urgency of succession planning, as many of today’s C-level leaders are approaching retirement age, and hasty decisions put your business at risk. You need a plan.
What you risk when you lack comprehensive succession planning
Abrupt, unplanned changes can be confusing and concerning to staff and other stakeholders, often engendering suspicion and mistrust. If you think having an informal shortlist is enough, consider how business decisions usually work when they’re made based on emotions and “gut feelings” rather than smart strategy. The transition will be rockier than it needs to be, and it might even fail, forcing you into the costly process of finding another replacement.
A failed business transition won’t just disturb your stakeholders; it’ll very likely disrupt your operations, and who has the time or the profit margins for that? Proactive succession planning efforts reduce the risk of hiring and promotion mistakes, loss of institutional knowledge, and the negative impact of turnover in key roles.
Succession planning in six steps
Getting started with making succession plans can be daunting. Not only is it a significant undertaking, but conflicting feelings around preparing successors are common — we see it time and again with our clients. Often a current leader’s professional and personal identity are heavily invested in the role, and they may experience mixed feelings regarding this transition. That’s why we recommend using a framework to take emotion out of the equation, focus on the facts, and set clear and achievable goals.
1. Identify challenges facing the organization.
Leaders must proactively and effectively plan for leadership transition two to five years out, starting with identifying and prioritizing the challenges they need to overcome. Next, examine the characteristics and skills of the future leaders needed to address and overcome these issues. Do you need a rainmaker, a collaborator, a strategist, or a turnaround expert? Remember, you’re not seeking a clone of the departing executive. You want an effective future leader who understands your organization’s strategic plans, challenges, market dynamics, and constraints.
Here are some questions to explore:
- How important is it for candidates to possess previous industry experience?
- What are the pros and cons related to hiring from within rather than seeking external candidates?
- Do we have any internal candidates that are realistic candidates for this position?
- Do leaders have any personal relationships with candidates that may bias their perspectives?
- Are there any specific criteria that we need to discuss (regional or industry preferences)?
2. Create a leadership success profile that prioritizes key characteristics.
Once you’ve recognized the issues that you’ll need the next leader to address, determine what specific skills are required to address them. This gives you a framework for developing internal candidates, and we suggest choosing several. Best-in-class organizations focus on developing a strong leadership pipeline by creating customized professional development plans for emerging leaders.
A business needs bench strength, and succession planning allows you to develop strong leaders at all levels who will be well equipped to step up when — not if — top executives move on.
3. Facilitate a dialogue for the tough questions.
Among leaders and board members, disagreements may arise about which successor to select. Facilitating and engaging in open dialogue around key leadership priorities and exploring alternative viewpoints is important. Failure to explore and embrace healthy dissent can lead to division and misalignment, which can create difficulty because there’s not a shared vision for evaluating finalist candidates. A contributing factor may be that many organizations aren’t cognizant of the full scope of executives’ roles and responsibilities when it comes to succession planning.
4. Select your new executive leader.
If you’ve done the previous three steps well, this should be straightforward. If you want additional reassurance, you can always reach out to a third-party assessor to obtain an objective assessment of a candidate’s strengths and professional development areas. The third party (like Plante Moran) could assess the individual’s interests, cognitive abilities, and personality profile. With this information, a frank and honest discussion may take place about a candidate’s strengths, development areas, and overall fit for the position and organization.
5. Develop an integration plan based on key transition topics.
Leadership transition is a two-part process: selecting the right candidate and helping that person succeed. A leader’s job isn’t done once the successor accepts the offer. Develop an onboarding process and integration plan that include short- and long-term goals, time frames, and results. An integration plan is essential for a new leader’s success, and should consider not only the new leader, but those who’ll be working with them.
6. Start the business transition planning process early, and review it often
Commonly, succession planning is addressed only when change is imminent or in response to an unexpected crisis or staff departure. Starting early not only allows for better planning but fosters talent development at a more realistic and achievable pace. Developing candidates from within your organization provides the dual benefit of promoting leaders familiar with your organization’s culture and values as well as providing professional growth opportunities for your top talent.
It’s also important to review the process regularly — tracking, documenting, and monitoring your succession planning program will help you make sure it’s still working for you. Business needs will change over time, so your leadership profiles will need to reflect that, as will your talent development efforts.
