Imagine a scenario where the leader of your organization has stepped down without advance notice and no one is ready to take their place. Or a similar situation: A company finds itself at a loss when an owner who kept his leadership expertise entirely to himself winds up in the hospital unexpectedly for several months.
These are just two examples of why succession planning is essential for any size organization. And they’re both examples that Jevon Powell, an organizational psychologist and president, owner and senior consultant of Seattle-based firm Scontrino Powell, has seen over his nearly 30 years in the business.
In the first scenario, Powell says, “The organization was caught kind of flat-footed. They had to go to a temporary or an interim president. Now they’re being more thoughtful about what their next president needs to look like.” In the second scenario, he says, the leader’s “organization almost collapsed in his absence because nobody could take over his job.”
“Effective, consistent succession planning helps prevent significant gaps in leadership, so if somebody leaves unexpectedly, we know what to do,” Powell says. Succession planning is the process of identifying key positions in an organization and nurturing a talent pipeline to potentially fill those positions as the need arises.
As the scenarios above indicate, succession planning helps companies avoid gaps in business operations, loss of institutional knowledge or unnecessarily bumpy leadership transitions. It engages employees and adds value to organizations.
“There’s a lot of research that highlights the importance of succession planning,” Powell says. “There is less consistent research around exactly which tools are going to be the most useful or the most effective. But certainly… one of management’s prime responsibilities is to ensure that they have a succession plan in place.” So how does an organization go about doing that?
Consistent Process
A key aspect to succession planning, according to Powell, is that it be a “consistent, disciplined, focused” endeavor. “One doesn’t just create a succession plan,” Powell notes. “One creates a process. And then the process is constantly working.” People’s lives change, employees change and businesses evolve, so a succession plan that is always humming along will be nimbler in adapting its staffing needs in the moment.
For example, Powell describes working with a large electrical contractor whose discipline about doing succession planning resulted in being able to quickly tap people within their organization to lead a new company they purchased. “They could move quickly and respond to things quickly because they had an awareness of the talent that they had within their organization and how they could reposition that talent.”
Powell suggests management should be putting together a succession planning system “as early as possible in the life of an organization.” That system is twofold: It evaluates company needs, and it evaluates employees against those needs. And it does this in an ongoing way, relying on tools to produce information about both those needs—how employees are performing, what’s best for them, what the organization needs and how those needs can best be met.
The tools can vary. Powell points to various performance management and review systems that companies might employ, such as quarterly talent development roundtables, 360-degree reviews, 9-Box models or Red-Yellow-Green systems. HR often drives succession planning, bringing in people to participate in the process depending on the function and level of roles that need to be filled within the organization. Powell says the specific tools or systems matter less than “the discipline and the consistency of focus.”
Benefits
Succession planning can have significant benefits for an organization, from preventing leadership gaps to retaining institutional knowledge to developing employees in ways that both improve morale and bring value to the organization.
Powell points to Gallup’s annual employee engagement survey, which shows that a top indicator of employee engagement and retention is the attention paid to professional development. “That’s about as person focused as you can get. Of course, it’s also good for the company… ” Powell says. “It is two sides of the same coin, and we have to pay attention to both sides.”
To that end, “transparency and predictability are both very important components of succession planning,” according to Powell. “Employees like to know that they might be considered for something. And they like to know that not only might they be considered for an advancement, but they like to know what they need to do in order to get there,” he adds.
“That might include things like training, coaching, alternative job assignments, special projects committees. So that transparency and that predictability are really important for everybody involved, but the benefit, obviously, is that it really helps employees feel engaged.”
This is equally true in smaller organizations where management positions are few and most employees don’t have an opportunity to move up. “We still want to make sure that we are helping people, employees grow and develop in the ways that they want to grow and develop and that they do so also in ways that benefit the organization,” Powell suggests.
Putting development plans in place for every employee is beneficial for all. “We may identify somebody through succession planning who is a high potential employee. And so, what we may want to do is explore things like job enrichment so that we’re teaching them additional skills that can enrich or broaden the position or the work that they do.” At the same time, this broadens their value to the organization.
Risks
Succession planning isn’t without its challenges and even risks. “One of the main risks that I see with organizations is that they are not deliberate about succession planning,” says Powell.
“All too often I see organizations that are really haphazard about it, and they’ll do it every couple of years, and it’s only because somebody says, ‘Oh my gosh, Phil is going to retire next year, and we don’t know who’s going to replace him.’ All of a sudden, we’re doing succession planning again.”
Successful succession planning is an ongoing process that requires consistency. It also requires that organizations have strong performance management systems in place. “The performance management system helps the organization evaluate how employees are doing and gives us reliable data to determine if they are meeting expectations or falling short of those expectations.”
“One of the main risks that I see companies fall into is succession planning can look like they are playing favorites,” Powell adds. “This is where the transparency piece is really important. So, if a company puts together a succession planning process, which they should, it should be clear what that process looks like: how often the team is going to meet, how they are going to evaluate employees’ performance, how they’re going to consider advancement opportunities. Transparency can help avoid the appearance of favoritism.”
While Powell says cost “is not a huge factor in succession planning because it doesn’t have to take that much time or money to do it right,” it does require buy-in from team members. “Another risk comes from managers, some of whom might say, ‘I’m too busy to do this nonsense. I have other, more important things to do.’ If they really truly believe that, I think those managers should probably go to another organization.”
Lastly, Powell mentions that offering employees chances at training for management positions should not just result in “adding a bunch of stuff to somebody’s already very full plate… In that case, that’s not really succession planning. That’s just piling on. Or, if we’re giving it a nice label, we call it workload distribution.”
All in all, Powell says the benefits of succession planning “dramatically” outweigh the risks.
This article originally appeared in the July issue of SUCCESS+ digital magazine. Photo by Peerayut Chan/Shutterstock