Early retirements, down-sizing and short-term maximization of profits have dire side effects – there aren’t enough middle managers in the wings ready to take the lead. Many companies who face the decision of whether to “make or buy” their next generation of leaders, are finding that there aren’t a lot of ready-made leaders on the market at any price.
According to a McKinsey study, the war for top talent will be fierce, affecting companies and industries new and old. The time for action is now—before top leaders have retired or been recruited away.
Without succession planning, production suffers because key positions take too long to fill, and high-potential candidates often leave the organization. Matt Paese, practice leader of executive development at DDI says “Seventy-five percent of executives are currently marketing themselves in some active way.” In times of down-sizing, mergers and acquisitions, the risk of losing top talent is even higher. Companies with foresight prepare their next crop of leaders, which keeps morale high, reduces turnover, preserves excellent performance and assures continuity of leadership.
People are known by the company they keep. Companies are known by the people they keep.
The Gallup Organization and the Harvard Business Review claim that people leave managers, not companies. An ongoing coaching and mentoring program should be part of any well-designed succession plan. Challenge and exciting work are still the leading factors for engaging and retaining top talent. Too often succession planning can be viewed as the “flavor of the month” unless the process is carefully designed.
What Kills Succession Planning?
- Promises of a promotion
- Arbitrary identification of high potential candidates
- Subjective feedback that damages someone’s reputation or potential
- Current leaders don’t develop the competencies themselves
- Promotions of individuals who clearly do not reflect the competencies
- Promotions that support the company but not the candidates themselves (I know you aspire to job X but we need you in job Y for the next seven years)
- Broken confidences
- No development for individuals outside the program
(non-succession planning candidates need development opportunities too)
- Exclusivity – the program must include diverse candidates or it will lose support
- Inability to express the hard truth when it come to giving feedback
- Secretive process drives talented people away who don’t know where they stand
- Inadequate development budget
- Unexplained outside hires
Fortunately you can avoid failure by paying attention to how benchmarked firms make Succession Planning work.
- Get top management support
- Focus on developing competencies aligned with the future strategy and culture
- Utilize objective multiple assessment methods
- Develop a pool of high potential leaders (not a queue)
- Commit time and resources to leadership development (not just selection)
- Empower individuals to drive the process using leadership development plans
- Foster a feedback culture to accelerate leadership development
- Update your succession plan annually (at a minimum)
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