Succession planning still in its infancy

by 27 Nov 2007

WHILE COMPANIES are realising that succession planning is no longer simply a rescue plan to manage the exit of CEOs from an organisation, recent research has found that succession planning is too often unstructured, under-resourced and clouded in mystery.

While 83 per cent having implemented succession planning in the past five years and a further 51 per cent of companies are currently implementing such programs, as little as 5 per cent of HR budgets were invested in succession planning.

However, of the 49 per cent of organisations that do not have a succession plan in place, 54 per cent are planning to implement one in the next 12 months.

“Companies continue to invest heavily in recruitment and development, yet many aren’t taking the necessary steps to protect and retain that investment through succession planning,” said David Reynolds, executive GM of Chandler Macleod Consulting, which conducted the research.

“If a critical employee leaves an organisation due to lack of perceived career progression, that is money, expertise and intellectual property lost. Companies cannot sustain business growth without talented employees filling critical roles.”

Interestingly, of the more than 300 business leaders and senior HR practitioners surveyed, 58 per cent did not have a succession plan in place that involved them personally.

Furthermore, the survey found succession planning is still considered a ‘dark art’ in almost half of all organisations surveyed, and often left solely to the discretion of managers and CEOs.

In fact, 66 per cent could not agree that the processes used for succession planning are transparent, while only 38 per cent agreed their processes were completely objective.

Additionally, only 7 per cent of respondents said their succession planning was a formal and well-established strategy with clear goals. “If a succession plan isn’t well structured, the ability to align it with business strategy is limited,” Reynolds said.

“A succession plan has to be communicated clearly to all employees, particularly to pivotal individuals, as we know that career progression aids retention. Otherwise your talent pool is left open for competitors to fish.”

As such, Reynolds said HR professionals had a duty to guide their executive team through succession planning and ensure clear communication with employees.

“There’s also an opportunity for HR professionals to add real value to their organisation through succession planning, which will in turn drive a more strategic investment in remuneration and rewards, learning and development, and recruitment and assessment,” he said.

“Importantly, if they take succession planning from a traditionally narrow, one-size-fits-all approach to one aligned to their business’ long-term strategy, they will create meaningful roles for themselves.”

A big part of effective succession planning is identifying those roles, skills and individuals critical to a company’s success, according to Reynolds.

“The traditionally narrow definition of succession planning focusing on C-level executives is short-sighted and potentially very damaging. Good succession planning requires free thinking, and answers the question ‘Who are the people delighting our clients or customers?’,” he said.

Organisations looking to identify those pivotal roles should focus on: the key skills and knowledge needed for business growth; the roles that provide the highest leverage and contribution to organisational success; and the areas of highest risk or vulnerability.

“Companies must think strategically and laterally to anticipate the type of people and skill sets they’ll need in five or 10 years time. There’s no point developing a great team for the future based on the needs of today or yesterday,” Reynolds said.

Getting succession planning right

• Develop a structured ongoing process for identifying, recruiting, attracting, assessing and developing employees with critical skills and those with potential

• Ensure succession planning has the total support of the CEO and executive team

• Ensure senior executives are responsible and accountable for identifying and developing talent, as part of their KPIs

• Ensure talent are aware they have been identified, provide tailored career development plans and involve them in regular conversations about their career

• Measure, track and rate the success of succession planning processes

Source: David Reynolds, executive GM of Chandler Macleod Consulting


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