By Fran Maxwell, Global Lead, People Advisory and Organizational Change, and DeLynn Senna, Senior District President, Executive Search Global Operations, Robert HalfEffective succession planning, especially for roles at a company’s most senior levels, is a hallmark of strong corporate governance and risk management and, in essence, is one of the most forward-looking conversations in both C-suites and boardrooms. To lay the foundation for smoother transitions and business continuity, the process of identifying and developing future leaders must be proactive, strategic and continuous. However, too often, succession planning is a focus only when a crisis hits.A mad scramble to replace an executive can easily lead to a poor recruitment decision, especially if the individual selected for the role has not been thoroughly vetted, or is not fully prepared to assume the responsibility. Tapping whoever is next in line in the organizational chart may seem like a logical move, but it isn’t always the best one. Between 27% and 46% of executive transitions are viewed as failures or disappointments after two years, research shows.Many business leaders recognize that succession planning is a weak spot for their business. In the latest Top Risks survey from Protiviti,* C-suite executives and board directors at companies around the globe ranked succession challenges and the inability to attract and retain top talent as the second-highest rated risk for their organization not just for 2024, but also looking ahead 10 years to 2034.
Why are succession planning efforts falling short and making leaders nervous? A separate Robert Half survey of U.S. hiring managers sheds light on the succession planning challenges that many organizations face today. According to the respondents, the top five issues are:Lack of succession candidates within the company (42%)Insufficient upskilling programs (39%)Retirement of key employees (38%)Potential successors not interested in leadership roles (35%)No succession plan in place (21%)In that same survey, hiring managers were asked about the top issues they encounter when recruiting executive talent, specifically. Thirty-five percent said their greatest challenge was finding candidates who have the experience they seek and are well-matched to the company’s culture. One-fifth cited the pressure of time constraints in hiring into executive roles, which, of course, can lead to hasty decisions.
So, what can companies do to create and maintain a robust pipeline of talent leaders ready to take on critical roles when executive departures, expected or not, inevitably occur? How can companies make succession planning a thoughtful, deliberative activity in the cool of the day rather and minimize reactive, ad hoc decisions in the heat of the moment?At an executive roundtable that Robert Half and Protiviti hosted earlier this year, we addressed this very topic with several board members, C-level executives and other business leaders looking for insight on how to improve their approaches to succession planning and talent management.Our top recommendations included adopting a new talent mindset, which is crucial to identifying and preparing future leaders. It includes taking actions such as:Establishing greater transparency to let rising leaders know they’ve been identified as future candidates for leadership roles, and to make all employees in the organization aware of advancement opportunities.“Laddering up” by extending succession planning efforts deeper into the organization, to the manager level, to help ensure high-potential talent is being identified and developed early.Embracing the use of metrics to track succession planning efforts; some examples of metrics cited in a report by the National Association of Corporate Directors (NACD) include the number of designated successors for key positions who are considered to be “ready now” or will be “ready in 2 to 3 years,” and changes in the demographic profile of the current workforce and the candidate pool. **Changing times call for this new mindset. Employee loyalty is more fleeting today, as the most talented and experienced professionals recognize they have options in a competitive labor market. The demand for skilled talent is persistent across many industries, and if an employee with leadership potential feels underutilized or overlooked in their current organization, it is unlikely they will stay for too long.
