Expert details best practices, common mistakes among employers' succession plans
The world has been through a lot in the past few years — COVID-19 pandemic, labour shortages, return to office, surge in the use of generative artificial intelligence (GenAI).
With or without those things, employers should be mindful about succession planning, says one expert.
“It's very much a risk management exercise,” Peter Demangos, CEO & founder, SuccessionHR, tells Human Resources Director.
“The idea is ‘How do we ensure business continuity for the most key roles in the company?’ If there's a vacancy in a key role in an organization, that’s going to create disruption in the business, how do we mitigate that risk with proper succession planning?”
CEO turnover worldwide surged in the first quarter of 2024, with the number of "failed appointments" going up, according to data from Russell Reynolds Associates (RRA).
What to consider in succession planning?
For most employers, subconsciously, succession planning starts from the moment they hire employees, says Demangos.
More formally, however, it happens when companies reach a few hundred employees. At that point, it becomes vital to start to track succession plans for key roles, which typically represent 10-20% of total employees.
However, “it's very much about key role management and how your available talent currently matches the needs of the key roles,” says Demangos.
There are going to be strengths and weaknesses of the existing talent as well as uncertainties with external talent brought in to a key role, he says.
“Maybe it wasn't the right fit. There are challenges in the first three to six months of any new hire, but having clarity on what the role needs allows you to validate the new employee’s success quicker.”
“At the other end of the spectrum, if an employee has been in the role for a very long time, what's their current flight risk, which impacts the vulnerability of that key role and ultimately the business? It’s about where that individual is in their development journey and how that matches to the needs of the key role, which itself is evolving based on the growing needs of the business”
Only a third of employers are taking full advantage of their people data to make informed decisions in the workplace, according to a previous report from Ciphr.
It’s also important for employers to consider and develop the skills and competencies of successor candidates to be as ready as possible for when a replacement for a key role is needed, says Demangos.
What causes succession planning to fail?
Another important thing for employers to do is to keep succession plans up-to-date, he says.
“In many succession plans, they become stale. People don't look at them for years, surprisingly. And obviously, that's not the reality of today's fast-paced environment.”
He suggests that employers look at succession plans at least every quarter, focusing on key roles and asking: “The current person in them, has their flight risk changed and do they still have the skills needed with the evolving key role?”
This sort of planning does not necessarily mean employers are preparing for the time workers leave the company, he says.
“It is part of one’s own progression within a company. Before a promotion can happen, the incumbent should support the company in finding the right successors. And from the HR’s perspective it’s important to consider the domino effect that one vacancy leaves on the surrounding key roles. This ‘scenario planning’ is an important part of proactive succession planning that prioritizes internal talent development.”
More companies are considering transitioning to become a skills-based organization, according to a previous Udemy report.
Final succession planning tip to employers
“It has to be a key priority in talent management,” says Demangos when asked for succession planning tips for employers.
“If we look at it as a business continuity risk management exercise, it's a very, very important aspect of talent management as a result of that.”
He emphasizes the constant maintenance of succession plans, and of having the necessary data at employers’ disposal.
Being able to “easily access trends in your succession planning,” is key. He says employers should also ask the following questions: Are you getting more or less vulnerable? What risks are present now that may not have been there before?
“Having clarity with the right succession planning metrics and trends becomes really important in making decisions quickly.”
CEOs are "cautiously optimistic" this quarter and are planning to hoard employees amid persistent labour shortages concerns, according to a previous report from The Conference Board.
