Should your HR Managers Focus on Succession Planning?

What would you do in your organization if a key employee resigned, fell ill or had to be fired tomorrow? Would you be prepared? If not, you may end up with an empty C-suite or underqualified people moving into leadership roles because there is no one else to take over. A succession plan may help prepare for these events.

What exactly is a succession plan?

Succession planning is the process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. In this process, you ensure that you will never have a key role open for which another employee is not prepared.

Through this process, you will:

• Recruit superior employees
• Develop their skillset and industry knowledge
• Prepare them for advancement or promotion for more challenging roles

Why implement succession planning?

• Vacancies in senior or key positions are occurring in numerous organizations simultaneously and demographics indicate there are statistically fewer people available to fill them.

• Baby boomer retirements are on the rise just at the time when the economy is growing and increasing the demand for senior management expertise.

• There is no emerging group of potential employees on the horizon as in past generations (i.e. baby boomers, women entering the workforce, large waves of immigration).

• Many organizations eliminated middle manager positions during restructuring in the 1980s and 90s and no longer have this group as a source to fill senior level vacancies.

• Younger managers interested in moving up do not have the skills and experience required because they have not been adequately mentored. This is because middle managers, who would normally perform this type of coaching role, were eliminated.

What to consider before implementing Succession Planning

There are plenty of ways that succession planning can help your company achieve long-term success but there are a few issues to consider.

• High potential vs. everyone:Some companies focus all of their succession planning efforts on “high potential individuals,” whereas others create a succession plan for everyone from the moment they are onboard. The benefit of focusing on high-potential workers is you can channel more resources and coaching toward those employees with the greatest promise. The risk is that you overlook great people, and alienate or frustrate the rest of the employees, which can impact morale and turnover.

“Most successful organization focus on everyone,” says Dan Schneider, cultural architect at advisory firm The Rawls Group.

• Hiring from within vs. bringing in someone new:Developing leaders internally takes time and effort, but these homegrown candidates are more likely to be successful than external candidates. According to a 2012 study by Matthew Bidwell, an assistant professor at the University of Pennsylvania’s Wharton School, external hires are 61 percent more likely to be laid off or fired, and 21 percent more likely than internal hires to leave a job on their own accord. These outside hires also get paid more, but get lower marks in performance reviews during their first two years on the job.

However, internal hires aren’t always an option. In fact, 38 percent of firms anticipate they will need to recruit externally for C-level roles in the next 12 months. Internal candidates are also not always the best choice. If a company wants to move in a dramatically different direction, or its current leaders leave before the next generation is ready, companies need to be open to bringing in someone from the outside.

• Factoring diversity into decision-making. Managers often seek people who are like them for mentoring and promotion, which often leads to the same type of personnel. If companies want diversity in their leadership, the succession planning initiative should include steps that actively promote women and minorities for leadership opportunities, and train managers on how to encourage diversity on their teams.

• Making sure you have support from the top.Human resources can build a great talent development plan, but without active support from leadership, it won’t have the desired impact. Human resources leaders can’t force executives to support their efforts but they can align talent management efforts with strategic plans and educate executives and managers about the business value of succession planning efforts.

If your company is looking to implement a succession plan and need assistance, give us a call today!

Jim DePew
Vice President & Consultant
Mobile: (330) 631-9022
Office: (330) 915-2355 Ext: 103
Email: jdepew@bdewees.com