Developing Future Leaders: The Importance of Succession Planning

By Elizabeth Harrin (London)

The number of managers available to step into leadership roles will drop dramatically in the coming years, according to a recent study by Egon Zehnder International. The average company will be left with just half the talent it needs by 2015. Why? Demographics – there just aren’t that many people around with the right type of skills and experience. This means that companies are going to have to get a lot better at identifying and nurturing talent from within, as recruiting externally is going to get tougher and more expensive. This is the process of succession planning, and not many companies do it well.

“Historically, companies only considered leadership development a priority for top executives. Market issues are beginning to change this mindset and more and more organisations are starting to think more widely and deeply about their talent,” says Alice Snell, Vice President of Taleo Research, the research wing of talent management software company Taleo. “Unfortunately, there is no ‘restore previous settings’ button to get organisations back to pre-recession growth and success, but having a comprehensive talent management strategy that identifies and builds on critical talent throughout the organisation is a good place to start.”

Why don’t companies do succession planning?

Succession planning isn’t difficult, but you do only get the benefits when someone leaves, and that can seem like a long way into the future. Companies put off succession planning because it doesn’t look like a value-adding task. There are often other, higher priority things, on which to spend HR dollars.

It takes effort to identify qualified candidates to fill current and future leadership roles. In addition to this, companies (and individual senior managers) often lack the tools and techniques to develop their teams through a leadership programme and prepare them to become the leaders of tomorrow. However, it is something that managers should be doing – especially now.

“Succession planning is a ‘no-cost’ benefit,” says Phillip Wilson, author of The Next 52 Weeks: One Year to Transform Your Workplace and President of the Labor Relations Institute. “Belts are about as tight as they can be as we claw our way out of the great recession. But you still have to motivate employees. Taking an active interest in the development of top talent is a no-cost way to keep folks engaged and happy to go above and beyond in their current role, because they see that as the quickest way to advance to their next step with the company.”

Actions for managers

Women seem to get a particularly bad deal when it comes to internal promotions. So what should managers be doing to stay ahead of the curve and plan for when their top performers move on, especially with regard to promoting female talent?

Ask yourself what would happen if you left the company tomorrow. Who would take on your responsibilities? And what would they struggle with? That will give you the starting point to identify potential candidates and their development needs. You might surprise yourself by coming up with a name that wouldn’t normally be the obvious choice.

Even if your company doesn’t have a formal succession planning programme, you can still build a development plan for your key team members. Taleo Research found that the most successful leadership development schemes recognise and understand the type of leadership style needed for their culture, then they align leadership development with overall corporate strategy. Once you have identified potential high fliers, work with them to develop career planning goals and skills roadmap so they know what they need to work on. “Talent management is really about having the whole workforce involved in the kinds of things that will help them be more engaged and productive, especially when it comes to leadership development,” says Snell.

According to Linda D. Henman, Ph.D., President of the Henman Performance Group, one of the main skills to work on is to encourage the women in your team to study the company finance processes and engage in the accounts. “Too many women stay in positions that don’t involve handling a budget or P&L responsibilities,” she says. “We have heard much about glass ceilings for women and not enough about glass walls. By that I mean that often women and the companies they work for cut women off from the higher ranks of the organisation by keeping them in a silo, such as HR. In order for women, or anyone else, to climb the ladder, the person must understand finance and basic accounting – the building blocks of running a successful business.”

Henman suggests encouraging women to take lateral moves into roles in which they can prove they have what it takes to grow a business. “Too many women hold positions that don’t allow them to show they can handle the financial side of things, but too often the women aren’t prepared to do so.”

Being ‘succession planned’

If there is no formal leadership development programme at your company, you can take Henman’s advice and create the opportunity to get financial experience. If your company doesn’t do formal succession planning, and your manager is less than interested in planning for you, work on your own development. Make sure the key business leaders know that you consider yourself to be a future leader. Get a mentor and ask them for advice on what you need to put on your skills roadmap. By taking control of your personal development you can build a plan for yourself that is potentially better than anything the company could do for you – it will be tailored to your needs instead of being the standard company offering.

Whether you are a senior manager looking to support your top performers, or a middle manager looking for the next step up, keep an eye on what’s going on in the company beyond your immediate job responsibilities and work towards planning successfully for the future.