There’s no one model for succession planning as its focus is likely to be quite different in small and large organisations, although it can be equally vital in both. All organisations need leaders and managers with a range of experience. Management training and development activities alone cannot provide the hands-on experience that is crucial in making future leaders.
Succession planning is an important way to manage the delivery of that experience, complemented by management training and development activities, and aligned with business needs. Organisations need to ensure that they continually review and develop their succession plans to meet current and future skills, capability and behavioural needs and to ensure that succession planning is closely aligned with evolving business priorities.
What is succession planning?
Succession planning is the process of identifying and developing potential future leaders or senior managers, as well as individuals to fill other business-critical positions, either in the short- or the long-term. As well as training and development activities, succession planning programmes typically include the provision of practical, tailored work experience relevant for future senior or key roles. The aim is for the organisation to be able to fill key roles effectively if the current post holder were to leave the organisation.
Which posts are covered by succession planning?
A first step is to identify the business-critical positions or roles in the organisation for which potential successors are needed. It’s possible for succession planning schemes to include individual senior or key positions or to take a more generic approach targeting a ‘pool’ of positions for which similar skills are required. One example could be non-leadership technical roles that could leave an organisation vulnerable, if unfilled promptly.
Succession planning typically covers the most senior jobs in the organisation, together with short-term and longer-term successors for these posts. The latter group is in effect on a fast-track and may be developed through job moves within various parts of the business.
This focus on the most senior posts means that even in large organisations, only a few hundred people at any given time would be subject to the succession planning process. The relatively low numbers involved can help make the process more manageable. That said, many large organisations attempt to operate devolved models in divisions, sites, or countries where the same or similar processes are applied to a wider population.
Roles, not jobs – the use of pools
While some jobs will always require specialists, there is a growing focus on identifying and developing groups of jobs to enable potential successors to be identified for a variety of roles. So, jobs might be clustered by role, function and/or level so that the generic skills required for particular roles can be developed. The aim is to develop pools of talented people, each of whom is adaptable and capable of filling several roles. Because succession planning is concerned with developing longer-term successors as well as short-term replacements, each pool will be considerably larger than the range of posts it covers.
Who uses succession planning?
All organisations need to be able to find people with the right skills to fill key positions.
Traditionally, large blue-chip companies ran highly structured, confidential and top-down succession schemes aimed at identifying internal successors for key posts and planning their career paths to provide the necessary range of experience. But with growing uncertainty, increasing speed of change in the business environment and flatter structures, succession planning of this sort has declined.
A further problem with traditional succession planning was that it failed to take account of non-managerial roles – a brilliant scientist, for example, who might be crucial to the future of the organisation and who wanted to stay in a research role.
In a climate of enduring skills shortages and research suggesting there’s a lack of confidence in the leadership potential within the existing workforce, interest in succession planning has revived. Yet, recent reports suggest that despite growing investment in leadership development, the improvement in leader quality has stalled. CIPD research looks at the barriers to leadership and good people management in practice and emphasises that development of future leaders must be aligned with supportive organisational processes (reward and recognition, decision-making, cross-functional working) and organisational culture.
It’s difficult to gauge with precision how widely succession planning currently operates, survey indicates that over half of employers have some form of succession planning in place, though these are more likely to be informal rather than formal arrangements.
Modern succession planning looks quite different from the old version, with a broader vision, greater openness and diversity and closer links to wider talent management practices.
Links between succession planning and talent management programmes
Talent management covers a wide range of activities designed to recruit, develop and retain talented individuals – with a focus on attracting external talent as well as nurturing internal talent.
‘Insiders’ versus ‘outsiders’
All organisations need a certain number of new recruits directly at senior levels to bring in new ideas and approaches and fill newly-created or unanticipated roles. Many, however, seem to rely either too much on outsiders or too much on insiders, suggesting that it is difficult to find the right balance.
It is also sometimes argued that outsiders should not be brought in at board level but somewhere below it, so that people with outside experience can become accustomed to the corporate culture and undergo development before making the next step up. Others, though, argue that if an objective business case can be made for bringing in outsiders at board level, this should be done where appropriate, and that a failing business needs to recruit from outside – and to be seen to be doing so – to satisfy investors.
Nurturing internal talent
While many employers aim to attract certain highly talented individuals from outside the organisation for key or senior positions, this aim is likely to be balanced by a desire to promote widely from the home-grown talent pool. This will be particularly relevant where there is a high degree of organisation-specific knowledge, for example, in the case of IT professionals in business-critical roles. Some commentators believe that leaders developed from within tend to be more successful than those brought in from outside. Succession planning can help with keeping talented individuals as they are made aware of internal opportunities available to them to progress their careers. Succession planning is therefore central to the internal element of talent management programmes.
Informal v formal approaches
Participants in succession planning programmes may be selected either by informal methods, such as conversations with managers, or by more formal techniques, such as the performance review process and/or the assessment of competencies. (Link to performance management section)
Many organisations have developed frameworks for technical and generic competencies, which relate to a broad range of desired skills and behaviours. The assessment process attached to generic frameworks (especially for management competencies) can provide a useful starting point for evaluating an individual’s potential for a senior role. So, succession plans may need to be integrated with existing competency frameworks. However, there should not be an over-reliance on competencies because they may be too limiting and mechanistic to assess skills such as leadership. They also relate to the past and present rather than to the future, which is where organisational leaders need to look.
Openness, fairness and diversity
Employees need to understand the succession process. Transparency should be given to the methods used to judge potential successors and the kinds of jobs that are considered suitable for everyone. Hence the previously confidential nature of the succession planning process has been reduced, and advertising of senior internal jobs is more common.
With openness should go fairness; objective assessments of all available candidates need to be made, and succession development committees (under a variety of names) exist in many large companies to review and challenge key talent and succession plans and to examine how to improve the process.
All employees need to feel empowered to grow or they may opt out of the succession process. With the value of diversity and inclusion now widely recognised, employers are increasingly aware of the need to ensure that diverse talents are properly developed and that diversity considerations are built into talent development strategies.
The modern version of succession planning takes account of the growing recognition that people need to make their own career decisions and to balance career and family responsibilities.
Links with workforce planning and business planning
Succession planning sits inside a very much wider set of resourcing and development processes called ‘succession management’ which includes management resourcing strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills analysis, the job filling process, and management development including graduate and high-flyer programmes.
Succession planning is a key component of workforce planning, a process to ensure the right number of people with the right skills are employed in the right place at the right time to deliver on the organisation’s objectives. (Link to workforce planning section)
While succession planning needs to be owned by line managers and should be actively led by the chief executive (who has a key role in ensuring that its given importance by other senior managers), HR has a critical role in supporting and facilitating the process. HR must compile all the necessary information on potential candidates through designing and managing assessment processes and information support, including the development and maintenance of any relevant databases. HR is of course also heavily involved in giving career advice and information to individuals and assessing and advising on their development needs.
Those responsible for succession planning need to be highly knowledgeable about how the business is likely to evolve, and how such change might affect the numbers involved in succession planning and the skills they must possess. This requires a close relationship at a senior level between top managers responsible for shaping the future of the business (including the chief executive) and HR.
It’s important for employers to avoid talent tunnel vision where the focus is purely on current skills needs, and to ensure they develop a good understanding of future business needs for leaders, managers and business critical positions.
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Singapore’s employers need to consider the following to ensure they are being open, fair and diverse in the workplace: