Having the right executives leading your organization is vital – spending more time and effort recruiting the right person for the job is imperative. However, many organizations still lack a proper executive succession plan. This means that should a top executive choose to retire, leave the company, or become unavailable for any other reason, there should be a plan in place to replace them and transfer responsibilities.
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Tipping the Scales
Here are a few of the reasons that many companies lack a strong executive succession plan:
• No ownership – Planning for the eventual departure of a senior management official is new to many organizations. It may be unclear who should lead the charge. Should this responsibility be delegated to the HR department, business leaders, or the board? While all these parties may agree the task needs to be done, ownership of the process should be clearly defined.
• Long-Term Effort – The investment of time and money to develop and implement an executive succession plan is significant, and the dividends are delayed. Thus, companies are unwilling to justify the short-term costs of a plan that may not pay off for years to come.
• Disruptive – Although it would seem that planning for the future would promote confidence, it can undermine current executive leadership. They may wonder if identifying a successor is a signal of changes around the corner. Executives may also be hesitant to bring succession up for fear that it may be viewed as a sign of plans to leave.
If the task appears too daunting on the surface, consider what might happen without one in place. First, ineffective leaders could remain in their positions far longer than they should as the company fumbles around for a replacement. This can hurt morale, productivity, and profitability. Or in haste to find a good replacement, companies could make poor choices. They will then be saddled with leadership that isn’t meeting performance expectations.
You should be prepared to look for executives from both inside and outside of your company, as both can offer advantages depending on your needs. To prepare for internal hiring of executives, your succession plan should include the following:
Select Successors Empirically
The ultimate goal of an executive succession plan is to prepare for and mitigate the risk should a top executive depart the organization. Implement a data-driven plan that tracks performance appraisals so that you can identify top performers and reward them with training and leadership responsibilities. With this machine in place, you should have a clear idea of who the rising stars in your company are, and you won’t have to revert to choosing successors based on office politics, connections, or tenure.
The first step in developing a sound plan is to form a committee or team, who will oversee the project. This team may include HR executives, board members, and other leadership executives. These leaders know from experience the skillset and personal qualities necessary to fill these positions. Creating a profile for key positions and benchmarks against which candidates can be measured will be indispensable when identifying qualified individuals. Discussions within this group must be kept confidential as they will be discussing current employees.
Once the qualifications for top positions have been identified, it is crucial to turn the discussion to evaluation tools, which can quickly narrow down your choices to the most qualified employees. Selecting the best successor for management positions is a data-centric process. There are many employee assessment tools available, but they are not all equally useful. Look for a tool that evaluates the skills most applicable to the position in question. Beyond skills, it should take cultural fit into account as well, as this fit is vital for long-term success.
Train Employees Early
Postponing training until there is a vacancy is unwise. As noted earlier, an executive succession plan requires both time and money. While a skilled successor is the end goal, this marathon begins with establishing a broad effort to develop leadership and talent among all employees. Talent assessments may be used to pinpoint employees who excel in skills or leadership abilities. These individuals can benefit from advancement opportunities and accelerated training. If gaps are present in their skill set, these should be identified and addressed to build a sound foundation for future advancement. The steps of early identification and training of employees will create an upward flow of highly skilled individuals. While not all employees will want to progress to the top tiers of management, those who do aspire to these heights will be prepared to take the reins when the time comes.
Be Prepared to Adjust
Review and revise your criteria for leadership positions regularly. Changes in the market, technology, and business will inevitably affect the skills necessary to lead tomorrow’s corporations. Any succession plan should be aimed towards meeting the company’s needs in the future, taking into account business projections. The core skills and abilities needed to lead in the business world are constantly changing, and your succession plan needs to adapt to these changes.
Internal or External Hires
While there is merit to internal hires, there’s also a lot of good that can come from external hires. They may have a skillset and outside perspective that leads the company to take innovative leaps. A set of fresh eyes to familiar problems and “out of the box” thinking for growing your company can be valuable. And finally, they may not be biased by loyalties to people within the company, which will allow them to make tough calls about hiring, terminations, budget cuts, and reallocations.
As you build your executive succession plan for your Utah company, it’s critical that you partner with an executive search firm. While an internal hire may be the right decision, there may be a candidate in the workforce who may be just the person you need to lead your company into a brighter future. And chances are, since many of these candidates are already employed elsewhere, you probably won’t be able to find them through traditional means. From accounting to engineering to healthcare executive search, we know who the best and brightest in your industry are. And we also take the time to get to know your company and its culture intimately so that we can quickly align you with the most promising candidates for your leadership needs.