Institute For Family Business
                


      Kent Lutz- Advisors To Families In Business
Succession Planning

                   Thoughts On Succession Planning

 

Succession planning is any effort designed to ensure the continued effective performance of an organization, division, department, or work group by making provision for the development, replacement, and strategic application of key people(human capital) over time.

 

Succession planning is geared to developing the internal bench strength of an organization and is part of  a larger talent management program designed to attract the very best through recruitment and effective retention practices

 

Succession planning is critical due to the aging workforce and the difficulty finding qualified talent

 

Succession planning is NOT replacement planning because it focuses on developing people rather than just replacing them. It builds bench strength throughout an organization  so that when a vacancy occurs, the organization has a pool of qualified candidates internally to be considered for advancement

 

How does an organization know it needs succession planning? The company has done a retention risk analysis for estimating the projected target dates when individuals may be leaving the organization(retirement, etc.); The company has no way to respond quickly to a sudden departure or loss of key talent(death, disability, resignation); The time to fill positions(time to fill metric) is unknown or perceived to be too long; Managers at one or many levels complain that they have trouble finding people ready for promotion or to fill critical positions; Workers complain that promotion decisions are made unfairly or capriciously; Women , minorities, or other groups protected by law may not be adequately represented at various levels or various functions; Critical numbers of high potential workers are leaving (higher turnover) than the number of average workers leaving

 

Talent pools need to be identified-either by recommendation and/or assessments. People are not put in silos to fill a vacant position based sole on an organization chart, but rather based on their ability to be developed and grow and they fill a vacant position based on an organization chart, but may also be cross-over trained and developed.

 

Succession planning is a commitment to long term organizational change rather than short term panic needs and requires numerous steps: 1) Clarify senior leaders expectations, preferences and buy in  for succession planning-this is not and HR function(although HR participates) but one of senior leadership 2) Establish competency models by talent pool  for positions that need to be fed by the talent pool-Competency models are the descriptions of the knowledge, skills, attitudes, and other abilities needed for great performance. What should be the competency of various levels within the organization at the executive , manager, supervisor, sales, technical, financial, or other groups. This may include the development of a company’s ethics, code of conduct, and values. 3) Assess individuals against the competencies required for a successful organization. This assessment will help uncover gaps between what competencies an individual currently has and what he or she should possess to be successful 4) Establish an organizational  performance management system  where individuals are measured as objectively as possible against performance expectations for their current level of responsibility, as they would be seldom eligible for promotion without fulfilling current responsibilities 5) Assess individual potential for success at higher levels. Potential assessments focus on future potential 6) Establish a regular ongoing individual development plan filling the gap between performance assessment and potential assessment-devise a plan to help individuals develop themselves thus preparing for future promotion 7) Implement individual development plans either by establishing in house leadership and management programs, attend development programs, forums or outside training that can be helpful 8) Establish a talent inventory so that decision makers can find the organization’s talents on short notice-put out fires, seize opportunities, outdraw competitors, and fill vacancies 9) Establish accountability for the succession planning effort where everyone must be held accountable for cultivating talents over time and closing developmental gaps. Periodic meetings must be held to report on implementation and how development plans are being  carried out. 10) Evaluate the results of the systematic planning effort. The time to fill metric is a key to success-how long does it take to fill a position with a qualified candidate.

 

Common mistakes in Succession Planning: 1) Assuming success at one level is no guarantee of success at higher levels of responsibility 2) Assuming the bosses are always the best judges of who is promotable-some bosses may not want to see their people promoted for fear of inability to replace them 3) Assuming that promotions are rewards-some employees have the feeling of entitlement-meaning that because they are there for a long period of time that they should be rewarded with a promotion rather than filling that position with the right person 4) Trying to do too much too soon-A systematic succession planning system should be implemented in phases-either from the top down or else starting in specific departments , divisions, or locations. 5) Giving no thought as to what to call the process-it may be called a leadership development program, human capital management program, or a talent program 6) Don’t assume that everyone wants a promotion-Find out what people really want to do-what do they really enjoy doing-you could do top down succession planning program while at the same time do a bottom up career planning program

 

Conclusion-The Final Test of Greatness of Any Business Owner-Ensure The Right People Will Be In The Right Places And At The Right Times To Do The Right Things So As To Achieve The Right Results

 

Kent Lutz

Institute for Family Business

Advisors To Families in Business

Assistant Professor, Business

Entrepreneurship/Family Business/Finance

University of Cincinnati

Blue Ash College

513-314-7561


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