Why Succession Planning?

 

The importance of Succession Planning in current downturn state

Succession planning is always regarded as most important for organizations’ success especially during current financial crisis. It is because business continuity is at the top of priorities when arguments take place over who should run the business, it will have a disastrous effect on sales and morale within the business.

A forced, ill-informed or panic decision could mean the business is transferred into reluctant or incapable hands. So a proper and deep Succession Planning keeps the business ready to bridge the leavers’ gap at top management level.

The benefits & impact of Succession Planning on businesses

Choosing the right successor and making sure the transferral happens at the right time is the best way to ensure the ongoing success of the business.Succession planning increases the availability of experienced and capableemployees that are prepared to assume these roles as they become available.
Knowing exactly how, when and to whom the key roles will be transferred is the most likely way the current business will maximise their returns.
Succession Planning improves employee commitment and retention
Companies pay their replaced executive nearly three times more when they hire them from outside than if they promote from within.
Proper Succession Planning results in business continuity and sustainability of the business.
Planned succession gives the incumbent leader a chance to share his philosophy, values, lessons learned and experiences with potential successors.
It usually meets the career development expectations of existing employees.
It counters the increasing difficulty and costs of recruiting employees externally.

How to do proper Succession Planning?

Here the summary of steps taken during succession planning:
Understanding the type of talent that will be needed (functional skills, knowledge, experiences and traits) i.e. setting the criteria.
Sharing an assessment of the performance and potential of likely successors based on direct observations and feedback from others.
Creating relevant development opportunities (rotations) for identified successors.
Devoting time for one-on-one coaching and mentoring of potential successors.

Illustration: In all major sectors like, Banking & Financial sectors, proper Succession Planning requires sound preparation. It includes engaging the top management to present the rough proposal of their successors and such proposal is refreshed annually. It includes that who will be replacing to whom after about two years or more. This will not include the finalists names for the successor but a criteria for the role and a list of competent top management leaders from within the organization. This will be the list of prospective successors. Usually below points are considered before Succession Planning:

• Identify those with the potential to assume greater responsibility in the organization.
• Provide critical development experiences to those that can move into key roles.
• Engage the leadership in supporting the development of high-potential leaders.
• Build a data base that can be used to make better staffing decisions for key jobs.

Once the criteria are established, then a baseline assessment of bank’s internal candidates is done. Such assessment is done in order to avoid choosing the favorites and to give equal chances of succession to the most eligible and experienced executives. An accurate and complete snapshot of talent within the organization cannot manifest unless business leaders are engaged in the process so top leaders too underwrite the on going development of potential successors. Hence, PD plans, 360 degree feedbacks, Performance Appraisals and Evaluations play an important role in good Succession Planning.

Then it is the final job of HR for coordinating the effort: helping identify positions, facilitating talent reviews and development plans and measuring and reporting results in the form of finalised hierarchy of Succession Planning.

Finally before the successor is on-board, crucial support must be provided–a good team, wise and accessible mentors, executive coaching and a feedback-rich environment–to create a setting in which the new President / Manager can be the most effective.