White Paper: Succession Planning- Is It Really Important?
Just as most of us avoid planning our funerals, we avoid planning our succession. Our eventual departure from the company is an inevitable reality, however, as is the reality that we will need a funeral some day.
Despite the growing awareness that succession planning is an essential process with numerous benefits, a recent study by the Center for Organizational Research titled Effective Succession Management found that only one percent of surveyed organizations rated their succession management plans as “excellent” and as many as two-thirds described them as “fair or worse.”
What are some of the benefits of succession planning?
• The future success of the company — Succession planning allows for a transfer of knowledge to the company’s future leaders. It gives corporations a process to begin tapping talent for bigger roles.
• Higher retention – Succession planning helps you retain superior employees, because they appreciate the time, attention, and development opportunities. A 2002 Hackett Best Practices Survey of two thousand global companies cited succession management and planning as the single-most successful strategy for reducing voluntary turnover.
• Cost-effective hiring — Internal hiring costs about half as much as external hiring. An internal hiring approach also breeds loyalty to the company.
There are other reasons why succession planning is becoming increasingly important. Baby Boomer executives are retiring at a very high rate, taking the corporate knowledge with them. This glut of retiring Boomers — combined with the decreasing population of younger talent to replace them — is creating a talent war among corporations. Solid succession planning can help you avoid leaving your company vulnerable.
For succession planning initiatives to be successful, there are certain infrastructures that must be in place.
• Get the support of senior management.
• Provide a link between succession planning and the overall business strategy.
• Include your human resources department’s process of training and performance appraisal in the plan.
• Put a formal process in place for transfer of knowledge.
• Use technology to facilitate the process. Research and implement succession planning software to help the process run smoothly.
First things first, though. What should you do right now to prepare for your company’s future?
1. Identify the competencies of future leaders. Consider employees who will be eligible for retirement in the next five, ten, or 15 years and the competencies they possess. Study future trends.
2. Identify your high performers based on performance evaluations, assessment tests, and core competencies.
3. Develop your identified high performers with individualized development plans, 360-degree feedback, cross-training, and mentoring programs.
4. Measure the success of the succession plan. Track how many openings are filled with internal candidates. Are open positions being filled by the people who were listed as potential successors?
So, is succession planning really important? If you care about your company’s future, it is absolutely essential.