"The longer you can plan ahead the better, but it’s good practice to look at least three to four years into the horizon so that when there is a change, the change can be an orderly transition and not a disruptive distraction.
“When done well there will be a clear continuity plan that everybody from the board to the executive team knows and understands, and which anticipates and prepares for any future changes.
“The single biggest reason firms historically haven’t been great at this is that there can be a discomfort of having open and honest conversations.
"This comes from both sides. Executives need to feel comfortable about their future and when they would like to do something different, and the nominations committee needs to feel comfortable that they can talk to executives about business needs and plans that go on beyond their tenure.
“By not having those conversations succession planning often only starts when somebody resigns. This can be disruptive and reduces the pool of successors available to choose from.
“There is also an instinct to replace the person you are losing rather than find the person that will be needed for the future, yet this should not be the case given the inevitability of evolving businesses meaning challenges will not be the same.
“Companies need to make sure they have a process that genuinely finds the right person rather than somebody who would historically ‘meet the mould’. If you want to be truly diverse then you need to value and seek somebody who is different to others within the team; somebody who can offer a different perspective and reflect its employee and customer base.
“There is also now a broader focus from investors around whether an organisation is well run. This shift will cause more boards to expect HR to better support them in having better conversations about succession planning, focusing on behaviours and CSR agendas.
“Investors can see the difference between sudden departures and the well-planned orderly succession that happens when there is a good handover and steady confident leadership of the business.”
Simon Linares is HR director at Direct Line Group
This piece appeared in the February 2020 print issue. Subscribe today to have all our latest articles delivered right to your desk