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Ensuring the future of your business

To secure our companies' futures we need to carefully consider and implement an often-forgotten tool: the succession plan

Succession planning is a dynamic process that should be regularly reassessed. A well-constructed succession plan focuses on the direction of the company, the skills of existing employees and the needs of the organisation. This practice of developing top employees for executive positions can be hazardous if ignored, but when properly considered it offers a number of business benefits.

Succession planning is an effective performance management tool that can help identify employees with certain attributes, as well as skill and competency gaps in your organisation that need filling in as a matter of urgency. On top of this, succession planning can play a key role in the improvement of employee engagement levels.

When employees know that you prioritise existing, loyal candidates, albeit those with potential, and you are willing to offer relevant training and support to encourage them in their journey with your company, they are much more likely to be motivated, engaged and willing to put in extra discretionary effort. This will have a natural knock-on effect to staff turnover, as promising employees won’t be forced to look further afield for promotions or better prospects.

One significant benefit of implementing a succession plan and keeping it updated is the money that stands to be saved in terms of recruitment. Rather than taking the time and effort to source, then recruit high-level external candidates and train them up over a period of months, you can simply promote prepared employees who are already familiar with the company culture and processes. This then means you can hire in eternal candidates at lower levels, which will come at a far lesser expense. As Forbes points out, external hires cost, on average, 18% more than internal promotions. They also take longer to become efficient and are a remarkable 61% more likely to be fired, so it pays to invest in — and bank on — your existing talent.

Unfortunately, a number of companies choose to adopt a reactive approach when a C-Suite executive leaves, only to then discover that hiring an external CEO can be challenging and time-consuming. A far better course of action is to adopt a proactive approach and to have a succession plan in place that involves the use of objective senior executive assessment, personal development, executive coaching and training. This will help promising candidates become the confident, authentic leaders to drive your business forward. In this way, your succession plan acts as a security net for your company.

When creating a succession plan, critical positions need to be examined and carefully defined. A full job analysis conducted to ascertain what are the necessary skills, knowledge and experience required to fulfil these roles properly?

On top of this, you need to look at your existing talent pool. Who are those high potential employees that could perform given the challenges of a more senior leadership position? It’s important to look past basic skills and existing knowledge, even current performance and instead explore more complex concepts, such as an employee’s self-image, characteristics, traits and motives. Objectively run development centres assessing a range of criteria across a range of exercises as well as certain psychometric tests, if used by experienced business psychologists, can be used to help determine high-potential candidates with great leadership abilities that might not yet have been nurtured.

Once roles have been defined and the right people have been identified, it is time to start training and developing. This can come in the form of executive coaching, mentoring, shadowing, 360° feedback, leadership development programmes and external training schemes.

A succession plan can be a lot of hard work to begin with and it’s something that needs to be revisited and adjusted frequently, but once it is established, succession planning can streamline your processes, keep your employees motivated and ensure a long, successful future for your company.

Nick Davis is a director and business psychologist at Davis Associates