January 2008 Newsletter

Your team has the right players on the field. Unfortunately, they've gone into the game with an empty bench. What are their chances of success?

"Slim to none," you're probably thinking. "What a ridiculous way to run a football team."

Why then do so many companies operate without key personnel in the ready?

Just like a football team has at least one, and more often two, back-up quarterbacks, companies should have a succession plan for replacing key leaders.

Yet many companies ignore this planning. They fail to think about replacing key leaders until it's too late–until someone gets sick, dies, retires or departs for greener passages. Then suddenly they look around to find that anyone who could lead the company is gone.
 
Why are they so reluctant to tackle this all-important subject?

Some suggest the problem falls squarely into the CEO's lap. CEO's, they say, really don't like to plan for their retirement.

Others say that the prospect of replacing a key figure is overwhelming. Or makes people uncomfortable.

A recent Workforce Management article cites a survey that shows only 6 percent of companies polled in North America feel confident they can make the right decisions for replacing their leaders for the future.

Further, a majority of these companies–69 percent–believe a shortage of top talent will complicate the selection process. 

It's true that there are fewer candidates for top leadership positions. Downsizing companies, retiring baby boomers, a tight labor market, and increased mobility or movement of talent from one organization to another have reduced the candidate pool. Worse, this scarcity comes at a time when companies need sophisticated leaders to develop and guide more global and highly technological initiatives.

Yet, changes in CEO offices are as inevitable as change itself. Not attending to the succession problem means dire consequences for an organization's profitability…and worse, for its very survival. A company that lets decades of experience walk out the door without a plan in place to stop the bleeding will bleed to death.

This dynamic, incidentally, doesn't apply to CEO offices alone. It's vitally important that companies get the right people in place for every job. If you plan to grow, for example, you will need more talented managers throughout your organization down the road. Further, you should position and develop your workforce keeping in mind that some of tomorrow's jobs may not even exist now.

Focus on developing leaders
At this point you might be thinking, "Yeah, yeah. This sounds good; it makes sense. But how do I go about getting my succession ducks in a row?"

Here's the biggest key: Match your organization's future needs with your people's aspirations.

By this I mean focus on development to retain and groom the leaders you have rather than think only of replacing talent.

Although it is possible to find leaders outside your organization, competition is fierce. Your best bet is to grow your own. Coaching, mentoring and developing people from within for leadership roles make life much easier. With good succession planning, employees will readily assume new leadership roles as needs arise.

What's more, succession from within pays--or should I say saves? According to a recent study, companies pay their chief executives three times more when they hire them from outside the company rather than groom them from within.

To keep key talent, you must provide your people with growth opportunities that stretch them and offer more promising opportunities than they will find elsewhere.
 
Tips for successful succession planning
Here are some ideas from top companies that you can use to help keep corporate knowledge in your organization:

  1. Anticipate key personnel retirements years before they occur
    Talk with your leaders. Ask about their thoughts for replacement in case of illness or an extended disability. Make this an ongoing conversation and keep it non-threatening by positioning it as part of a purposeful business plan to ensure the company's health.
  2. Set deadlines for each step
    Anticipating retirements, you will need to recruit, train and transition new personnel into your top positions, especially your number one leadership position. This takes time so start the process early. A good place to begin is with assessing your current leader. Comprehensive assessments can help reveal interests, tendencies, skills and competencies so you can analyze what is needed in the person replacing him or her. Some companies begin the succession process five to ten years before a leader's retirement.
  3. Appoint an intermediary to help recruit, conduct or participate in interviews
    An intermediary or third-party representative--a board member, for example--can aid negotiations by asking and answering hard questions. This takes pressure off both the departing executive and potential replacement.
  4. Talk vision early
    Your new leaders must try new ways to move a company forward. To ensure their comfort with this process, share your company's vision with them. If possible, you should also offer incoming leaders time to experience the company before they take the reins.
  5. Include sharing time in the transition period
    A smooth transition depends upon imparting and absorbing company history and culture. Allow for sharing time between incoming and outgoing leaders.
  6. Have ongoing plans in place
    Most important, before your top team members disappear, have a plan in place that addresses preparation for personnel turnover or unavailability. Account for short term, mid-range and long term needs.

Succession planning is just one piece of overall business continuity planning. Don't overlook it, however. Ignoring succession planning will leave your company without properly developed key personnel.


 

Tip of the Month: Ten Steps to Take Before Your Key Talent Leaves

The right people make things happen. We just need to find the right people.

Here's the start of a to-do list that will help you make finding the right people happen and the transition process smoother:

  1. Identify expected key vacancies as far in advance as possible. Some companies start this process years before a key leader retires.
  2. Explore the skills and competencies needed for each expected vacancy.
  3. Work on retention so that top performers stay.
  4. Develop a recruitment strategy.
  5. Identify or develop assessment process and tools.
  6. Have CEO inform key clients about the plan so they won't desert when he leaves.
  7. Set target date for leader's departure and have him begin shifting responsibilities beforehand so that he or she is there for the transition.
  8. Prepare employees to expect questions from the new leaders.
  9. Ask the incoming executive to prepare a company assessment and action plan listing his priorities and how he plans to address them.
  10. Prepare an orientation book for the new team member that includes the company's history and culture, and biographies of key players.

And, for those of you with a family business, here's an eleventh to-do: Involve an estate planner well before your leader departs.

Succession planning is tough for any company. For a family business owner, it's even more challenging. The stakes are high for family businesses--so high that most family businesses fail to negotiate the transition to a new leader. In addition, its stakeholders are many and often in conflict. An estate planner can help you develop a reliable and workable strategy for succession planning.



Technical Corner: Step-by-Step Planning for A Successful Future 

What if you had a mentor who stood beside you guiding you through every complicated business process systematically? And what if this handy mentor could help you develop leadership skills in your employees and provide a way to replace key team members when they depart?

I may not have a mentor for you, but I can offer you the next best thing: a step-by-step guide to succession planning using the Profile XT™ Succession Planning Report and the Profiles CheckPoint 360°™ tool suite.

Profile XT™ offers a report that places an employee side-by-side with all your company jobs and indicates the positions that his or her interests, skills and attributes match.

Using this information, your management can help team members prepare for greater responsibilities by ensuring they acquire the skills and experiences they will need to perform well in the jobs they will fill in coming years.

In other words, you can think of Profile XT™ as a scientific crystal ball – scientific because it allows team leaders to predict the future with accuracy.

Profiles CheckPoint 360°™ offers another set of leadership development tools. It measures job skills and gives managers performance ratings so they can evaluate their strengths, areas for improvement and overall job performance.

Within Profiles CheckPoint 360°™, Organization Management Analysis™ describes your organization's current position so you can determine the company's future direction. Based on statistically accurate data, it analyzes organizational development priorities and defines your organization's training needs. This analysis helps you avoid false assumptions that lead to wasted time.

SkillBuilder™ Series, another tool within CheckPoint 360°™, provides managers with a self-paced, self –improvement program for performance growth. It promotes professional development in all CheckPoint360°™ competencies.

Are you interested in positioning your organization for the future? MG Assessments has tools to help. Send me an e-mail or give me a call if you are interested in learning more about how they can help you with your succession planning.

  



News Articles     Search