Businesses today must have formidable succession plans for leadership roles. Without cohesive strategies in place, a corporation could lose its industry stature or reputation when current leaders resign or move on.
According to a 2014 study completed by the Institute of Executive Development in conjunction with Stanford University, corporate leaders see succession plans as a vital aspect of their businesses' futures, yet 46 percent stated they had no specific candidate in mind to succeed the current CEO. Should a CEO leave tomorrow, it would take those companies a median of 90 days to fill the position.
Fast Company stated that most corporations either have no plans for succession or a strategy with too many complicated rules, stages and candidates. This simply isn't conducive to a healthy business.
Why build a succession plan?
A succession plan helps businesses maintain continuity in leadership and operations. It also helps human resources professionals identify potential candidates early on and work with these employees' strengths for a long period of time rather than tossing new CEOs into the hot seat at a crucial moment and expecting a faultless performance.
From an employee's perspective, working for a company with a succession strategy makes committing to professional development a more meaningful endeavor. From management's point of view, the process allows current leaders an opportunity to demonstrate power, which in turn actively earns employee trust. Being able to delegate duties and motivate top talent is at once a strong display of power and care. Plus, implementing a succession program will motivate senior leadership to remain accountable and on top of their businesses' performance until the day they leave.
One common motivator for establishing a succession plan among the executives in the survey was risk reduction. While this is certainly important, it doesn't focus on the professional development necessary to properly groom someone for as significant a role as CEO. Harvard Business Review encouraged companies to focus on succession development rather than succession planning as they develop their unique programs. This is because while a plan helps an organization understand the process, when it comes time for a successor to fill a leadership role, he or she will need to have had significant experience with those responsibilities already to make the transition smoothly.
How can a company initiate succession development?
The two words human resources professionals need to remember when designing a succession development plan are honesty and practice.
- Honesty: It's irresponsible to promise a position to someone or begin nurturing candidates who will never be considered for a CEO position. Any professional or succession development program must be straightforward with participants – and applicants, if applicable – about their chances of obtaining that top spot and what is expected of them along the way.
- Practice: Without actively practicing making tough decisions, performing routine tasks or interacting with clients, no prospective successor is going to be ready to take over a CEO's position. It's necessary that HR departments and senior leaders alike facilitate opportunities for those top candidates to try their hand at the work.
Human resource information systems can improve the design and execution of a promising succession development strategy – something every business needs to secure its future.