The definition of “succession planning” seems to have lost its meaning lately, with employers downplaying its importance, or practicing it on only a superficial level. Succession planning can often be found only at the lower end of HR’s priority list. There is often an assumption that career progression for some employees is still too far in the future to begin considering. The cost of developing a new generation of leadership, particularly in the economic downturn, is another deterrent. But the potential impact of neglecting this crucial task can be damaging to organisations. Aparna Kumar, Vice President of HR, Schenker, says employers risk creating a domino effect – starting with a drop in confidence from top management. As it cascades down to the rest of the organisation, employees begin to lose confidence as well, leading to lower productivity and a brain drain.
Bryan Lim, Head of HR, BG Group, agrees. “Relationships are lost and there is a dent to profitability. The company becomes less viable, especially if it’s a small to medium enterprise,” he says. The risks are significant for multinationals as well. They have enough diversity and resources to minimise a loss of continuity, but they sacrifice important relationships which can contribute to long-term success.
Employers should realise, however, that carrying out succession planning as a matter of course is not enough. Those who just want it crossed off the HR checklist are doing as much disservice to the organisation as those who neglect it altogether. The absence of a robust framework is usually an indication that the organisation is not doing enough to ensure seamless transitions.
According to Rahul Varma, Director of HR Strategy, Accenture, the most valuable results come from a diligent execution of succession planning. “Don’t do it as a one-time exercise,” he warns. “Business conditions and outcomes change (so) make this a way of life in the organisation.”
But whose responsibility is it to carry out a goal-oriented succession planning exercise? Lim says leaders are crucial to the process, with HR playing a strong enabling role. “HR is the plumber that lays the pipe,” he says. “Ultimately, management must jointly own the problem.”
Kumar agrees. “HR can design a concept but the line managers have to believe and ‘live’ the same,” she says. She also points out HR’s most common oversight: to assume it can design and implement succession planning strategies without this support from managers and leaders.
Experts say whoever is involved must set in place processes that will anticipate short, medium and long-term needs. Three general categories of potential candidates should be made early on in the process: people who are ready to move up now, people who will be ready in one or two years’ and people who will be ready in up to four years.
An effective succession planning effort must look at several different types of situations so that organisations can be prepared for anything. Lim says these also come in separate categories. A contingent-type situation requires HR to ensure it has a backup stock of mostly internal candidates. A retiring employee, meanwhile, would fall under the category of a non-crisis situation. Employers should also be in the habit of grooming younger workers, even if their future in the organisation remains fuzzy. Short-sightedness often causes HR to put off this initiative until it is too late.
According to Kumar, HR can often assume candidates are ready to take on a new role when that is not always the case. The internal candidate may feel very differently about the position and their abilities than the HR professional making the call.
If a position is being internally filled, Kumar says there needs to be a comprehensive development plan. An external employee should be coached on the job and given constant feedback to help them stay on track.
There is also a crucial need for balance. Employers should not be overzealous with succession planning to the point where they are wasting time and resources preparing successors for every possible position. “Focus on the more vulnerable areas of the business,” says Kumar. This is done by identifying skills critical to the organisation’s success and most scarce in the relevant labour market.
HR should also avoid using traditional replacement planning models. “These focus very narrowly on just replacements and tend to overlook key aspects such as criticality, availability of skills, readiness to move, accelerated executive development, and also effective on-boarding,” says Kumar.
It is also important for HR to have back-ups for its back-up plans, meaning there should be more than one successor for every role. “You won’t always get it right,” Varma warns. But by viewing staff training as a lateral and continuous process, an organisation can prepare for any succession situation.
Stay consistent
At the core of any effective succession planning initiative is the employer’s ability to anticipate needs and mitigate risks. Knowing the desired outcome is important, but HR must first have a firm grasp of the organisation’s landscape.
Kumar suggests zeroing in on specific levels within the organisation, and then gradually bringing succession planning initiatives down (or up) to other levels. “To focus on the entire organisation in one step can be a huge task which will not reap the desired outcomes,” she says.
In fact, alignment is one of the biggest challenges within any succession planning programme. HR can create development plans, identify problems and fill positions but if they don’t connect the task to the organisation’s wider purpose, they will run into problems.
At the early stages, Kumar suggests engaging line managers to reconsider how they classify roles in their departments and then working with them to bring alignment across the organisation. “This will serve as the foundation to identify which roles are priorities and need immediate focus,” she says.
Creating and carrying out a consistent procedure is crucial because it impacts on the entire culture of the organisation, adding to its overall brand. Customers want to experience the company’s distinct feel when they walk into its office in any part of the world, Varma says. “They have to see the same quality of leadership.” If procedures and definitions are not common, then a dilution of company culture occurs, he adds.
How does HR know whether its succession planning methods are working or not? Varma says there are qualitative and quantitative indications of HR’s achievements in this area. HR can look at how many positions were filled internally and externally and the speed at which they were filled to gauge efficiency. It can also make observations about the company’s culture and employee satisfaction.
Training opportunities
Training goes hand-in-hand with any career development initiative, but choosing the right type of training for your business needs is not always so clear-cut. Rahul Varma, Director of HR Strategy, Accenture, says three types of training correlate to different succession planning circumstances.
+ Formal learning
Classroom experience is important at a foundational level. It covers all the necessary bases for staff moving up at the junior level.
+ Experience
This type of learning is shaped by doing. Participants actively learn through their abilities and insights as they are exposed to different work situations. At the senior level, this is considered the most important learning method.
+ Collaboration
This is another one for staff moving up into the senior ranks. It requires leveraging internal and external resources to gain more understanding on subjects pertinent to the business. Subject matter experts should also encourage people to network across functions.