Succession planning is a crucial process for organisations to ensure the long-term success and sustainability of their business. It involves identifying and developing potential leaders to fill key roles when current leaders retire or move on. When done right, it helps businesses avoid disruption and mitigates risk of critical expertise. It also has employee morale and engagement. However, getting it wrong is disruptive and puts the sustainability of the business at risk.
The following steps are important parts of an effective succession planning process:
Identify your critical roles
- Not all positions should have succession plans, only those where, if left unfilled for more then a few days, the business would be crippled.
Identifying the right talent
- A lot of businesses get this part of the process very wrong and will often operate from assumptions and bias. To get it right, and with the focus on a company’s leadership layer, it is important to understand a potential successor’s aspirations, motivations and ability, and then qualify this giving regard to their performance and proven success in growth roles. In particular, this is a common mistake we hear about with regards to family- owned businesses, in that a parent will mistakenly assume their child aspires to take up the company reins when it is time for them to move on.
Formulating the succession plan
- A well formulated succession plan sets out a learning and development pathway for potential successors and outlines successor readiness. This should focus on the skills, ability, and professional growth needs of the potential successor. Leadership aptitude assessments and 360-degree feedback processes are high value sources of information that can help inform successors in what those needs are.
Conduct annual reviews of your succession plan
- Succession plans should be reviewed annually and provide for the scenario of considering any new talent that appeared within the previous 12 months.
Consider the option of formalised agreements and insurance
- There is a lot of time and capital invested in developing a potential successor for a company. Risk of loss can be mitigated through the formulation of well-structured agreements and plans and investment in insurance products such as “key-person” insurance.
At Active HR we help shape great workplaces and recognise the value of a business in shaping tomorrow’s company leader, today. If you are needing to secure your company’s future, talk to Active HR about our range of solutions that can support your succession planning endeavours.
Find out more about Active HR by clicking here.
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