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Successful Succession Planning

As we reach the end of 2020, the pause of the festive season will have businesses reflecting on two contrasting perspectives.

The Phantom Menace

The second wave of the pandemic continues to be front of mind for all of us. In comparison to the first wave, this has felt far less disruptive to most businesses as they have learnt to adapt to the COVID-era. Comparative ease, however, does not make it any less devastating. Forecasts from the Office for Budget Responsibility (OBR) show the economy will contract by 11.3% this year, the biggest decline the UK has suffered in three centuries. This contraction has translated into continued business devastation, with 1 in 7 businesses having low or no confidence that they will survive the next three months, and unemployment soared to 4.8%.

A New Hope

The second perspective in the minds of businesses will be the hope of 2021, the promise of a vaccine and forecasts of annual growth of 5.5% and 6.6% in each of the next two years. The response of the markets and futures indexes points to cautious optimism for new year and the potential of recovery. Meanwhile, businesses will be reflecting on the lessons learnt from 2020 that will enable them to be more resilient in the future and capitalise on the opportunities of the future.

The Last Jedi High

on the list of lessons will be the impact of single points of failure. As workers got sick or found themselves unable to work due to enforced isolation, businesses stumbled. This resulted in many organisations either discovering, or feeling the repercussions of existing, single points of failure. Customers were understanding, but revenues were impacted, and it took far too long to return to productivity. Organisations have quickly realised they lack the depth of support required to maintain continuity of service when a critical employee is unable to work, or suddenly leaves. This has been especially pronounced for many businesses that have sought to create a leaner workforce in recent years. What is more, this lack of depth presents a far greater risk to small and medium-sized enterprises, where the inability to maintain continuity can derail an entire business.

The Force Awakens

Succession planning can be a highly effective approach to managing the challenge of continuity with a single point of failure. Succession planning is identifying in advance those who could step into a lateral, or more senior role, particularly when they are hard to fill. In its simplest terms, it creates an internal talent pool for future vacancies. Whilst for many organisations this practice is limited strictly to senior leadership positions, it can be conducted at all levels of the organisation and for all workforce segments.

Attack of the Clones

The struggle of several organisations to realise the benefits of succession planning shines through in the decrease in CEO tenure and increases in the turnover of new CEOs. Much of this can be pinpointed to tendencies towards replacement planning, rather than genuine succession planning. Replacement planning is when a business seeks to fill a forthcoming vacancy with the ‘best candidate available’. This approach is one of the most effective and commonly used tools in short-term workforce planning, as anyone who has ever put the contact details of a colleague into their out-of-office email can attest. Whilst replacement planning is highly effective for short-term cover, it is often mistaken for succession planning and used to fill permanent vacancies in the longer-term. When businesses do this, their endeavour to simply maintain a status quo is often the wrong choice as they mistake continuity of process for continuity of service.

The Return of the Jedi 

The final stage is continuous review and evaluation. Primarily, we need to ensure that a potential successor has meaningful and timely feedback on their progress. Moreover, we need to continuously reassess the plan that has been created. Boards (for the C suite) and line managers of the incumbent need to be mindful of changes that may change the timelines for succession. Just as development may need to be accelerated if there is a heightened risk of an incumbent departing early, thought needs to be given if the incumbent may depart late. The convergence of a delayed departure of the incumbent and a ready successor risks loss of the latter. Careful contingency planning is advised to provide an intermediate role or enhanced responsibilities should such circumstances change. Used in this way, succession planning gives organisations the ability to develop its leadership bench in a way that aligns exactly to its future needs. Focused on its internal talent pool, it maintains continuity of success in a departure, retains your top performers and avoids costly search, recruitment and onboarding activity.

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