With an ageing workforce such as the one we have today, succession planning is critical. And yet, only 35% of organisations have a formal succession planning process in place.
Why? Well, for a few different reasons. One may be because as executive leaders look one or two levels below themselves, they see potential successors who are young and lack experience, and it might be difficult to predict if they’ll be ready to take on a more senior role in the longer term. And because of this, organisations go to the market to find successors rather than promoting internally.
But while you’d certainly be bringing a fresh perspective and new experience into the role, consistently recruiting externally can be counterproductive and harm employee retention. So, what are the challenges and risks of succession planning, and what are the benefits it can bring?
Risks of poor succession planning
Little or no succession planning can have a big impact, both on your people and on your bottom line.
You might find these stats pretty surprising:
So clearly there’s a very real fiscal risk to a lack of succession planning. But another challenge is with your people.
Employees who regularly see senior executive roles being filled externally can find it demotivating, especially if they consider themselves eligible for the role. This in turn impacts productivity and can mean that you lose vital middle managers.
Another risk to consider with regards to people is actually when you do have a succession plan in place, but don’t identify the right people to bring upwards to senior level. It’s often the case that mid-level executives are promoted because they’re good at their job - but that doesn’t mean they’ll make a great leader, and perhaps they don’t even want to be a leader.
Additionally, there’s often a lack of preparation for what is a big career and organisational change. It’s so important to start preparing people who do want to grow into a senior executive role as early as possible, otherwise they might not be ready to take on a more challenging position and may not be able to adapt as you expect them to.
Benefits of strong succession planning
There are myriad benefits to both organisations and individuals in identifying and investing in talent early, rather than waiting until they move into a bigger role and then have to play catch-up on the job.
For employers, there’s the clear benefit of employee retention, and knowing that succession planning is a real and tangible thing has a knock-on effect across the business. And when employees do step up after going through the succession planning stage, they will simply be better at their job, and better leaders. Again, this can be felt throughout the business.
Having a strong talent pipeline is also reassuring. It means you know that you have a second line of defence and people who can step up when needed.
Investing in existing employees also means that you’ll have people in senior leadership roles who know the business inside and out from the moment they’re in the position, and they’ll know your customers or clients.
Individuals who want to grow into a senior position with a company that offers clear succession plans will be very engaged with development opportunities that are relevant for them and their career goals. In fact, 94% of businesses say that having a succession plan positively impacts engagement levels.
There’s also a clear career path for them to aim for, and a feeling of being valued and invested in.
A final thought
While it’s immensely important (and immensely under-done), I’m not advocating for 100% succession planning. There’s certainly a balance to strike between bringing in someone with a fresh perspective and different experience and supporting someone in moving up internally.
I believe that organisations should be looking around three years out and starting to support individuals to develop in line with what the business needs, as well as what people want their career progression to be.
If you need support with succession planning and building your internal talent pipeline, contact me directly and let’s set up time for a chat.
