Whitepaper: Succession Planning and Management

Succession Planning and Management in Tough Economic Times

Succession Management is a proactive approach to managing talent as it involves identification of high potentials for anticipated future needs and the tailored development of these people so that there is a talent pool or leadership pipeline available to meet organisational demands as they arise.

"Many organizations that engage in SPM have transitioned from traditional approaches that seek to identify and prepare leaders for specific future positions to processes that seek to identify and develop pools of talented individuals who can assume a variety of unknown future positions" (Caruso, Groehler & Perry, 2005).

Why should SPM be prioritized now?

The current global financial crisis has left few businesses untouched. Short term reactions have focused on cost cutting. Given that total compensation represents between 20% to 70% of total costs (Holincheck, 2008), it is not surprising that many people are being laid off. While the closure of businesses or parts of larger businesses has been a common strategy, causing unemployment figures to rise quickly, it is not the time to abandon the SPM strategy, but rather a time to embrace it. Lay off of individuals without recognising their value to the organization with further skills training is poor business practice. Corporate knowledge is lost. Organisations should "hire for attitudes, train for skills" (Karaevli & Hall, 2003; p.69). Reactively dismissing employees in key positions when investors are showing dissatisfaction without a full appreciation of the issues facing the business or the disruption that is caused through bypassing organizationally accepted succession processes can cause long term damage (Berke, 2005).

If they are to survive the continually evolving business landscape, organisations need to adopt a SPM approach that will develop their talent pool of adaptable, skilled individuals who embrace learning, mobility and change (Karaevli & Hall, 2003). They need to ensure that critical jobs have sufficient resources. The SPM system enables organizations to lower costs (eg. through reduction in time to fill roles, fewer recruitment fees, greater retention rates) and increase productivity (eg. through developmental opportunities, improved employee motivation).

There has been too much emphasis on succession "events" (replacement of key individuals) instead of considering the process by which individuals are developed during their careers in preparation for their next challenge.

Highly successful organisations emphasise the building of a comprehensive set of assessment and development practices that support the entire pipeline of talent across the organization (Charan, Drotter & Noel, 2001). As the current uncertainty means that it may be impossible to sustain all employees in their current positions, succession planning should be used to identify possible lateral movements as well (eg. to different functions, project teams or geographic locations) (Spencer & Spencer, cited in Kim, 2003). The competency of Learning Agility should also be a key corporate competency of all staff.

"organisations are better served by investing the necessary time and effort in identifying and developing multiple high potential managers to ensure flexibility in key executive successions - employees fluidly move on and off the list of high potentials and a diverse range of candidates is considered for succession, not merely direct reports" (Groves, 2007).

Businesses are operating in a different financial landscape than they were 12 months ago. Surviving and prospering in the current economic environment requires leaders to review their talent management approach carefully before reactively shedding staff. Those that already have a SPM program in place should focus on overcoming their unique obstacles to a best practice system; those who do not currently invest in SPM should perhaps consider the value it could add over the medium to long term.