Who’s Next in Line? How to Design a Solid Succession Plan

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Sooner or later it will happen. One or more of your key people, probably the one you consider most indispensable, will drop the bombshell: she’s leaving. And you won’t have a clue what to do next.

Unfortunately, many companies never even think about a succession planning program until they are faced with a crisis or emergency. Someone falls ill or gets recruited by a competitor, and suddenly there’s a huge hole in the organization chart and no one is available to fill it. Business interruption, political maneuvering, and a host of related problems ensue.

Every business needs to handle succession at some point, but it doesn’t have to happen that way. While quickly changing circumstances leave some companies scrambling to make fast decisions, others navigate through the situation gracefully—because they’ve prepared long in advance for this very potentiality.

For any organization, succession planning can be a touchy subject, often involving high emotions, office politics, and a reluctance to face reality. While this scenario exists in almost every business, it’s even more prevalent in family-owned companies. Research shows that over 70% of family businesses fail to successfully transfer to the next generation. None of us wants to admit our own mortality, so we avoid an open discussion of the process.

Whether your workplace involves family or not, it’s time to take a realistic look at succession planning tools. A good succession plan, based on intelligent research and best practices in your particular business, is the key to making this process less threatening for everyone involved. Read on to learn how to tackle succession planning in your organization.

Three Critical Steps of Succession Planning 

1 – Visualize what you need.

This may sound simplistic, but it’s a critical first step that too many companies never even begin. Start with an organizational chart of the entire company. Fill in all the blanks. Then color-code each block, depending on the current state of that particular position. Start with four position categories: currently filled, currently vacant, expected to become vacant, and ready to be promoted. You may want to add other categories unique to your situation. For example, if you use outside consultants or contractors for some positions, give them a different color code. Once you’ve done this, you can see exactly where your weak spots are. These vulnerabilities are not the only contingencies you’ll need to plan for, but they may be the most pressing.

Now it’s time to begin creating a written plan for how to address your vulnerabilities along with any unexpected changes. Putting your succession plan in writing will help you to organize and record your thoughts so you can put them into action. Whether you put your template on a white board in your office or a spreadsheet on your computer, here are the elements you should begin with:

  • The positions you will ultimately need to fill
  • The date when each successor needs to be ready
  • The level of urgency for each position, ranging from low priority to panic
  • Skills and capabilities required

As you evaluate your situation, you’ll of course need to first consider the key positions in your current structure. Ask yourself, “If Joe got struck by a meteor tomorrow, what would we do?” But it doesn’t stop there. You also need to look into the future to identify new challenges and opportunities that will demand new leadership, to the best of your ability.

2 – Develop a pool.

Now it’s time to generate a list of potential successors for each position you will need to fill. Focus first on internal candidates in the blocks that say “ready to be promoted.” This should be your easiest step, as these people could move up with little or no training, although you’ll obviously want to prepare them as much as possible. Don’t just look at people who are one rung down on the organizational ladder—consider high potentials who not in the direct line of succession, too. Look throughout the company forpotential superstars—high performers who have the skills you need, or who may be overlooked or underutilized in their present positions. Let those people know they have a chance to move up. You don’t want your promising young talent to be tempted away because they don’t see any growth challenges or upward potential. 

Create a chart identifying all of the following:

  • A list of potential successors for each position
  • Level of preparedness for each potential successor, ranging from totally unfit to ready now
  • Capabilities that are missing for each person

Depending on the size and complexity of your plan, you may want to break up candidates into several pools, based on their levels of potential or ability. For example, you could have “nearly ready” and “high-potential” pools of potential successors for a leadership position. Consider how the possible candidates measure up against the competencies the position demands. Look for both tangibles and intangibles. For example, if you will be needing a CFO, do your potential candidates have accounting degrees and other appropriate certifications? Then add in the intangibles, such as leadership qualities and interpersonal skills.

3 – Implement a stretch plan.

Now you’re ready to develop plans that will prepare these high potentials to step up. Every employee in your talent pools should have a written career plan geared toward advancement to the target position. This plan should include their core competencies, career goals, and the necessary training and experience to get them from where they are now to where they want to go. Consider which skills each employee needs to develop in order to remain valuable in the future workplace. Include a time frame for each development activity.

To keep your succession plan on track, you’ll need to use a variety of tools, such as lateral moves, job rotations, and special project assignments, along with your internal and external training and development. Give the people in each talent pool a chance to grow and show off their skills through training experiences, personal coaching, and most importantly, with a variety of stretch projects. A stretch project takes each individual outside of their comfort zone by assigning them to a project outside of their normal job description. For example, high-potential IT middle managers might be asked to develop a new product launch strategy and sell their plan to top management.

Let’s take a look at several of the most important growth tools in more depth.

  • Stretch projects

Taking on higher-profile projects allows people to expand their horizons in order to gain a bigger picture of the company and their potential within it. They can also gain teaching, collaboration, and leadership skills by heading up bigger projects. Company leadership can find out what they’re truly capable of achieving as they push toward more ambitious goals. Make sure they have the necessary support every step of the way.

