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7 Key Steps to Succession Management
When created properly, succession management programs can enable companies to develop a secure and sustainable plan for their future.
What is Succession Management?
Succession management is the practice of identifying and selecting talent to succeed existing employees in an organization’s critical roles. While the world presents more challenging business conditions, the availability of skilled leaders who are prepared to tackle them is declining. Now more than ever, leaders are facing challenges that they do not have a frame of reference to tackle with, making the entire role of leadership into something daunting to many employees, rather than something they are working towards. In response to this, succession planning is receiving renewed focus in many organizations globally.
As the business world changes, so too do the demands placed on modern organizations. Shareholders are beginning to lean much more into activism, seeking insight into how organizations will change direction when turnover occurs. Institutional investors need to be able to assess the thoroughness of an organization’s succession management as a criterion for their investment decisions. Similarly, internal stakeholders want to be assured that their leadership is about more than just worst-case disaster planning. Even governmental entities are feeling the effects – they need reassurance and secure knowledge that their investments in an organization are protected from leadership vacuums. This reassurance and security are also being sought out by internal employees themselves, as many organizations are feeling the effects of the global situation within their business strategy and objectives.
The responsibility for managing leadership succession planning in a company ultimately lies in the hands of the board of directors and the CEO, with ongoing assistance provided by human resources. However, it is important to remember that effective succession management is much more than simply having a succession pipeline filled with candidates in line to replace the CEO.
Why is Succession Management Important?
Succession management and succession planning aim to ensure that an organization has a depth and breadth of talent suitable to its critical, company-specific objectives. Commitment to succession management helps elevate leadership growth into a competitive business priority, forecasting leadership scenarios of all kinds, gathering precise data about an organization’s workforce and clientele, and propelling emerging leaders into new challenges that build the necessary skills for success.
The increased scrutiny placed on succession management in today’s business world enables organizations to transform their succession planning process into a practice that can create shareholder value. However, for it to become a strategic advantage, many organizations’ succession management models need to see significant enhancements.
Creating a Successful Succession Management Model
The effects of a weak succession plan can be felt on an economic, operational, and cultural level. When a strong succession management plan is absent, a candidate often emerges because of a perception that they are viewed favorably by the hiring managers. They have not having undergone a rigorous analysis, leaving employees doubting whether their strengths align with the demands of a larger role. Succession planning aims to eliminate this perception, solidifying a process by which all employees, existing and future alike, can feel the right leaders are stepping up to the plate.
Any succession management plan should be curated to meet the following objectives:
- Defining a Leadership Future: Succession planning should hardwire leadership capabilities and requirements to the company’s future. Aligning a potential leader’s talent to the business is critical and can only be achieved when there is a clear definition of the key business drivers for your company. Aim to develop a holistic profile of your leaders, defining the required competencies for leadership, as well as the experience and personal attributes you are looking for in leadership roles.
- Unleashing Existing Leadership Potential: Creating a successful future involves the recognition and identification of potential in everyone, including those leaders with the greatest trajectory for leadership growth. Aim to use various methods to uncover future leaders within your organizations. For example, you could use online tools that measure current leadership performance and future leadership potential, or simulation-based leadership assessments to identify leadership strengths and capability gaps in your existing workforce.
- Diagnosing Readiness: A clear idea of what leadership looks like across all levels of your organization is critical. When you have role-specific, targeted intelligence on your existing leaders’ capability gaps, you can make much more effective promotion decisions and develop more specific talent and leadership development initiatives. This can be achieved through leadership assessments at every level of an organization, or a 360-degree feedback system that helps identify employee-specific strengths and development needs.
- Accelerating Development: A central component of any organization’s succession management model should be to quickly prepare middle managers and senior leaders for the unique succession planning demands that may arise. Engaging senior leaders with development solutions that help them succeed in today’s business landscape, or executive coaching that enables them to address major challenges in their leadership roles, can be very useful.
- Driving Impact: The need to evaluate leadership impact is essential, and in turn, the need to understand the future disconnects between talent and strategy becomes a greater objective for any succession management model. Evaluation of a program’s impact through individual, leader population, and organizational-level metrics helps you to gain a clearer insight into what is working in your leadership development plan, and what isn’t working.
7 Key Steps for Creating a Succession Management Model
Organizations can see a number of benefits that accompany a well-planned succession management program, including an engaged and motivated workforce, a qualified talent pool, an organized view of talent and talent management, sophisticated selection and development systems, greater confidence among stakeholders, and clear career trajectories for all employees. But where do you begin when constructing a plan for succession management for your organization?
The process includes seven critical steps.
1. Develop an Organizational Strategy
The organizational strategy is the foundation for your succession management plan. Leaders must ask themselves: what will the company’s focus be in three years? Five years? Ten? Who will the competitors be then? Which, if any, new markets will the organization enter?
2. Define the Key Positions
Once you have a clear understanding of the organization’s overarching strategy, you then need to determine which positions will be fed by the succession management pool you are going to create. That is, you must identify the central positions that need to be filled by adequately trained, experienced, well-rounded employees who have made their way through your curated succession pipeline. Not all leadership roles in an organization are an essential to the plan – focusing on the top 5 or 10 positions is a good jumping off point.
3. Clarify the Applicable Performance Metrics
After determining the specific positions that will be fed by the succession pool, leadership should then define the core competencies required for success in these positions, keeping in mind the future of the organization and business itself. This step requires a thorough review of the position, an evaluation of future business and position-specific needs, and the specification of an organizational performance model.
Drawing on the information gathered through these assessments, you can then define position-specific metrics or KPIs that will act as the foundation for the succession plan.
4. Evaluate Bench Strength
Once competencies required for the position have been defined with the appropriate skills, knowledge and behavioral anchors, and the performance metrics that support them have been established, organizations can now begin to evaluate current employees. This step will provide a benchmark from which to compare candidates over time. If a candidate shows little or no improvement, this may be an indication to revise your succession management plan. In addition, clarifying the current bench strength enables organizations to get a clearer picture of the areas that should be addressed for future improvement.
5. Build the Succession Management Pool
Constructing a succession management pool can be done in several ways. Information can be taken from several different sources, including nominations or recommendations from supervisors, talent and leadership assessment results, and overall performance data.
Talent assessments can also be a useful tool in determining the strengths and opportunity areas of candidates, helping leadership determine whether they will, ultimately, succeed. Each candidate should also undergo a regular performance review to ensure consistency in their growth.
6. Professional Development
Once the succession pool is built, prospective candidates should then work closely with their leaders, creating and specifying a unique development plan. This plan should focus on three to five goals that align with the position-specific competencies and can be accomplished within the next six to twelve months. Results from these talent assessments can then be integrated into performance feedback. This helps candidates and their supervisors identify core strengths, and any skill or leadership gaps that exist in their current performance.
Candidates that qualify for succession should always be made aware that they are in the queue for a senior leadership position and be provided with a timeframe in which this transition will occur. Aim to make them aware that this hinges on them continuing to meet the pre-determined performance metrics, which should be regularly and clearly communicated in advance (establishing expectations) and ongoing with consistently scheduled touch-point meetings.
The Benefits of Succession Management
Strategic management and the deployment of succession management practices is one of the most important responsibilities of any organization’s board and CEO, working to ensure both business continuity and stewardship of an organization for the future. Now more than ever, all moving parts of any company need a clear, reliable understanding of the future of leadership internally. When an organization prioritizes its own strategic future, determines what is required of its future leaders, and prepares a plan that ensures a smooth transition from one leader to the next, they can ultimately transform their company from ordinary to extraordinary.