Mindset shifts don’t typically happen overnight, and it can take a long time for changes to take hold in an organization and become routine practice. But a business can do many things in the interim to prioritize and improve its succession planning and leadership development efforts which, in turn, can help to accelerate the shift. Here are seven best practices to consider.1. Develop a formal success planning frameworkCreate a framework to structure your company’s process for identifying, developing and transitioning leaders. The process should include talent review meetings, held regularly, to discuss the development progress of potential successors. The creation of individual development plans (IDPs) that detail specific development activities and timelines for each potential successor should be another element.When setting up this framework, keep in mind that your company will evolve over time due to changes like business growth, the rollout of new product lines, macroeconomic conditions, and mergers and acquisitions. You can’t anticipate every future leadership need, but try to envision what types of executive-level roles your organization might need — or not — if certain changes would occur.2. Plan for difference scenarios, planned and unplannedRegardless of the “crystal balling” mentioned above, succession plans should be flexible and adaptable, generally. Consider both planned transitions, such as retirements, and unplanned transitions, like sudden departures due to personal reasons or resignations. Develop and test contingency plans so that your organization can respond quickly, confidently and effectively to a significant change in leadership. As part of this process, you should strive to identify potential backups for successors, if your organization’s bench runs that deep.3. Define critical roles and competenciesWhat roles in your company are essential to business success? C-suite positions like CEO, chief financial officer and chief operating officer are obvious picks, as they significantly influence business strategy and operations. But also think about other roles that could lead to disruption if they were suddenly vacated, like the general manager of your top-performing division or store or your vice president of supply chain management who is located in another country.Next, map out the competencies and skills required for these roles today and likely for the future. Include not only technical and industry-specific expertise but also leadership qualities, strategic thinking, decision-making abilities and alignment with the company’s culture and values. Be sure to consider what competencies are needed to help keep the business moving forward, and agile and resilient in response to changes in business practices, technology and more.Also, establish clear performance benchmarks and success metrics for each critical role. This will help you evaluate potential successors against present and future business objectives.4. Assess your current talent resourcesConduct a comprehensive review of your current employees to identify potential successors based on their performance and potential, and their overall readiness to step up or pivot to a specific leadership role. To help keep the assessment process objective, evaluate individuals against the competencies and expectations of the role they might ascend to, and not against the individual currently serving in that role or their peer group.Identify any gaps in their skills or experience so you can create tailored development plans to prepare them for future responsibilities. Also, take care to understand the professional aspirations and motivations of the individuals you tap to be successors to top executives and other leaders. Your succession plan can’t succeed if successors are not engaged in the leadership development process or interested in staying with the organization for the long term.5. Develop meaningful leadership development programsBuilding on the point above, it’s essential to create personalized development plans for identified successors. These plans should include leadership training, executive education programs and specific skill-building activities. Cross-functional experience can also be incredibly valuable, as it helps potential leaders gain a broad understanding of the business and develop a diverse skill set.Don’t overlook the value of mentoring and coaching. Establish formal mentorship programs where current executives mentor their potential successors. Executive coaching is another effective method for developing leadership capabilities and strategic thinking.6. Implement regular succession planning reviewsA common pitfall in succession planning is setting the plan, and then not tracking the process or simply forgetting about it. Today’s organizations and their workforces are very dynamic, which means succession plans must be, too.Set up a regular cadence of succession planning meetings to review and update plans and confirm they are in alignment with evolving business needs and strategies. Be sure to involve key stakeholders, such as board members, senior executives and human resources leaders, in this process. Their insights and support are crucial for the plan’s success.Gathering input regularly from potential successors, mentors and other stakeholders can help drive continuous improvement in your succession planning process. Consider using built-in feedback survey functionality in your human resources information system, for example. Or try using 360-degree leadership assessments to identify high-performers, their effective behaviors, and what skills or knowledge gaps they may have that could be addressed through targeted development efforts.7. Collaborate with an executive search firmEstablishing a relationship with a reputable executive search firm can also support your company’s succession planning success by providing a balanced, objective approach that can provide confidence to C-level executives and others making hiring decisions at the top levels of the organization.Retained executive search consultants bring specialized knowledge and an external perspective to this critical process and understand how to make it more efficient. They can help your business locate and evaluate external candidates who have the required skills and experience, exhibit long-term potential, and are likely to thrive in your unique organizational culture.The best firms have access to a broad talent pool and can help you identify high-potential candidates you may not otherwise find on your own. Their reach is particularly valuable when you need to hire leadership roles requiring hard-to-find skill sets.Executive search firms also provide objective assessments and unbiased recommendations, so you can make informed decisions about your leadership pipeline. They can assist in benchmarking internal candidates against external talent as well.In addition to making it easier to hire leaders for your business, top executive search firms can provide valuable insights into industry best practices and emerging trends in succession planning so you can confirm that your current process is competitive and effective.Taking a thoughtful, structured approach to succession planning can promote the long-term health and growth of your business. You can mitigate the risks associated with sudden departures while fostering a company culture where continuous leadership development is a high priority. Investing in tomorrow’s leaders today can enhance your company’s ability to retain and attract in-demand talent, build greater organizational resilience and agility and remain competitive in rapidly changing markets.
Contact Robert Half’s award-winning retained executive search practice today to discuss your specific situation. Our retained consultants can provide advice and also help you find the C-suite and senior management professionals to lead your business forward.
*Protiviti is a global consulting firm and Robert Half subsidiary.**The NACD Blue Ribbon Report on the Board and Long-Term Value Creation, NACD, 2015, pp. 28-29.
