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Expert Advice for Medium and Midsize Businesses

A Simple Guide to Succession Planning

Guest Author
This is a syndicated post, view the original post here

By Jason Richmond, Chief Culture Officer and Founder at Ideal Outcomes 

Historically, succession planning has been focused on key leadership roles. For example, when Jack Welch was the CEO of GE, the rule of thumb was three replacements for his role. In other words, there should be three people with the potential to replace him at any given time. This concept has been adapted and proven to be effective by a number of organizations. One that comes to mind is McDonalds, which survived the unexpected loss of two CEOs in a nine-month period.

The first was long-time CEO, Jim Cantalupo, who died suddenly from a massive heart attack. His successor, Charlie Bell, was diagnosed with colon cancer just seven months later. Jim Skinner, who was Charlie’s replacement was known to ask his managers regularly, “Give me the names of two people who could succeed you.”

 

Today, organizations are likely to have a more expanded perspective on succession planning. Typical is a succession strategy for executive roles, with the most common being one to two levels below the CEO. Many organizations, especially those with a strong talent management focus and strategy, drive succession planning more deeply into the organization, developing plans for all leadership roles, including front line leaders. Other perspectives for succession planning take a strategic workforce planning perspective and focus on pivotal and hard to fill roles. 

There is no one correct approach. If you have no succession planning processes in place at all, you will want to work with your executives on a long-term plan based on critical business needs and priorities. You may decide to start with executives, and that is the most common initial step. But if you are in an industry with a number of hard to fill roles, this might be the right place to begin. If you are growing very rapidly, the positions that are critical to support successful growth might make more sense.

Good analytics also play into the decision. As part of your process, you and your executive team will need a clear understanding of reasons for employee turnover and the performance success of internally developed managers vs. externally hired talent. What data do you have that can help you prioritize where to start your succession planning process?

It's all smiles today, but what will you do when succession questions arise?

9 Steps for Developing a Formal Succession Planning Process

  1. Educate the executive team on the strategic importance of a formal succession planning process.
  2. Target the roles that are critical to business success. Decide based on business strategy and metrics (and gather additional data as needed) where the key needs for succession planning lie.
  3. Research and identify tools that could automate the succession planning process in an affordable manner.
  4. Develop a rigorous talent review process that identifies high potential candidates and distinguish these from high performers. (Educate executives on the difference between the two.)
  5. Determine the appropriate timing of talent reviews.
  6. Decide on the roles of each participant, including preparation tools for the executive teams and employees being discussed.
  7. Detail key philosophical, tracking and follow-up processes and procedures around talent review results, how they would be communicated, and to whom.
  8. Determine developmental systems and processes to ensure employees identified as high potential are truly prepared for future opportunities. Decide on accountability around this process.
  9. Determine how the success of development is to be measured and, related to that, how to measure and determine “readiness.”

Finally, keep in mind that succession planning is the means to an end. Its purpose is not only to identify talent, but also to develop it. Many organizations do a robust job of identifying key talent, but do not follow through on the development side.  Watch for our blog on talent development for tips and strategies to fine tune your succession planning process.

Learn More 

Looking to make the most of your organization's succession planning? We've got you covered in Oracle HCM Cloud Talent Management Cloud, where you'll find all the tools you need to ensure business stays on track and nothing falls behind. 

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