Are you and your team thinking about succession? No, not HBO’s award-winning series (although needless to say, yes, we are watching). I’m referring to the other succession; the one that involves developing internal talent with the intent to grow them into future business leaders.
Have you ever had an air-tight succession plan in place, but your candidate took another opportunity before you could promote them? Or an employee in such a critical position that you couldn’t move them to the role you were planning for them because it would negatively impact a transformational project? What about a succession plan that fell apart because a similarly skilled and critical employee (who was not part of the succession plan) was identified as a flight risk? These situations are all clear examples of why succession planning is so important for teams to ensure business continuity today and in the future.
At its core, succession is all about creating long-term stability, which, of course, is one thing perpetually missing from the HBO series and its chaotic characters. Contrary to the show, succession planning doesn’t have to be full of anxiety-ridden twists and turns.
Today’s blog dives into the key components of a strong succession strategy, including how to build a team with the right skills for the future and pick tech tools that will streamline and support the entire process.
We’ve written recently about widespread tech layoffs that have been occurring since last year. Reducing team size is a common response to a down market, but succession planning is another HR action that can be helpful for teams. It may seem counterintuitive to further invest in employees when money is tight, but there are several benefits to refocusing and repurposing team members instead of letting them go:
Thankfully, businesses can strengthen their organizations to weather economic storms by investing in internal employee development, allowing them to emerge even stronger on the other side. This ultimately helps teams grow their revenue and control costs by reducing money spent on sourcing and training external candidates.
The labor force participation rate for workers ages 18 to 64 has largely rebounded to early 2020 levels, but participation for those who are 65+ has declined by about 900,000 people since pre-pandemic levels. This tight labor market and recent shifts in the generational breakdown of teams have far-reaching effects on organizations, especially their plans for the future. These market conditions make it more important than ever for firms to develop a comprehensive succession strategy in order to secure long-term business continuity.
Unfortunately, only 54% of boards today are actively developing a successor to their CEO and 39% had no viable internal candidates who could immediately replace them. If barely half of those teams have a backup plan for their #1 leadership role, you can only imagine what the numbers look like for less senior titles.
Planning who will run your company (both on the executive team and in senior/management roles) when current leaders leave is absolutely crucial not just for business continuity, but also revenue growth, talent retention, and cost controls.
Succession planning traditionally referred to executive roles, but today’s teams should also consider succession plans for any domain expert regardless of seniority, or senior managers with a lot of niche knowledge or industry insights. While these people may not be on the executive team, their leaving would massively impact the business if they walked out the door tomorrow.
There are many drivers for succession plans:
Historical reasons for thinking through succession planning:
More progressive reasons for succession planning:
Regardless of what’s prompting teams to start a succession plan, firms often dive into the process by mapping 1-1 replacements for business leaders based on the current company organizational structure. To this, I like to say there’s a reason that we call it “Succession Planning” and not “Successor Planning”.
Single threading succession into one person – or even a series of one-person plans presents a tremendous risk for organizations by not accounting for long-term strategy shifts, nor changing business priorities. Teams should instead use succession planning to focus on skills, not titles and names. This mindset is what ultimately future-proofs an organization from being too rigid with options when the unexpected predictably happens.
It’s also worth noting that this short-term approach of replacing 1:1 leader/leader most often looks for someone with similar mindsets, skills, and backgrounds.
Not only does that not account for future business plans, but it also severely limits diversity and often perpetuates the current mix of backgrounds that populate the majority of C-suites. Looking more broadly for talent will open companies to diversity, not only in personal characteristics but diversity of thought that will encourage challenges to the status quo and increase innovation. Scroll down to the section on “Succession Planning Pools” to learn about an alternative method of succession planning that is more strategic, flexible, and reliable than the traditional 1:1 succession approach.
Succession planning must start with a clear understanding of the business’s long-term strategy and use that vision as a guiding North Star. Only then can teams begin to thoughtfully plan for what type of future leaders the firm will need, and what skill sets those roles require. Rather than trying to fill a role with one person, teams should also explore how they can supplement current roles with a mixture of people, new businesses, new hires, and automation.
Most companies also try to solve succession planning by creating detailed processes, charts, and checklists. While these are helpful components, the most valuable tool in succession planning is quite simple: communication. No amount of planning can replace the value of an open and exposed dialogue among team members. This piece of the puzzle often makes the succession journey far more valuable than the ultimate destination – and unfortunately, is often missing.
Communication is a key factor for successful succession plans because it pulls in multiple perspectives on what skills may be needed in the future; it gives a chance for less obvious, less vocal, less sponsored candidates to raise their hands for a challenge; and ultimately it allows for innovation about required skills.
Having a 1:1 successor is fine for short-term risk mitigation when you know that a key leader is retiring or moving on to another internal role. That said, it requires a significant transition of 3-6 months. It’s important to note that after that 6-month horizon, teams no longer mitigate risk with 1:1 succession plans due to the current labor market’s volatility. By that point, any one individual successor could move on by the time they are needed to fill a role. To avoid the stresses and high-stakes nature of 1:1 succession plans, modern teams are embracing succession planning pools instead.
Succession planning pools are a more flexible and diverse approach, wherein organizations pull pools of multiple potential successors. By engaging multiple candidates and recognizing them as high performers, succession planning pools often help increase retention while also raising the skills of the overall team. This communal growth is crucial as leadership looks to fill skill gaps to make the transition into new roles as seamless as possible.
As you can see, succession planning is a complex system that involves multiple groups throughout an organization. As such, technology plays a critical role in streamlining and simplifying succession planning. Here are a few examples:
That said, HR tools are only as strong as the business strategy they support. Establishing a supporting structure for a Succession Planning Program is one way to keep the process organized. For example, Workday offers a comprehensive system that enables teams to seamlessly streamline and optimize their HR planning processes. It can also proactively measure and monitor the process within a flexible model.
Traditionally, succession planning has been extremely focused on people, with most planning existing outside of technology. As business systems have evolved, though, technology has become increasingly important in all facets of business – including succession planning. As discussed above, there are several ways that teams today can use technology to streamline and optimize their succession planning processes.
But beyond facilitating the actual succession planning process, technology is also changing the nature of work. As such, teams must account for technology when considering how a position will function in the future: are there specific job tasks that they can offload to an automation or software tool? In other words, teams should embrace digital tools to cut out manual, redundant tasks and create more engaging, strategic jobs for their people.
When it comes to succession planning, teams today must plan for the future (not just the present) and account for how their organization will change over the next three to five years.
The only way to position your team for long-term success is by making sure you have the right people with the right skills. This can be done by integrating succession planning with other HR initiatives, considering the future when building your plan, leveraging technology along the way, and maintaining an open dialogue with team members. When done correctly, succession planning is well worth the effort. It rewards teams by increasing employee retention; strengthening business continuity, growing revenue, and controlling costs.
Image credit: HBO