How to Revolutionize Your Succession Plan

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How to Revolutionize Your Succession Plan

“Do you want me to tell you what we tell the Board or what we actually do?” the senior executive told us during our conversation about her company’s succession planning process. Unfortunately, as disheartening as this statement is, we found it refreshing. This executive called it how most companies approach succession planning – an annual process that ends up being much ado about nothing. After all the time spent doing a careful talent review, identifying individuals to place on the official succession tracker, in the end, leadership simply goes with their gut.

This is probably why only 14% of leaders surveyed by Deloitte, say their companies do succession planning well. We’ve been helping companies do proper succession planning for a long time, and we see the emergence of two forces that indicate a powerful need to overhaul this gut approach.

First Force – If 2020 taught us anything, it’s that stuff happens we can’t plan for, and that building resiliency is critically important for both organizations and people. It seems counterintuitive, but having a robust plan can make you more resilient in uncertain times. Resiliency comes from preparing a strong and diverse pipeline. It comes from future-proofing the organization by eliminating the reactionary, emotional hiring decisions that are all too common. Instead, it builds the leadership bench needed to execute on the future needs of the business. Succession planning helps ensure business continuity by mitigating the risk of leaving key leadership roles unfilled or under-filled and providing the business continuity plan that the Board and shareholders require.

Second Force – 2020 has also shown us there is a stark need for social change. When 85% of corporate executives are white and 93% of Fortune 100 executives are male, going with your gut will probably not get you much diversity. One recent study showed that 77% of the American public says it’s deeply important that companies play a role in creating racial equality to keep or earn their trust. Other research shows diverse teams are more effective and creative, making a direct impact on the bottom line. Having a strong, equitable, and diverse leadership bench is not only crucial for business resiliency, but it’s also important to customers and employees and is the right thing for a strong and stable society.

Luckily, there is a way to approach succession planning that addresses both forces, however; it requires thinking about talent management differently. We call this new thinking, The Four Tectonic Shifts.

Shift #1: Focus on Roles – We need to turn the succession planning process on its head, from leader driven to role driven. A good example of how this needs to change is looking at the difference between talent reviews vs. succession reviews. Organizations usually focus on talent reviews by rating leaders on a nine-box or something similar. Even if a talent review is done well, it produces insight by person, not by role. And yet, succession happens by role. Right away, there is a disconnect between the work done and how it can be applied. When a role opens up for promotion, many talent reviews don’t help guide who would be the best fit for that role. Move to a Succession Review instead. Start with the role (say the CFO), identify potential successors and what development they may need to fill that role effectively. Having a slate of candidates identified to develop and assess implies an opportunity to more tightly partner with those in recruiting and leadership development to source and prepare leaders for these critical roles.

Shift #2: Focus on Diversity – To really move the needle, the underlining succession planning processes need to be redesigned to identify, develop, and select leaders who may have been overlooked in the past. Succession planning must be more intentional about broadening the aperture to yield a more diverse leadership pipeline, and it must be measured. One way to do this is to expand the criteria for leadership. The criteria should be less rigid and traditional. Instead of focusing on the specific experiences or roles a person has had or where they went to school, which automatically builds in bias, focus instead on attributes such as agility, drive, grit, and collaboration. With these newly defined criteria, not only will a greater number of candidates be elevated with the traits most relevant to strong leadership, but more diverse candidates with strong potential will be identified. Historically, traditional succession planning has narrowed the funnel of leaders every step of the way. Taking this new approach widens the funnel, ensuring that traditional candidates who look and act like most of the leaders who came before them aren’t the only ones considered.

Shift #3: Focus on Development – The emphasis needs to shift from identification to development. We’ve all heard the heroic leader myth, “Smart people will figure it out.” On the whole, organizations have overemphasized the identification of successors and underemphasized their development. Instead of simply monitoring readiness like a thermometer, succession planning should act more like a thermostat. A thermometer tells the temperature. A thermostat changes it. With little integration between identified successor pools and development efforts, too many companies find their leaders’ readiness the same year after year. Integrate the succession and development plans to proactively advance your leadership talent.

Shift #4: Focus on Focus – Complexity, and scope has driven much of succession planning ineffectiveness. A major stumbling block for companies is their attempt to take on too much in succession planning. Organizations that attempt succession for hundreds or thousands of people or roles tend to underestimate the challenge of doing this at scale and end up with a scope that is nearly impossible to manage. Leading organizations narrow the scope to the top two or three levels, or high impact/critical roles, maximum. Doing this will increase intention and accountability. At lower levels, focus more on career development vs. succession planning. Better to do less well than more poorly.

By making these fundamental shifts, and not simply relying on our gut instincts to select successors, the candidate pool broadens instead of narrows, becomes more diverse, and is better developed and prepared to take on critical roles in the organization. Not only will your organization become known for your intentionality, but you will also get the results of a strong and diverse group of leaders that makes the organization more creative and resilient. Best of all, we can drive the social change needed in the world.