  • Job rotations
    Job rotations are designed to give rising stars wide exposure to the big company picture by experiencing all phases of the company’s business. Don’t confuse job rotation with cross-training, which usually takes place among employees within a department rather than throughout the company. As an important piece of your succession planning, you’ll want to set this up so that each program participant spends time assuming duties and getting hands-on experience in every department. For example, let’s say you’ve targeted Jeffrey as a potential future CFO. As a final phase in his growth plan, he might spend an entire year devoting 25% or more of his time to projects in HR, marketing, and production. Think of job rotation as an investment in leadership developmentthat will ensure that promising employees gain the experience they need to understand all aspects of the business.
  • An internship program
    An internship program is an important component of succession planning, giving employees intensive experience in an area where they don’t typically work. I’m talking here about a special kind of internship: a formal growth tool for employees on the move. This is similar to job rotation but is focused on one key area. Let’s say, for example, that Kate, who is currently an IT supervisor, has expressed interest in learning more about marketing. Kate can begin to spend a small percentage of her time in marketing, doing real work, such as a special project or real problem-solving. Kate should have a mentorwho will support and critique her work. At the same time, she should be given opportunities to interact with senior marketing staff during meetings and trainings. Socializing with marketing staff outside the workplace would also help her feel comfortable and become more visible.

Work with each person one on one to develop their individual plan, rather than developing the plan yourself and dictating what they must do. Be sure they know the plan can be modified if situations or goals change. To hold your people accountable, develop a customized timeline for each position to close developmental gaps. Then schedule progress meetings to track performance against goals. Set up financial and non-financial incentives based on these goals.

Most importantly, don’t procrastinate! If you leave organizational succession planning to individual managers, or to chance, the likelihood of failure increases exponentially. Neglecting this important management strategy can cost you substantial money spent in recruiting new leaders, to say nothing of the costs of declining morale and lost productivity. Your existing employees want and deserve a chance to move up in the ranks when the opportunity arises. Developing a plan before you need one costs little by comparison, and it takes the urgency and emotion out of the process.

Filling the Void: How One Client Prepared for the Next Leadership Vacancy 

Marshall, the CEO of a large IT firm, was about to turn 65. Lately he’d been hearing some rather pointed comments from several of his C-level managers about “succession planning.” He was beginning to feel rather sensitive and more than a little defensive about his age. Until one day his HR director, Maria, gave him a wake-up call that shifted his thinking.

“Look, Marshall,” Maria said, “our company has got to get serious about a planning program for succession. This is not about you. It’s about the company and giving some thought to our future. There’s a book title I love—Hope Is Not a Strategy. The smart farmer hopes for sunshine, but he plans for rain. That’s what we need to do—not just for your position but for all of us that our stockholders count on to keep the business running. We need to have a successor for my position as well!”

“We talk about succession all the time, but only in an informal, conversational way,” she continued. “‘Oh, Janet would be a great comptroller if we could get her into a couple of training programs.’ But there’s nothing in writing and no formal plan with benchmarks and milestones. With your consent, I want to get the ball rolling.”

After sleeping on it, Marshall gave Maria the go-ahead to come up with some succession planning tools they could use to put a plan in place for the company’s top-level executive and management positions. After a few weeks, she reported back to the executive committee with recommendations for a three-step process that could be implemented by almost any company.

Conversations to Have With High Potentials and High Performers

Maria began by creating a template like the one outlined above. As a next step, she had two-part conversations with their high potentials and high performers. The first conversation focused on comprehensive self-development. She assessed what kinds of training they might need to prepare them for moving up, from cross-departmental mentorship to enrolling in an MBA program. She worked to match each rising star or high performer with the right coach and resources. To make things equitable, she decided to provide them each with an executive coach who could help them all to reach their fullest potential. She also implemented a mentoring program designed to expose high-potential employees to the positions they might hold in the future.

Within her conversations with these high performers, Maria also determined what would motivate the employees to stay with their company. She asked about their long-range career plans and their perspective of the company, assessing where they thought it was heading and whether they wanted to go along for the ride. She worked to bring home the big company picture and instill a clear vision of their place in it, too. 

Over the course of the next six months, Maria and Marshall worked with the company’s other C-level managers to develop a workable plan that they could implement in the event of both planned and unplanned vacancies in key positions. Their star employees were thriving, and they’d become more loyal to the company than ever. It was clearly a win-win for everyone!

“I think the company is on much more solid footing now,” Marshall told Maria. “I may live to be a hundred, but just in case I don’t, I’m confident that our future is in good hands.”

When you set up this kind of structure as Maria and Marshall did, you’re doing two things. First, you’re letting your future leaders know you have confidence in them. You’re giving them an opportunity to chart their own course to a successful future. This type of plan will go a long way toward retaining your superior employees, because they’ll appreciate the time, attention, and development you’ve invested in them. People stay motivated and engaged when they can clearly see that the path ahead of them leads to personal growth and career success. At the same time, you’re giving them the responsibility to rise to the occasion through hard work and commitment to their own futures. Most, if not all, will seize the opportunity, and you’ll sleep better at night knowing that your company has the right people in place who can step up to the plate when the occasion demands.

How’s your succession plan looking? Seeking outside support for implementing your plan can benefit the whole team. Contact Joel today for advice on how to leverage succession planning tools. His executive leadership training program will give your next generation of leaders the support they need to advance and excel.