Succession Planning

-Succession planning is the process for ensuring the future leadership of the organization.
Succession Planning is the process for ensuring the future leadership of the organization. This is both a governance issue and a corporate health issue:

Therefore, we believe that ensuring the future leadership of the organization is much more than the staffing exercise it too often ends up being (putting people into boxes on an organization chart). All succession plans rely on creating a rich pool of leadership resources for that org chart. Therefore, we believe that the most important outcome of any succession planning program is translating leadership potential into reality.

Putting the Governance Issues into a Leadership Perspective

Providing for the smooth transfer of senior decision-making authority requires, at a minimum, formal processes for dealing with a) the orderly transfer of authority under normal circumstances and b) crisis management in extraordinary circumstances.

However, there are two other governance issues (i.e. issues that affect the financial and legal stability of the organization) that too often are not considered, or not considered in a systematic way:

  1. The first issue is the intellectual capability of the individuals in the succession pool to set direction and deal with the complexity of the business issues they will face. The organization (and shareholders) need to be confident that the individuals coming down the leadership track have the cognitive capacity to think through the issues they will face in the positions they attain. That complexity will vary depending on which position is under consideration.

    For example, the business strategy for one of the business units may be status quo. This makes it an ideal way-station for high potentials to be given early authority with minimal risk. It also can be a highly suitable end destination for someone with strong interpersonal leadership skills but less strong cognitive potential.

    You need to analyze the complexity of your business challenges as they affect different parts or levels in the organization and then use an interviewing process that identifies individuals´ cognitive capacity for dealing with those levels of complexity.

  2. The second issue is the ethical grounding of potential executives

    . This issue is taking on significant importance both as a governance issue and as a human issue (establishing the tone of the organization). There are no easy solutions. We use a mix of scenario testing ("What would you do in X situation?") and competency testing ("What did you do in Y situation?") to provide useful insights about the individual´s ability to a) recognize and deal with ethical issues and b) his/her willingness to make tough choices.

Addressing the Human Issues of Leadership Succession

The integrity of the people you place in your succession pool is one component of what we believe is the critical issue in providing for the healthy continuity of the organization: the ability of potential executives to lead (i.e. mobilize others to act) in complex situations. We use a competency-based approach to determine two critical things:

  1. The few (often less than 6) competencies that make the difference in your organization for outstanding leadership abilityy. We have found this more useful for succession planning than identifying the full range of things that might apply (the more common competency approach). It also helps to get at the critical difference between being a good manager of a silo vs. being someone who can "act like a leader" (i.e. deal with issues from a broader perspective and gets others to do the same).
  2. Differences based on level or location. Just as issues tend to become more complex the higher you go in an organization, differences in stakeholders or business challenges can create subtle differences in required leadership behaviours as well as cognitive capability. For example, we know of one organization that put an executive who previously had been very successful in handling a downsizing in a unionized environment into a turn-around situation where he failed miserably. He was an artist at compromise, not entrepreneurial hard-headedness.

Putting It All Together in a Process that Works

The first thing to do is determine the succession framework the organization needs to use. For example, in a small organization, the focus will probably be on a few key roles/positions; in a multi-unit organization, the focus may be much broader - business units/functions, different levels within the different functions and key corporate-wide roles.

The next thing is to confirm the high performance competencies within the succession framework. The key here is to determine the progression of key things that make the difference for outstanding performance at the different points in the succession framework.

Next, set up an effective and efficient way to identify who the high potentials are and at what level of readiness each one is. We marry competency and cognitive capacity assessment tools for getting that data.

Finally, work through development planning for each individual in the succession pool. Identifying those with the potential to take on greater leadership responsibility requires taking action to close competency gaps. Individual learning and development plans may include mentoring/coaching relationships, attending leadership conferences, developmental assignments, self-development activities, enrolment in executive MBA style courses, etc. Where there are common needs, we find efficient group solutions that may include customized training. Where personalized coaching is critical to success, we consider when to use an outside coach and when to create internal senior executive accountability for hands-on development of the next generation of leadership.

We measure the effectiveness of the succession planning program, using what we have found to be the four Critical Success Factors of any succession planning program:

  1. The process anticipates the complexities of future business needs
    The process must confirm the ability of potential leaders to deal with the complexities of the future business and ethical challenges, whether or not you are publicly traded and have to meet TSE needs.
  2. The process focuses primarily on leadership development
    Organizations used to be good at carrying out executive development but it went out of style 20 years ago. It´s back on the table and you need to clarify succession development approaches that you can and will follow through on.
  3. The process is treated as one of the organizational priorities
    While important, ensuring the future leadership of the organization is only one of the business priorities. Be careful to avoid starting down an overly robust succession planning path only to have to pull back because of conflicting pressures for executive time and attention. This means setting executive accountabilities for succession planning, mentorship and development activities that are realistic.
  4. The process is so practical that it actually gets used in making senior staffing decisions
    Keep things simple without losing quality. This means making wise choices about the tools and processes you will use to translate leadership potential into reality.
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