Succession Planning: Investing Today……For Tomorrow“The business case for growing your own leaders”

By John Lankford

Top performing companies get that way by first mastering a disciplined approach to systems. They can stay that way by instituting a system of succession planning. Simply defined, succession planning is a systematic process to identify, assess and develop leadership talent for future organizational needs.

We all know that development will occur naturally inside organizations. A well-designed succession planning system will not only increase the natural pace of development, but enhance the adaptability and resourcefulness of developing leaders internally.

In Jim Collins’s newest research book, How the Mighty Fall, he documents key indicators of how you can predict which companies will go from Good to Great. He mentions that one predictor is how organizations transition leadership or fail to groom leaders from within. The following six keystones represent the most important fundamentals to consider in instituting a comprehensive and effective succession plan.
 
1. Commitment / Involvement

Throughout my more than 25 years of developing leaders in many Fortune 500 companies, the most common question from clients has been: How do we get started?

Succession planning is one of many organizational activities that can only deliver real results when instituted from the top down. The first focus must be on senior leadership. I have no examples of an organization that has successfully adopted the process without CEO support, involvement and commitment. Starting with a critique of the company’s strategic plan is a quick and surefire way to determine the CEO’s commitment to the process.

2. Benchmarking / External resources

It is always a good idea to learn from someone else's success. Why not select two or three key members of your management team to go visit a company that has mastered the art of cultivating its own leaders? Observing a corporate culture entrenched in leadership development makes benchmarking trips a concrete way to see best practices in action. Another powerful prerequisite for success is to leverage other external resources such as an executive coach or consultant to assist in the design of your process.

3. Assessment

It's good to be excited by the prospect of building your organization's future success for generations to come. Don't let your enthusiasm get the better of you.  It might be tempting to jump into action without the benefit of an organizational assessment. An analysis of the company and its leaders will ultimately determine the design of your plan.

A complete review of your internal candidates and your entire management team is crucial in designing the plan. It is all too common a mistake to only include executives in the succession planning process. A smarter option might be to design a system that prepares front line managers to someday be strongly considered for a director level position.

4. Customize your process

Recently the Institute for Executive Development conducted a study where 36 percent of respondents reported, “ramp up time for new hire executives ranges from six to nine months,” while an additional 26% said it takes “longer than nine months.”  Benchmarking trips and other comparative research can provide valuable insights. It's imperative, however, to customize your succession planning process for your company. For example, explore the critical leadership competencies for each level in the organization – now and for the future. Development must have a forward focus.

5. Alignment and accountability

To develop a system that has sustainable value, you must ensure that your succession planning system is linked to your compensation systems. The alignment of how people are compensated goes a long way to reinforce the value of the process and the design and development of each person's individual development plan.

Including a development section in every person’s performance management review discussions will ensure the accountability that is so critical for success.
When leaders are held accountable for the development of direct reports, measurement and commitment significantly increase.

6.  Measurement and tracking

According to Susan Wells in an article in HR Magazine, “83% of top performing firms track the development of their leaders.”  Integrating succession management with other human resource systems increases alignment with business outcomes. A review of management’s development plans may also provide tremendous insights into the type, style and content of training that gets offered to leaders within the company. This data becomes a critical component of what is discussed in the “bench strength” section of annual board meetings.

Expect the unexpected

Succession planning offers greater stability in an organization's culture and performance. Key executives know were they stand, critical vacancies are effectively forecast, and the development of talent is aligned to future growth plans.  William Rothwell in Link & Learn reported that one in five senior executives in the Fortune 500 are eligible for retirement – today. Is your talent management strategy ready for the next five years?

About the Author
John Lankford was recognized as the 2007 and 2008 Global Associate Business Coach of the Year for ActionCOACH. His business expertise as a partner of ActionCOACH Pinellas has been tapped by the New York Times and CBS. John’s keynote speaking has landed him on the elite team that trains and certifies the new Executive Coaches joining the worldwide ActionCOACH community. John was recently named the Chief Executive Officer for the Innisbrook Leadership Institute.