Succession Plans: Have Yours Ready

Q. We have about 200 employees in our company—many of them “baby boomers” — who even now are starting to retire—or plan on it. We don’t have much of a plan for who will take over when they leave, and many of these are key people. How do we do this? —Lavina B.

A. You’re talking about what’s called “succession planning,” and smart organizations have plans in place to prepare for the possibility of key people retiring—or being recruited away by another firm. And with so many of your people in the “baby boomer” crowd, it’s not an “if” but a “when” that it’s going to happen.

Two experts in this field are Kevin Butler & Dona E. Roche-Tarry. Butler is managing partner in the global health care practice, and Roche-Tarry is managing partner and a member of the international technology practice at Heidrick & Struggles, Greenwich, CT.

Their focus is clear: succession planning is essential for an organization to meet its strategic goals. They find that many organizations focus almost entirely on hiring and training, and neglect succession planning. They also note that every organization is different, and each organization must develop a succession plan that fits its specific needs.

Typically, the process requires several steps:

• Identify existing competencies that relate to the organization’s leadership

needs and the industry it competes in.

• Evaluate current employees to determine how they match up to organizational

needs.

• Introduce coaching, mentoring, training, and recruiting methods that match

personnel requirements—and future needs.

Organization development experts agree that succession planning is a complex task that requires constant attention and ongoing resources. Successful companies devote considerable time and resources to mapping out the skills and competencies they need so that they can hire and train appropriately— and stay in business.

Understanding The Need

In most cases, succession planning focuses on three main areas:

Aging senior management.

Some top managers, especially CEOs, spend years leading an organization, and business procedures become entrenched as daily issues take precedence. As a result, the organization doesn’t have people who can assume the top posts. Although large organizations are at risk, the problem can be especially severe at small companies, which often flounder, and sometimes collapse, after the founder or CEO leaves. And nobody is fully prepared to assume the top post.

Unexpected events.

Sudden illness or death of a key executive can paralyze both management and staff and hinder the organization's ability to operate well. While a company can’t plan for every possible scenario, it’s realistic to map out a chain of command and understand who will assume control if and when a key executive is lost. (When the World Trade Center attacks took place, dozens of companies lost key executives, including CEOs and CFOs, who were on the planes or in the buildings that were destroyed.)

Peak Efficiency.

Not only does succession planning serve as a way to create an organizational hierarchy, but it can also help companies conduct an inventory of human capital and better understand any gaps. It can also help organizations better manage change.

If you’re looking to develop even a basic succession plan, consider addressing these areas:

 Competencies:

Identify current management and leadership competencies, guidelines on using them, and make them requirements for new hires.

Knowledge Management/Transfer:

Develop effective ways of capturing knowledge possessed by highly skilled employees who may be departing and sharing it with those who will take their place.

Management Mobility:

Increase the ability of managers to move around within the company. The purpose is to develop the company’s managerial resources and skills and make them vested in many managers—not just a few

Mentoring: Develop good mentoring programs to help current employees develop their full potential.

Recruitment and Selection.

Develop strategies for innovative recruitment and selection techniques for new hires and promotions.

Employee Retention:

This is often overlooked. Create and implement better ways to communicate to employees what the company has to offer, make employment with the company more appealing, and motivate highly skilled employees to stay.

Retiree Resources:

While some of your older employees may be leaving, don’t neglect the realistic, practical ideas and options for hiring retirees from other firms. With good screening, you can tap the potential of experienced, responsible people who may have five, ten, even twenty more productive years they’d like to contribute to your company.

Staff Development:

Look for new ways to develop all your employees and prepare them to take on new jobs and responsibilities to replace departing employees:

• Executive performance coaching for senior leaders

• Measure and improve employee and customer engagement

• Teach all employees how to identify, deploy, and develop their strengths

• Create an objective and easy-to-use performance appraisal and review system

• Design a performance-based compensation system for all roles