The risks of poor succession planning and five steps to solve them

HFMtalentIndex shares five steps to provide the ideal structure process.

In our recent State of Succession survey, we found that South African business leaders have a general sense of dread surrounding unresolved succession.

Although 99 percent of respondents feel that succession is an important area of focus for organisations, only 19 percent have a structured succession planning process in place. This is especially prevalent in companies of between 100 and 1,000 employees, while larger organisations tend to be better prepared.

Succession planning is one of those concepts that sounds far more complicated than it is.

The summary comes down to a few simple facts: who is ready to step up, what needs to be done to prepare, and why we make the choices we do. Succession planning is about recognising existing talent and putting processes in place that ensure that decisions made now reduce future risk and ensure business continuity.

Let’s look at some of the main concerns about succession planning, followed by five straightforward steps to resolve them.

Bad decisions, long-lasting consequences
Not being proactively prepared to fill an essential role leads to a situation in which ad-hoc decisions need to be made. These could result in knee-jerk reactions based on incomplete information.

While it is possible to get lucky and quickly fill a role with the right talent, a stratagem of luck can just as easily not work out.

On one side of the spectrum, organisations are shackled with a permanent or semi-permanent mediocre performer in a critical role. On the other, due to poor temporary deployments, momentum in crucial business areas is eroded.

Downstream risks
It is not unusual for the best performing specialists or professionals to be promoted into leadership roles.

The Peter Principle holds that promoting based on performance only inevitably leads to promotion above one’s ability. Such a scenario leaves a hole in a critical downstream position on one hand, and risks bringing the wrong person into a leadership position on the other. Instead of the desired win-win, one is served up a lose-lose.

Disengaged talent
Lack of career development is one of the top causes of disengagement. Employees need to know that there is a way forward and up. This is especially important for top talent, which in general have their pick of where to go.

Employees are demotivated when organisations don’t actively address their career aspirations. Morale is often lost when employees see the prominent wrong person being promoted as the result of a crisis.

Strategic risk
Failing to consider the future team structure of an organisation equates to strategic risk. Decisions today will affect outcomes years from now.

Is the team that is being groomed for management equipped to deal with the issues of tomorrow, even if these issues are not yet apparent? The pool of successors needs to be agile enough, and develop their agility to remain effective in unknown situations.

Five steps to solve succession risk
While strategic succession might seem daunting, it comes down to a few simple questions:

  • Who is ready to step up?
  • What needs to be done to get them ready?
  • Why do we make the choices we do?

These concepts are summarised in our Succession Planning Checklist. You can complete the checklist to measure your organisation’s succession risk, and see how far you are on the 15 key considerations.

The five easy steps to follow are:

  1. Roles: Start by identifying the key roles on which to focus your succession energy. These can be leadership or business-critical roles, or other areas you assess risk. A simple list will suffice.

  2. People: Consider who is best placed to step into these roles. It is a good idea to have multiple successor options per role. For each person, take a view on what steps need to be taken for them to be able to step into the role effectively.

  3. Data: Base your decisions on objective insights. This includes a consistent view of employee performance in their current role, as well as measures of employee potential for future roles. For example, do they have sufficient leadership potential, agility or ability, for the expectations of the next level?

  4. Opinion: Balance objective insights with human input. Leaders’ and peers’ perceptions must be taken into account, and add rich detail to the numbers. There are numerous ways to achieve this, one of which is a holistic 360-degree feedback evaluation. It is imperative to give employees input into an agency over their careers.

  5. Planning: Keep your plan up-to-date. Succession planning should always be based on current data, and procedures should be kept up-to-date at least yearly. Check-in to see how much progress is being made with successors according to development plans and adjust accordingly.

The risks of unaddressed succession planning are large, and can be devastating in a crisis. A single event can cause a chain reaction that cascades far into the future. However, planning for succession need not be a daunting task, especially if you structure it according to these five simple steps.