Championship contenders know one thing well: each and every team player must be ready, willing and able to step up to the challenge if a team member should be unable to perform. Having backups that are ready to step in for the stars ensures a team’s glory and is a testament to good coaching – and good planning.
In the business world, not having a deep enough bench can leave a large leadership gap and affect the culture, the identity and the very viability of an organization. Simply grooming a replacement for a CEO within the organization (replacement planning) and having various headhunters as contacts (recruiting) is simply not enough in the contemporary corporate world.
To continue the sports analogy, while an effective back-up quarterback may perform adequately for a time, a team with overall depth, strength and expertise will do a much better job of ensuring a notch in the Win column.
So How Do Businesses Ensure Bench Depth?
Succession planning identifies the key performance metrics and leadership qualities needed to ensure that the organization not only survives a leadership transition period, but also outperforms its competitors. Succession planning can also identify obstacles to managing succession risks, such as inadequate development resources or gaps in performance management.
Best practice dictates that the CEO must not be the be-all and end-all of an organization. Doing so places the business in a precarious position in a highly competitive marketplace. If the CEO departs, all of the knowledge then exits too. More and more, shareholders have been pushing for more transparency regarding the risk to an organization should a leader decide to jump ship (i.e., an individual’s rating of vulnerability).
A “Significant Policy Issue”
The Securities and Exchange Commission has recognized that CEO succession planning raises “a significant policy issue,” rejecting the contention that it is a mere day-to-day business matter. As a result, for public companies at least, the best practice has become regulatory guidance.
This guidance creates an organizational compliance requirement that HR can help meet. When deciding whether to engage in succession planning, HR must engage in a number of steps to communicate possible strategies to the CEO and the Board.
Succession Planning 101
HR may incorporate a number of existing processes into a comprehensive succession planning process, including:
- Talent assessment and acquisition;
- Performance management;
- Training and development;
- Mentorship; and
- Career pathing.
Merely having a list of “usual suspects” falls short: conducting in-depth research into individual competencies and how those link to business needs and goals is crucial to an effective process. Otherwise, the planning devolves into one star player and a couple of proficient backups – who may be poached by a competitor at any time.
The scope of the process should be determined by the CEO, with advice from HR. The bare minimum of an organization’s succession plan addresses the chief executive. But depending on the internal structure, it may be advisable to include other positions as well, such as:
- Other C-level leaders (COO, CFO);
- Heads of various departments (such as Sales and HR); or
- Middle management positions critical for the overall success of the enterprise (such as a sales manager in a sales-driven organization).
Want to increase bench strength in your organization? Need to persuade your CEO to groom tomorrow’s superstars? Use a Succession Planning Checklist to keep you on the right track.
- Photo courtesy of Wikimedia Commons.