SUCCESSION PLANNING Introduction Great leaders all know that no plan ever goes off as expected.
Recent events in our global economy have certainly sent many of us back to the drawing board when it comes to prioritizing our top initiatives. The recent years have required each of us to spend considerable amounts of time working on short term strategies to strengthen our businesses to combat a volatile and challenging market. But as the signs begin to point to some inherent stability in the marketplace, we once again turn an eye to succession planning. Succession planning has the potential to be one of the major business issues of the coming decade. The demographic reality is that organizations will have a shrinking pool of staff from which to draw on, which will impact operations at all levels, from the receptionist to the CEO. It is this reality that has pushed succession planning an important issue in normal times to the forefront. What is Succession Planning and what role does it play in your organization? Succession planning is nothing more than having a systematic process where managers identify, assess and develop their staff to make sure they are ready to assume key roles within the company. Having this process in place is vital to the success of the organization because the individuals identified in the plan will eventually be responsible for ensuring the company is able to tackle future challenges. These "high potential" candidates must be carefully selected and then provided training and development that gives them skills and competencies needed for tomorrow's business environment. Succession planning is one of those initiatives that many companies don't find the time to start until it's too late - if you don't address succession planning now your organization may end up facing the burden in the middle of a crisis.
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Succession planning is not something a well-run company can ignore because the consequences of not being prepared to replace key personnel will have a major impact on an organization's ability to achieve its goals and strategic targets. The succession planning process needs to be considered as part of the company's strategic planning process because it deals with projecting future changes by anticipating management vacancies and then determining how to meet these challenges. In its simplest form succession planning is nothing more than getting managers in a company to use a systemic process to determine the current training and development requirements of their subordinates.
What is at stake? Leaving succession planning until the last minute will mean in-effective transfer of responsibility within the available time frame. A forced, ill-informed or panic decision could mean that vital tasks are transferred into reluctant or unqualified hands. The business could be severely disrupted as internal conflicts take place, while uncertainty and lack of leadership could have a disastrous effect on sales and morale within the organization. All of the above could ultimately result in the failure of the business. Studies have shown, and intuition would tell us, that organizations with talented people perform better than those without. Organizations with leaders perform better than organizations with no leaders. With talented leaders retiring and changing jobs at an ever-faster rate and fewer people coming up behind them to take the reigns, companies that have not established a culture that prioritizes succession planning will find themselves at a competitive disadvantage. Firms that must rely on external recruitment during a transition in leadership will find smaller and smaller pools of qualified, talented executives and increased competition for these same executives. Developing a pipeline of talent is an important safety net. The best of all worlds is to have a strong pool of internal talent that can be benchmarked against a strong pool of external candidates. Organizations in this situation will have the benefit of choosing the
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right person at the right time. Without discipline and focus on succession development, however, organizations put their very futures at risk, as they will be relying heavily on an ever shrinking and more competitive environment for talent. Organizations that do invest in this area, however, will be better positioned to thrive in the face of upcoming changes. Setting aside sufficient time to think and formulate an effective succession plan is an important key to success. Importance of Succession Planning An effective succession plan should form part of your overall business development strategy. Knowing exactly how, when and to whom responsibilities will be transferred to will be the most likely way to maximize your human capital. Choosing the right successor and the right time is the best way to ensure the ongoing success of the organization. A good succession plan maps out which employees are ready for new leadership roles as they become available, and when one employee leaves or is promoted to the next level, another employee is already trained and ready to step in where they are needed. Many organizations accomplish this on a small scale by job sharing and cross training for every position. However, a succession plan goes further, by planning for the training of employees to assume more responsible roles, providing that training and assessing each employees ability to step in when a position becomes available. Another reason it is important is because these high potentials will one day become the leaders of the Company. Assessing and creating a match between corporate goals and individual aspirations is the key. Your organizations succession plan will include assessment packages, open trainings and class learning opportunities, and short term job assignments that offer employees opportunities to participate in more responsible roles before taking on those responsibilities permanently. This is why their development needs to incorporate a broad range of learning opportunities in your organization. The individuals should also be exposed to as much of the working environment as possible so that they gain a good understanding of what www.virtualhr.co.ke
the company requires to remain successful. Talented employees who want to grow will either grow within your company or will move on to another if growth opportunities are not available in their current position. Succession planning is not just important for the company and its current employees, but also for investors, customers, the community and the employees and their families. The impact of a company going out of business will splash like waves on every life it has touched. Planning for the future, rather than just getting by today is imperative if a company is going to exist in 5, 10 or 20 years. Organizations that understand the need to manage the development of their high performers are a step ahead of their competitors! The effort required to establish a development program for future leaders is worthwhile because it creates a motivated and capable group of employees that are ready to move forward in the organization when the need arises. One of the most successful business leaders of all time, Jack Welch, who started working at General Electric in 1960. As he moved upward in the organization he displayed leadership qualities that set him apart from his peers. But what did Jack Welch think of succession planning? One of his most admired skills was the ability to develop his subordinates so there was always someone ready to take his place when Jack was offered a promotion. How successful was his strategy? In 1981 he became the CEO of General Electric and served in that position until he retired in 2000. Furthermore, in 1991, Jack Welch stated: "From now on, choosing my successor is the most important decision I'll make. It occupies a considerable amount of thought almost every day." That was a pretty strong statement for someone that had the vision and leadership ability to increase the value of General Electric from $13 billion to $410 billion dollars during his tenure. As the success of General Electric prevails it is clear that succession planning prepares the company and the employee for future needs. Matching that employees talents to
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current needs and training them for future responsibilities creates a cycle of anticipated growth and goals.
