Succession Management – why is it failing and what does good look like?

Thursday 16th March, 2017

Like it or not, we are in volatile times. Executive performance is becoming less predictable, tenures are reducing and engagement levels are at unprecedented lows – all this in the context of rapidly changing political and technological landscapes. There is not any single sure-fire fix, but surely, having solid continuity of talent in critical roles is key to effective business continuity and minimising business risk.

It’s probably worth drawing out that when I am referring to succession practices I am trying to be all encompassing in including both succession planning and succession management (while acknowledging there is a difference).

Succession practices makes sense. Over the last ten years, succession approaches have become common place and are now often cascaded beyond the C Suite to critical roles and beyond. The prevalent challenge though is that most succession processes do not deliver on their promise.

While there are numerous studies on a few progressive organisations having beautifully crafted succession plans (e.g. Tim Cook following Steve Jobs at Apple), in more common practice, all hell can break loose in the event of a sudden succession event.

There is a myriad of reasons why many succession plans don’t work but I think it essentially comes down to the reduction of succession to a hollow – we are doing it because we must do it – annual tick box process rather than a true business imperative. That is, however popular and accepted the concept of succession planning, it remains largely a process steeped in concept rather than a truly integrated practice. Implementation is woeful.Even in very sophisticated organisations where succession is integrated with talent reviews, incorporating a typical 9 box potential/performance grids, there is often a sense of panic when a critical vacancy arises. What frequently happens – you might recognise this scenario – is those people identified on the succession plans are whisked through a rapid process to determine their actual rather than conceptual suitability. These steps can be awkward in implementation as identified successors might decline the opportunity, or if they accept the position, the problem has not changed essentially because now another critical role is vacant and so on.

When succession is implemented in the right way, these challenges, although not totally negated, can be significantly minimised.

Let’s have a look at the good, the bad and the ugly when it comes to succession.

What not to do - learning from others’ mistakes

Some of the most prevalent errors that we see in reviewing succession practices include:

• Debates as to who is responsible for succession, whether it sits with HR or line. When ownership is not clear it’s easy to point fingers when things go wrong. A good simple rule is HR facilitates and line owns

• Assumptive internal succession plans (assuming that a potential successor will move to a new role as required) and potential internal successors being unaware they have been identified as a possible successor for a role, or as targeted bench strength

• Connected to the above is organisations not having a full and current appreciation of their key talents’ personal circumstances, making assumptions regarding what roles people want to pursue, how much they want to be paid and where they want to work (As an example, many people are now managing dual careers so mobility can often be a challenge)

• High potentials and high performers – they are not always the same thing, so it’s good to clearly differentiate

• There is little or no transparency in the talent process (some degrees of opaqueness can be appropriate in certain circumstances)

• Career planning/development has not taken place (someone is identified for succession but nothing is in place to equip them with the right experiences and capabilities for future success)

• High potential successors are often identified for areas of immediacy rather than across the broader organisation

• As organisations have become flatter and leaner, there is a tendency to put internals on unrealistic plans and succession timelines

• Potential successors are identified via informal internal networks rather than robust capability assessments

• Inconsistent potential/performance ratings across an organisation

• Not all high potential successors are identified (some managers are exceptional at holding back high potentials for their own gain)

• Successor readiness is greatly overestimated (ratings of ready now, ready in two years and ready in five years are often arbitrary)

• Gender bias and associated assumptions as to whether a high potential is interested in a role

• Organisations have not invested in understanding which key capabilities they will need in the future

• Organisations have not conducted a true risk assessment as to which roles are critical and what impact a vacancy would have on the organisation

• Succession planning is considered an additional cost so is often pushed way down the priorities list

• Overly optimistic succession plans when referenced for risk assessments

• A reluctance to conduct external succession reviews and benchmarking exercises to ensure skills are commensurate with the marketplace

The list goes on and there are clearly many risk areas. The prevailing view I would like to flag is that much of what is described above happen because succession is seen only as a process, rather than an essential risk-minimisation activity.

What does good look like?

Some of the more progressive succession practices that we have seen in client organisations include:

• Individuals within critical roles have KPI’s around identifying internal and sometimes external successors for their role (the same people might be involved in structured mentor programs to assist development)

• The succession management and workforce planning agendas are combined to consider new capability areas (e.g. digital). This then informs the organisation’s decision to build or ‘buy’ talent

• Senior leaders are involved in looking at key talent across divisions and geographies and have metrics in place to ensure that talent flows through their organisation

• Programs are in place to ensure that latent talent within the organisation is identified

• When internal talent is scarce, external talent succession pipelines/pools are developed (This can be taken a step further to benchmark internal talent – how do you know you have the best available talent?)

• Succession plans are scenario tested. Plans are also cross referenced to ensure they are not reliant on too few individuals

• Recruitment costs are reduced over time

• New metrics are in place and accountabilities are clear around how long a position is vacant – this is not time to hire from the raising of a recruitment requisition, but a measure of whether succession is planned and effective

• Succession for key roles is budgeted for, and when there is not internal talent immediately available, external talent is identified in readiness

• Succession discussions become more open and constant within a trusted environment

The lists above are in no way all-encompassing. They simply demonstrate some of the good, and unfortunately highlight some of the bad and ugly – which are more common than many a Board would be comfortable with.

My view is that there is still a long way to go before the majority of organisations really take full advantage of strategic succession practices, particularly from a business imperative perspective. And I think a proportion of these organisations don’t even have this on their radar because they think their current processes address the issue and the mistakes tend to be covered over by blowouts of recruitment budgets, ill-prepared successors promoted when not ready and short term planning around talent.

Those that are doing succession well are better equipped to deal with shortages of talent in key areas, higher turnover rates, generational work expectations, exponential growth of the gig economy and rapidly advancing AI technologies.

There are better ways…

 

I am always keen to hear how organisations are tackling succession, so don't hesitate to touch base for a conversation: phood@evolveintelligence.com

Peter Hood is the Managing Director of Evolve Intelligence – Europe (based in London). Evolve Intelligence is a leading talent firm focused on succession management, competitor intelligence, talent benchmarking and talent solutions.