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Building Succession In Your Business
The nature of business or the size of the organisation hardly matters. What counts is the key statistics that matter – revenues, profits, customer demographics, market share and many more measures that attract the key stakeholders of the organisation.
The importance of these powerful numbers can’t be denied. What is lost, however, is the faces behind these numbers. In the long-term war for continued profitable existence, the ability of the people to drive the business forward and hold it together for the future, rarely, makes headline news.
In the fast paced, highly intensive, technology driven world of business, leadership issues need to garner more attention at all levels of the organisation, more so if there is a future to be considered as part of the long-term organisational strategy.
The whole world looks at leaders and leadership qualities when looking at people who shape and decide the future.
Vince Lombardi is convinced that leaders can be created, not born.
Indeed that is what most organisations are on the lookout for – precious talent that can help them take the business to the next level. How successful they are in identifying and nurturing the next generation of potential leaders will eventually determine the sustainability of the organisation for the future.
In general, the main challenges faced by organisations primarily seem to accrue from any or all of the following factors.
1. Lack of management vision and foresight
Succession planning needs to permeate all levels of the organisation, not just the top layer. It should be embedded into the long-term strategic future plan of the organisation.
If this is not factored into the organisational strategy, it could have serious repercussions for the organisation in the long run.
Large organisations have always had a good succession plan and had clearly identified successors who were groomed into the role. Microsoft, IBM, Infosys, the Tata group and a host of companies had well-managed succession plans that ensured a smooth transition after the baton is passed to the next in line.
This also ensured sustainability for the organisation as a going concern over an extended period of time.
2. Insufficient talent pipeline to fill key positions
In an increasingly competitive world where organisations are fighting to acquire or retain the best talent available, there are not enough people with the right skill sets or competencies.
This is an issue faced by a majority of the organisations in the 21st century as they look to fill the shoes with suitable leaders who can take the organisation to the next level.
3. Identified potential successors do not last the distance
High potential employees who have been identified as suitable successors by the management leave the organisation before they reach their fullest potential, leaving gaps at the senior management levels.
Parting ways could be voluntary or forced due to mergers and acquisitions, governance issues or genuine lack of opportunities from the point of view of the candidate.
4. Identified high potential candidates not keen to take up roles
Some of the identified candidates are not keen to take up senior management roles due to various pressures and the challenges incumbent on that role.
The level of commitment required, mutual trust and compliance to governance and organisational structures place constraints on potential successors. Sometimes it may be a combination of one or more factors that they are not comfortable dealing with and hence they leave the organisation.
5. Talent management and retention issues
The organisation is unable to retain good talents who have the potential to be part of the succession line. Reasons for that include insufficient compensation and benefits package, lack of long-term potential from an organisational perspective, absence or lack of proper management support and vision.
And in most family-run businesses, reasons include not part of the family structure or lack of close relationship to the owning family.
The way forward – an eye into the future
Grooming a suitable candidate to take over from the incumbent is an ongoing process as an organisation matures and moves forward. It is never too late or too early to formulate a strategy for effective succession planning.
It would be worthwhile to consider these four strategies in coming up with succession planning mechanisms.
1. Keep an eye on the future and plan for it
It is crucial to consider the next line of leaders for the future. All potential hires should be prepared for taking over at any point in time should the incumbent depart suddenly.
As part of the long-term people strategy, employees should be groomed for future roles as part of their career development initiatives within the organisation.
You need to identify what are the roles required in the future as well as the skill sets and competencies required to take the company forward.
2. Incorporate external benchmarking
Taking a look at external talent can provide an indication of employee readiness and help with career planning within the organisation. This would also help the organisation to see how far the identified successor will go, and tailor plans to meet those needs accordingly.
As an organisation, planning ahead also involves looking at what the competition does to develop future leaders. This will give your company new ideas and help in coming up with an appropriate strategy as you prepare to face the ongoing war for talent.
3. Ensure sufficient talent pipeline internally
Putting in place career pathing initiatives as well as career development and growth strategies would ensure that there is an assembly line of successors being groomed for the next level.
This ensures better employee retention as employees view potential growth opportunities with the company if they stay with the organisation long enough.
4. Maintain trust and managerial support
For family-run businesses or SMEs (small and medium-sized enterprises), this is extremely critical as bringing outsiders into the family business is fraught with risks when viewed from an operational or business perspective.
The question of trust assumes critical proportions as those not related to the family will find it hard to gain the confidence of the business owners in a short span of time.
In such instances, organisations need to allow relationships to mature over a longer time to build the required confidence and trust based on the employee’s performance. Once this has been established, this can pave the way for a smoother transition when succession planning initiatives are introduced in the organisation.
Other simple measures
Interestingly, organisations often put in place certain simple measures that ensure that the next generation of leaders is not only ready, but continue to be available when needed.
Among others not mentioned above include:
- Taking precautions when travelling, especially in groups
Most organisations do not allow two or more successive lines of leaders to travel together. This is to prevent a rudderless organisation in the event any unforeseen mishap occurs and causes them to be obliterated at one go.
- Grooming the successor
In most instances, the next in line is carefully groomed and nurtured with a handholding period of anywhere between six months to a year, especially for large corporate enterprises.
This is to enable the newcomer to settle in, understand the business and start to make decisions affecting the company.
- Formal training and induction
Some senior management professionals are formally trained for their roles through executive or management development programmes over a period of time that may involve international travelling, marketing and operational stints outside of their home base.
Reaping the benefits
Ensuring a smooth transition by nurturing the next generation of leaders is part of the strategy of “future proofing” the organisation. While this guarantees future employability for the employees, it ensures that the organisation can sustain itself well into the future.
In the process of assuring themselves of a place in the future, the organisation can pride itself on a long-term retention strategy that helps to develop homegrown talent from within rather than having to depend on the external market forces for sustenance.