The Challenges of Succession Planning, Jodie Woodrow, Pure Executive
Every Manager, Director and CEO should be thinking about what/who comes next. The transition from one CEO to another is a critical moment in a company’s history. A smooth transition is essential to maintain the confidence of investors, business partners, customers and employees, and provides the incoming CEO with a solid platform from which to move the company forward. Studies have shown that 90% of companies understand the importance of succession planning, yet less than half have a formal succession plan in place.
Businesses of all shapes and sizes face difficulties with this process, however business owner/s of family companies have additional problems, which arise simply because it is privately held. The challenge of finding a successor is not just about identifying the person with the track record, it is about finding somebody who can meet the expectations of the family and continue its legacy. With over half the privately owned companies within the UK originating in London and the East of England, our region therefore naturally faces a challenge with succession planning.
Reasons why organisations can find it hard or fail at succession planning.
- They don’t know how or leave it too late
- Generational skills gap
- The expected next generation do not want the role
- Expected successors leave
- Current CEO finds it hard to let go
- Lack of investment in the talent pipeline or difficulty in attracting external talent
- It’s hard work!
At Pure Executive we are often in conversation about succession, with clients asking; “how can we tackle succession issues?” Organisations shouldn’t underestimate the importance of succession planning and the need to have formal plans in place. In addition to minimising risk, there are several beneficial byproducts that can be identified as part of succession planning: talent management, employee engagement, organisational development, staff motivation and retention, business continuity, leadership/employee brand and the ability to identify and attract external talent to your business.
That said there are many companies in this region doing it well, we have shared some best practice ideas below:
- Bring the People agenda to the Boardroom.
Businesses who succeed at succession raise the issues early on and put plans in place well before the event happens. It doesn’t just sit with HR, it needs to be supported and driven by senior management and should be aligned to the medium/long-term business strategy to minimize risk and manage business growth objectives. Ensure you have a plan which is clear, visible and communicated.
- Build talent pipelines.
Introducing clear progression and development routes will enhance the chances of you retaining your talent, enabling them to take on future key roles within the Boardroom. From an HR perspective, succession planning needs to be part of the wider employee engagement offer and should be aligned to recruitment, training, development and performance review. But it’s worth bearing in mind that succession planning isn’t always about moving upwards in an organisation. Increasingly, moving sideways is an important part of developing organisational capability and providing personal development. When looking at performance, look at potential as well. Current performance isn’t always an indicator of future performance, so it is prudent to test for potential.
- Attract and retain the best talent.
Work tirelessly on your employee and leadership brand and employee engagement methods. Don’t be afraid to publish your ‘People Agenda’ on your website and in your Board report. A ‘leadership’ brand in the market will attract and retain top talent – people will want to join your company because they have confidence in the existing leadership and the opportunities to develop as leaders themselves. Also, consider hiring people who challenge you. The best leaders are those who are not afraid to hire people who can be a threat to their role!
As well as sharing what we see locally, please see article below from ‘Investors in People’ who share their 10 tips for succession planning.