Several years ago, I worked for a large company whose COO was long expected to take over the Chief Executive position when the time was right. Suddenly, however, the COO contracted a serious and life-threatening illness. Thankfully he recovered, and the experience led him to begin a new career leading a not-for-profit organization for which he had served as a Board member. The company he left was devastated to lose a highly respected and effective leader. No one inside the company was prepared to take on the COO role and, as the CEO neared retirement, there was also no longer anyone prepared to take the top reins.
We never know what situations will arise to alter our well-fashioned plans. Succession management, the practice of identifying and preparing high-potential employees to take on key organization roles, is an important talent management initiative. It is a practice that enables organizations to mitigate risk of unexpected departures like the one described above. At its best, succession management is far more than compiling replacement charts for a few specific roles. It is a system that anticipates future business needs and strategically identifies and develops talent throughout the organization to meet those needs.
Four key practices lead to successful succession management: Integrate succession management with business strategy, accurately identify talent, focus on development, and measure critical outcomes.
Integrate succession management with business strategy. First and foremost, succession management must be driven by and integrated with business strategy and planning. Business objectives determine the leadership capabilities needed now and in the future, and these capabilities serve as the backbone for selecting and preparing organization leaders. A critical component of succession management is regular “talent reviews,” a practice in which management reviews where the organization stands with current talent and future leadership needs. Succession management is most successful when talent reviews are incorporated into the business planning process and cycle.
Accurately identify talent. A structured process to identify talent pools and provide feedback to individuals included in those pools is vital. Too often, selection management begins by simply asking managers to list their high potential talent. Even when criteria and target roles are provided, the naming of high potentials can be rife with personal bias. We strongly advocate identifying talent with objective data. For instance, ICC uses leadership assessments provided by Pinsight™, which evaluate potential leaders through live virtual simulations. Pinsight’s objective behavioral feedback identifies capabilities and readiness levels of participants, along with specific development suggestions.
Focus on development. The crux of succession management is the development. Once talent pool participants are identified and the feedback and suggestions from assessments are digested, it is essential to ensure that development plans are created and that development opportunities are made available and supported. Follow-up assessments to track growth in capabilities will also eventually become a necessary part of the ongoing process.
Measure critical outcomes. As with any organization practice, succession management must include measurement of its success. Key outcomes to be measured include:
- Quality of the organization’s leadership bench (as measured through assessments)
- Talent pool participants’ movement and success in new roles
- Levels of engagement and retention
- Overall business performance
A well-executed succession management system mitigates risk of leadership loss and ensures a steady pipeline of high potential employees who are capable of occupying leadership roles. It ensures the long-term stability and success of the organization, and is thus one of the most important strategic functions of Human Resources.
How well does succession management in your organization stack up?