The current labor force in America is polarizing – there are lots of older workers, lots of younger ones, and fewer people in the middle. That’s a legitimate managerial challenge. There are fast-paced changes in work that lead to skill shortages and managers complain that they have no one ready to fill vacancies. And the numbers of women and minorities at senior levels are still insufficient.
When a key position is left unfilled for any length of time, important decisions cannot be reached and critical activities are delayed. Often it is difficult to meet or exceed customer expectations, to confront competition successfully, or to follow through on efforts of crucial long-term significance. There are also other general challenges – reduced loyalty among employees, increased turnover of identified successors and high performers, increased attrition in executive level positions, and a shortfall in the number of future leaders.
Retaining leadership talent is both a strategic and economic necessity. You cannot implement your strategy without the right leadership. Because of these issues, there is a heightened sense of urgency about succession planning. No matter how certain your future appears, now is the time to begin taking measures to close the gaps we face over the coming years. A succession plan can help organizations drive competitive strategy, reinforce values, and successfully secure their future.
To focus your succession effort:
- Have a clear vision of where the business is going.
Depending on your growth goals and plans, you may need different kinds of leaders tomorrow than the ones you have today. Executives tend to look for people who remind them of themselves, so instead, it is best to think critically about future needs and who can best address them. The focus should be on developing leaders who can run the organization as it will be, not as it is now. Succession plans must be closely linked to business strategy.
- Don’t waste time having leaders choose their replacements.
Develop a high-potential pool of ready-now candidates to take on a variety of leadership responsibilities. Great leadership does not usually spring from specialized expertise, either. Acquiring a broad range of experiences allows leaders to develop a deeper, richer understanding of the organization as a whole.
- Make your time investment in Succession Planning worthwhile.
Do you have the same discussions about the same people each year only to find that they are not getting any closer to being ready? Succession planning is a futile effort unless it acts on a working, evolving guide to employee development. Cast a wide net throughout the organization when identifying leadership potential, and you may be surprised by the talent that already exists in the company. Also, the criteria on which you assess potential must be objective and fair. Every team member should know what it takes to be considered a future leader.
- Provide real development for real people.
People learn by doing. The worldwide primary methodology for simultaneously developing leaders, building teams, and improving organizational capabilities is Action Learning. Development by working on real, important, and urgent business problems is transformational.
The Benefits of Succession Planning
In a very practical sense, developing and retaining leadership talent is both a strategic and economic necessity. By filling positions internally, you can reduce the time needed to reach proficiency, limit hiring costs, and eliminate turnover resulting from a poor fit with your organizational culture.
Next, are business results. Future viability and performance requires “right people in the right place at the right time.” So you must continually develop qualified pools of candidates ready to fill critical positions and ready to step in when there are unplanned losses of key leaders. Costs and organizational risk continue to go up for external searches. Even if you find someone with the right credentials, you may not recognize the lack of culture fit. Filling leadership positions internally cuts down on hiring costs, ramp-up time and lost productivity.
Effective succession planning provides enhanced and targeted employee development, which leads to improved employee morale and engagement, increased workforce productivity, and expedited goal achievement. And with so many leaders planning for retirement, proactive knowledge transfer enables organizations to identify and capture the skills and competencies of retiring employees so they can develop qualified successors and facilitate smooth transitions.
All this means a significant return on investment and better business results.