According to the Azets Barometer, only 6% of businesses in Western Europe have fully integrated succession planning into their business, and 14% have given it no thought at all.
If succession planning is ignored or poorly executed, the implications are substantial and potentially catastrophic. They include reduced efficiency and operational errors, delays to strategic initiatives and erosion of share price due to a loss of trust from investors. Not what you want on your watch.
So why is it a blind spot for so many organisations? Leaders know it’s essential, but they’re not always doing much about it. In a recent survey by the Talent Insight Group, 86% of leaders believe succession planning is essential, although only 40% have a plan in place for CEO succession, and 38% don't discuss succession planning at all.
One reason for inaction may be a focus on current urgent operational crises, another is that succession planning often involves difficult discussions, either with the incumbent, enquiring as to when they are thinking of retiring or leaving, or with those who believe they could be the next in line but whom may not have the right skills. Sometimes it’s not clear whose responsibility it actually is - is it HR, the CEO or the leadership team in general? And succession planning isn’t just about the C-Suite. The disruption to business caused by a lack of clarity in any senior leadership role, particularly those with a niche expertise, can be damaging to the company.
So if you’re now thinking that succession planning needs to move up your list of leadership priorities, then here are five factors to consider:
Identify key roles. Look at your organisation chart. Which roles are essential to the company’s stability and success? Which would cause the most significant disruption if they were suddenly vacant? You can take this further by creating a risk assessment, assigning each role a score for impact if vacant and a score for likelihood of being vacant, taking into account whether you consider the post-holder to be a flight risk or not. Consider both unexpected departures and long-term transitions.
Align with your strategy. Where is your organisation headed, and what roles will be needed in the future? What are the key skills and attributes required for each of these? For example, if you expect to expand globally within the next five years, you may want your new Chief Commercial Officer to have international experience.
Assess the talent you have. You may already be doing this, but focus on evaluating current employees' skills, potential, and readiness for leadership roles. Where are your next leaders coming from? Many organisations use a 9-box grid like this one, but do it in a structure that feels right for you. Compare the existing capabilities with those required for future roles. Create development plans for high-potential individuals identified for future succession. Executive coaching can be a fantastic tool here. If you'd like to know more, get in touch to learn how I support leaders in a succession pipeline.
Don’t neglect diversity. The use of talent assessment models can introduce unconscious bias; therefore, consider using structured assessments when selecting and evaluating talent to mitigate this potential issue. Ensure the succession pool includes diverse candidates, not just those with the obvious, visible measures of diversity, but also those with diverse backgrounds and experiences.
Communicate and engage. Succession planning can easily be dismissed as an “HR matter”. Leaders should actively participate in identifying and developing successors, so have a focused plan of communication and engagement across the C-Suite and senior leadership teams. To take it one step further, tie leadership objectives to succession outcomes.
In conclusion, succession planning isn’t just about contingency planning - it’s a core leadership responsibility. When done well, it provides stability to the organisation, enhancing staff morale and reducing turnover. It also signals a deep commitment to the future of the organisation and its people. So if you’ve been feeling like succession planning is a “tomorrow” task, consider this blog your prompt to make it a conversation today!
Your first step could be to learn more about developing your key talent to take that next step. You can download two guides from my website to help you, or get in touch to find out more.