I’m the executive director of a medium-sized organization. One of my board members is keen on having a succession plan. I’m not convinced that we need to formalize the staffing process to such an extent. I’m also confused; the words ‘succession planning’ seem to get used to refer to different things. Can you help?

I’m not surprised that people experience confusion about succession planning. Our reader is right; the term attaches itself to different things:

Transferring ownership and control of a family or closely held business

This is the process whereby the founder or owner of a private sector business arranges for the orderly transfer of power to the next generation of owners. Accountants, lawyers and business valuation consultants get involved. That’s not what we’re talking about here.

Identifying replacements for senior executives

This is what most of us think of as succession planning, but in fact it’s just a first step. More properly called ‘replacement planning’, the process attaches the names of individuals as possible replacements for senior positions should the positions become vacant.

This is probably what our reader’s board member has in mind. It’s a good thing to do. It’s not a succession plan, but it’s useful in that it sheds light on areas where an organization’s ability to replace is strong and where it is weak.

Preparing talent for leadership roles

I like the label ‘succession management’ for this process. Here, we’re taking the replacement plan and managing it. The purpose of a succession management plan is to serve as a strategic tool for retaining talent. This goes way beyond backfilling jobs. There are three steps:

1. Identify key positions/roles

You don’t have to identify a successor for every job, just for the key ones. To help sort key positions from others, ask this question:

“In which positions would a vacancy have a significant negative impact on our ability to carry out our strategic plan?”

These are probably leadership positions. However, don’t assume they’re the highest paid, or the ones with the grandest titles (although they may be). For example, for a courier company a key position may be a supervisor on a loading dock.

2. Identify key employees

We’re looking for existing employees who have the potential to assume the key roles. Here are some suggested criteria for inclusion as ‘high-pos’ (employees with high potential):

• They produce consistently superior results.
• They show an interest in other areas of the organization.
• They volunteer to serve on cross-functional task forces and teams.
• They are favourably known to senior management.

 

(These are suggestions only. Each organization needs to decide what criteria to use.)

Before filling in boxes with names, however, ask the individuals whom you’ve identified if they’re interested in assuming leadership roles. Not everyone is. The ones who say they are are your hi-pos. The ones who say they’re not, no matter how well they meet the criteria, aren’t.

Remember to make two things clear:

• The employees are not being promised anything except development opportunities.
• They are being developed for leadership roles in the organization that may not even exist yet.

 

3. Create a development plan for each hi-po

Please don’t send them all on a course and declare them developed. Training and education have their places, but research shows that the best development experiences are working in the organization and contributing to real-time issues, projects, and problem-solving.

I would also suggest that people need to be clear that these employees belong to the organization and not to a department or a manager. Nobody gets to hoard them. As Professor Jeffrey Gandz of the University of Western Ontario puts it: “You can borrow talent from the organization, but you must return it improved.” Managers need to remember that these employees are being developed for future leadership roles. They have been assigned a category removed from other employees, and their performance needs to be managed differently.

I mentioned earlier that the purpose of this process is to help the organization to retain talent. (Not, as our reader assumes, just to do something with staffing.) The days when we could ask recruiters to dip into the external pool of strangers and pull out leaders, when we could put together plans with no consideration of where the talent was going to come from to carry them out, are over. The demographic march of the huge boomer generation has brought the oldest of them to retirement age. There aren’t enough people coming up behind to replace them all. Talent is in demand, and this will only intensify.

A succession management plan that’s actively implemented sends a message to hi-pos that they can manage their careers without leaving your organization. Remember that headhunters are phoning them regularly asking them to do just that. (Headhunters target your best performers because they’re easy to place elsewhere.) When employees are asked why they left a particular employer, they often say that they couldn’t see a career path in the company.

Boards of directors exercise due diligence by ensuring that a replacement plan is in place that covers key positions. But if a designated successor were to leave, the plan would be damaged. Succession management protects the replacement plan by working to keep the future leaders from leaving. Replacement plans that are revisited often because future leaders are leaving are plans that aren’t working.

So start with the replacement plan, but don’t stop there. Proceed with succession management and retain your talent.

To submit a question for a future column, or to comment on a previous one, please contact editor@charityvillage.com. No identifying information will appear in this column.

Tim Rutledge, Ph.D., is a veteran human resources consultant and publisher of Mattanie Press. You can contact him at tim_rutledge@sympatico.ca.

Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.