How do we make Succession Planning successful? It is clear to see that succession planning and development of future leaders does not exist in isolation - it needs to reflect the company's strategic objective and strategic goals. For any organization to implement an effective succession plan there are a number of key issues that need to be considered: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. The succession planning program must have the support and backing of the company's senior level management Succession planning must be part of an integrated HR process that includes training, development and performance appraisal Identify what skills the organization will need in 5, 10 or 15 years Critical positions must be identified and included in the Company's succession planning program Identify high-performers that are almost ready to step into those critical positions Analyze the workforce and identify who will be eligible for retirement within the next five years Managers need to identify the responsibilities, skills and competencies that will be needed by their replacements A system for communicating succession planning information to managers must be established A systematic approach for identifying, nominating and selecting potential successors must be established Background information on potential successors, such as education, experience, skills, appraisals and potential should be reviewed The training and development requirements of potential successors needs to be determined The skills of potential successors must be developed through work experiences, job rotation, projects and other challenging assignments
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xiii. xiv. xv. xvi.
A system for monitoring candidate's development plan progress by senior management should be established Succession planning must include a system for providing feedback and encouragement to potential successors Succession planning is basically a "numbers game" that requires good organizational skills and the ability to pay attention to details Finally, the succession plan must belong "to the organization" and not to the HR department in order to make sure it has the attention it deserves
Of course there are also a number of pitfalls you need to be aware of regarding succession planning: i. Focusing only on the "technical competencies" and failing to consider the teambuilding and leadership development requirements ii. Underestimating people within the organization or overlooking employees that don't appear to fit your standard "company template" iii. Implementing a program that is designed for upward mobility only - lateral succession moves should also be included in the plan iv. v. Failing to offer the appropriate training and developmental opportunities Creating a development program that only offers generic "leadership" training programs And the two biggest errors made regarding succession planning efforts: vi. vii. Not holding managers & leaders accountable for succession planning Not sharing the data with employees - you run the risk of losing promising employees if they don't feel the company has a plan for their development This is why succession planning must be a coordinated effort between HR and line and senior executives must ensure the line managers get involved with their own division succession planning efforts.
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It's the role of every manager to help their promising subordinates develop their fullest potential by continually challenging them and increasing their leadership competencies.
What is the way forward Do you understand the talent youll need to keep your organization successful well into the future? What strategies will be required to turn todays employees into tomorrows leaders? These issues are regularly on the minds of corporate executives and HR professionals alike. Today, however, our recent market has taken some of focus off the long term. Here are some helpful tips to get succession planning back to the forefront and ensure your organizations future looks bright. i. Consider Your Talent Needs One of the biggest changes this economic downturn has created is the slowdown in the retirement cycle. Its tough to sail into the sunset when your 401(k) is down 40%. Many older management employees will be working much longer than they thought possible a few years ago. Dont let this temporary delay take your eye off of the ball. Ask yourself, if the market came back tomorrow, what potential positions would we have to fill and do we have the talent in the pipeline to do so? ii. Identify Talent Early If you arent already doing so, put some sort of program in place to identify your talented employees. This could be as structured as assessment testing, or as simple as having cross-functional conversations with the employees with the top ten percent of review scores. No matter how you go about it, identifying your future leaders and letting them know you see their potential is a huge step toward successful succession planning. iii. Create Development Opportunities Many companies believe these tough economic times have left them incapable of offering development to their potential leaders due to the expense of training. This is not the case. As a manager you need to rethink your definition of training, and consider options that cost nothing. This may include high-potential www.virtualhr.co.ke
employees in budgeting cycles or planning sessions to begin educating them about responsibilities they may have someday. Not only will they build skill sets and feel valued, but you will get more of your best thinkers involved in the process of guiding your firm. Its a win-win situation. Conclusion As you begin laying the foundation to your future success, you should send the message that succession planning is back on your organizational radar. This will communicate to your workforce that the company is on solid ground and considering the best way to move forward. Not only will a focus on succession planning help protect your future, but this signal that stability is getting a foothold in the marketplace will also have a beneficial impact on your staff attitude and productivity today. I believe that is an idea everyone can get behind. -END-
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